The Emergence of Smartphone Apps as a tool to transform Consumer Behavior in India

Transcription

1 INSTITUTE OF MANAGEMENT, NIRMA UNIVERSITY A Research Paper on The Emergence of Smartphone Apps as a tool to transform Consumer Behavior in India Submitted to: ANVESH-2016 Doctoral Research Conference in Management Institute of Management, Nirma University Research Scholar: Ms. Priyanka Patel (Asst. Professor, Faculty of Management Studies, Parul University) priyanka.patel6022@paruluniversity.ac.in, priyankadp87@gmail.com Research Guide: Dr. Bijal Zaveri (Dean, Faculty of Management Studies, Parul University) bijal.zaveri@paruluniversity.ac.in Page 1 of 10

2 ANVESH-2016 DOCTORAL RESEARCH CONFERENCE IN MANAGEMENT The Emergence of Smartphone Apps as tool to transform Consumer Behavior in India Abstract With the rise of internet and mobile phone penetration in India, there is a phenomenal change in the means of communication and the way business are carried out. E-commerce boosted up with the explosive growth of Smartphones in India. Today there are far more mobile-based internet users than PC based internet users. In 2015, Mobile Apps are increasingly on the move over the websites which will continue to make new trends in how consumers communicate. Companies like Myntra and Flipkart have started closing their websites for transitioning users solely to their Apps. There are about 54% of Smartphone users who are using shopping apps in 2015 in contrast of 21% in the previous year which is a considerable growth as compared to just 17% in case of shopping websites. The emergence of Apps provides a new platform for the marketers to reach the end customers. It can be classified into seven categories, namely Communications, Shopping / Commerce, News / Information, Productivity / Function, Entertainment, Games and Social. Only preliminary study has been conducted so far in this area in India. Thus, this research paper attempts to study the consumer behavior of using Smartphone apps with reference to Indian consumers. Key words: Apps, E-commerce, Smartphone users Page 2 of 10

3 INSTITUTE OF MANAGEMENT, NIRMA UNIVERSITY Introduction Smartphones can perform many tasks with the usage of internet. Today, Smartphones are increasingly viewed as handheld computers rather than as just phones to communicate, due to their dynamic computing capacity, sizeable memories, large screens and open operating systems that encourage application development (Phutela, Vashisht & Wadhwa, 2016). As per the latest information available in December 2015 from TRAI, there are about 890 million active mobile subscriptions in India, out of those, 192 million are using Smartphones while nearly 180 million people use internet on their mobile Hussain(2015). Though the penetration of Smartphone in India is just 15% in comparison to developed nations like US and China which are on the verge of saturation, India provides a massive potential for the domestic as well as global retailers for mobile market. [Table 1] Activities performed among smartphone users Sr. No. Activities United States India 1. Text Messaging 86% 45% % 17% 3. Instant Messaging 28% 15% 4. Social Networking 63% 26% 5. Streaming Online Music 38% 11% 6. Video 28% 8% 7. Applications 62% 13% 8. Web Browsing 82% 15% 9. Mobile Shopping 30% 7% 10. Mobile Banking 38% 7% 11. GPS 48% 8% 12. Barcode or QR Scanning 24% NA 13. Mobile Wallet 3% NA Source: Nielsen Global Smartphone Insights, 2012 Percentage share of app downloads Mobile apps market is flooded with over 3 million mobile apps readily available for download as per the latest report by Statista. A study on apps downloading destinations reveal that Indonesia ranks on the top with 18% downloaded apps surpassing USA and China with 15% each, followed by Philippines. India stands fourth in the ranking with 6% share of app download, which is progressive in comparison to the world data (InMobi Insights, 2015). Page 3 of 10

4 ANVESH-2016 DOCTORAL RESEARCH CONFERENCE IN MANAGEMENT [Table 2] Top App Download Destinations Rank App Download Destination Countries Percentage Share of App downloads 1. Indonesia 18% 2. USA 15% 3. China 15% 4. Phillipines 12% 5. India 6% 6. Malaysia 6% 7. Russia 5% 8. Brazil 3% 9. South Korea 3% 10. Saudi Arabia 3% 11. France 2% 12. United Kingdom 1% Source: The State of App Downloads and Monetization, InMobi Insights Page, July 2015 Indian Smartphone users spend around 169 minutes per day on their mobile. The user base is likely to grow at CAGR 26% making 234 Mn users by 2017 which was mere 74Mn in 2013 (Vserv, 2015). Apps usage patterns The Smartphone user personas can be classified according to their usage patterns: App Junkies, Social Stars, Conversationalists, Entertainment Buffs, Utilitarians and Dabblers. Around 24 % of Indian Smartphone users are considered App Junkies, with each spending an average of 160 minutes on their Smartphones per day. These users comprise of the highest number i.e of app and game downloads and installs each month. About 20% of India s Smartphone users are Social Stars who spend over two hours each day on social networking and chat apps. These are mostly females, who are single and between 18 and 24 years old. When compared to App Junkies, these Social Stars download a meager on an average 4.7 apps each month, but they spend considerably more time on their Smartphones i.e. 263 minutes each day.(vserv, 2015) People use Mobile apps to satisfy a broad range of needs, such as entertainment, communication, information, and commerce (Coursaris, C., & Hassanein, K., 2002). Majority of the apps are free of charge, others charge a one-time price of usage for a specific period of time. Some of them monetize through the services they provide to a sponsoring body or by advertising revenues (Leontiadis, I., Efstratiou, C., Picone, M., & Mascolo, C., 2012). There are apps available for Page 4 of 10

5 INSTITUTE OF MANAGEMENT, NIRMA UNIVERSITY games, Social Networking, Video / Movies, News, Maps / Navigation, Weather, Banking / Finance, Shopping / Retail, Productivity. A Global study conducted by Nielsen Global Smartphone Insights in 2012 discusses the types of apps regularly used among various Smartphone users across the globe. People in United States use apps for social networking (85%) followed by Navigation purpose (84%), and productivity (74%). The scenario is different for India. Indians uses apps mostly for gaming purpose (39%), followed by Social Networking and Videos at 29% each. The studies also reveal that Facebook, Google, YouTube, Twitter and ebay consistently rank in the top 10 sites among mobile web users around the world (Huang, G. H., & Korfiatis, N. (2015). [Table 3] Types of Apps regularly used among smartphone users Sr. No. Use of Apps United States India 1. Games 61% 39% 2. Social Networking 85% 29% 3. Video / Movies 65% 29% 4. News 38% 13% 5. Maps / Navigation 84% 14% 6. Weather 48% 10% 7. Banking / Finance 53% 14% 8. Shopping / Retail 53% 11% 9. Productivity 74% 11% Source: Nielsen Global Smartphone Insights, 2012 Attitude towards app download and its usage Studies show that Product trials are a powerful source leading to the formation of attitudes towards the product or a service, the same applies for the apps too. If a consumer downloads and uses an app, it is likely to generate positive or negative attitude which in turn will affect the engagement in the app leading to continuing the usage or abandoning the app by uninstalling it. Two in three Smartphone users use an app frequently as it simplifies their lives, reveals Mobile App Marketing Insights research. About 40% of Smartphone users browse for apps in app stores from Gaming apps to Music and Video streaming etc. Moreover, the marketers need to make their apps discoverable everywhere, including search ads. People tend to discover, download and use the apps shown by the search ads. Search ads have proved to be an effective tool in driving app downloads as against video ads, banner ads or social ads. Yet, one in four installed app is Page 5 of 10

6 ANVESH-2016 DOCTORAL RESEARCH CONFERENCE IN MANAGEMENT never used. The studies show that about 38% of the people are likely to download an app when it is necessary to complete a purchase transaction. But, once they have completed the purchase, nearly half of them tend to uninstall that just-downloaded app. 38% Smartphone users start using an app again if they were offered a discount toward a purchase, and nearly one-fourth of app users would return if they received exclusive or bonus content. Thus, incentives prove to be reengagement drivers for app usages for the apps not used for long time or uninstalled app. This is particularly true for the travel (40%) and retail (47%) categories if they received a discount or coupon offer ( Tiongson J., 2015). E-commerce through apps India has recorded 440% growth in retail app downloads, which has outpaced the developed countries like US and Japan (AppAnnie, 2015). [Table 4] The top ten ranked Retail Apps by Monthly Active Users (MAU), India Rank Retail Apps Company 1. Flipkart Flipkart 2. Paytm One97 3. Snapdeal Snapdeal 4. Myntra Flipkart 5. Amazon India Shopping Amazon 6. Amazon Amazon 7. Jabong Jabong 8. Shopclues Shopclues 9. Limeroad Limeroad 10. HomeShop18 Mobile TV18 Home Shopping Network Source: India s Top 10 Retail Apps: Tapping Into the Trend of Mobile Shoppers Report, December, 2015, The above given table shows that 6 out of top 10 retails app companies in India have opted for mobile-first strategy while the rest of top app companies are still preferring online-only model. The growth of Indian online shopping companies like Flipkart and Snapdeal in the retail app segment highlights the changing scenario in the mobile users behavior in India. In India, 5 out of top 10 retail apps fall under the category of General Merchandise (Flipkart being the leader) while the rest 5 apps belong to the Apparel segment which is led by Myntra and Jabong (AppAnnie, 2015). Flipkart leads in shopping apps both in terms of reach (35%) and user Page 6 of 10

7 INSTITUTE OF MANAGEMENT, NIRMA UNIVERSITY engagement of 60 minutes per month which is followed by Snapdeal with a reach of 20% and a user engagement of 35 minutes a month. Amazon India Shopping app is at 3rd spot with a reach of 17% and a user engagement of 37 minutes a month (Nielsen Informate Mobile Insights, 2015) The overwhelming growth in the number of app downloads in India can be attributed to the discounts being offered by retail companies. To encourage the shoppers to use Smartphone apps, almost every major retailer is offering additional discounts on product purchased through mobile apps (AppAnnie, 2015). The Indian shopping habits took a turn towards online shopping with E- commerce campaigns by marketers and easy access to mobile apps. The growth in Shopping apps seems to be huge in contrast to shopping websites during the previous year. The number of Smartphone users who use shopping apps has seen a dramatic rise of 41% from just 13% in January 2014 to 54% in May 15. In comparison to the shopping apps, websites are found to have moderate growth of 18%, from 27% in 2014 to 45% in 2015 (Nielsen-Informate Mobile Insights, 2015). The studies show that shopping app downloads and installations rise up to triple during festive seasons. Normally, the Sale period and promotions are launched during public holidays and festivals, along with aggressive app launches. The majority of products viewed and bought online are electronics items which is a segment resembled by men. The penetration of shopping apps is 52% in Female and 55% in Males. In contrast, it has been also observed that women spend more time on shopping apps than men. The statistics show that the time spent per month (engagement) among Female app users in May 15 is 119 min in comparison to 103 min among Male app users. The cash-on-delivery option is key driver in small towns and non-metro cities for the adoption of e-commerce apps (Nielsen-Informate Mobile Insights, 2015). Conclusion The year 2015 establishes itself to be a year of apps as opposed to the year 2014, with was truly a year of e-commerce for India. The online consumer behavior changes with the emergence of apps, and India getting digital beyond doubt. People used their Smartphones apps mostly for Gaming, Social Networking, Videos, Navigation, Banking and Shopping in the ascending order rank till Thus, there is a huge scope for growth of shopping or e-commerce apps. With India s Smartphone user base likely to grow at CAGR 26% and 440% growth in retail app Page 7 of 10

8 ANVESH-2016 DOCTORAL RESEARCH CONFERENCE IN MANAGEMENT downloads, shopping apps in India holds an opportunistic dramatic growth in the coming years. Smartphone have indulged people to browse the products, compare prices, check discounts & sales promotions and read products reviews, making consumers more active and true decisions maker in their purchase decisions. The cash-on-delivery option induces people from towns and non-metros to use shopping apps. In this app oriented market scenario, the Markers have three roles; Firstly, to make the app visible and available to the customer even through search ads, Secondly, to encourage customers to download an app so as to increase the sales revenue and Lastly, constantly engaging the customers to the downloaded apps by offering benefits for using the app again, ultimately boosting loyalty towards an app. Page 8 of 10

9 INSTITUTE OF MANAGEMENT, NIRMA UNIVERSITY References App Annie s India s top 10 retail apps: Tapping into the trend of mobile shoppers. (2015). Retrieved from Coursaris, C., & Hassanein, K. (2002). Understanding m-commerce: a consumer-centric model. Quarterly journal of electronic commerce, 3, Retrieved from Huang, G. H., & Korfiatis, N. (2015). Trying before buying: The moderating role of online reviews in trial attitude formation toward mobile applications. International Journal of Electronic Commerce, 19(4), doi: / Hussain (2015). Flipkart, PayTM Most Downloaded Retail Apps In India, Amazon And Snapdeal Follow. Retrieved from InMobi Insights The State of App Downloads and Monetization. (2015). Retrieved from Leontiadis, I., Efstratiou, C., Picone, M., & Mascolo, C. (2012) Don t kill my ads! Balancing privacy in an ad-supported mobile application market. In Proceedings of 13th ACM Sigmobile Workshop on Mobile Computing Systems and Applications. CA, USA Retrieved from Nielsen Informate Mobile Insights Mobile Shoppers Turn App-Happy. (2015) Retrieved from Nielson s The Mobile Consumer A Global Snapshot. (2013). Retrieved from Consumer-Report-2013.pdf Number of apps available in leading app stores. (2014). Retrieved from Phutela, N., Vashisht, A., Wadhwa, B. (2016). Who Leads the Game in Indian Retail: Web or Page 9 of 10

10 ANVESH-2016 DOCTORAL RESEARCH CONFERENCE IN MANAGEMENT Apps? a Case of Flipkart. International Journal of Scientific Research, 5, Retrieved from 98.p df Tiongson J. (2015). Mobile App Marketing Insights: How Consumers Really Find and Use Your Apps. Retrieved from Vserv s Unveiling the Smartphone User Persona Report (SUPR) for India. (2015). Retrieved from india/ Page 10 of 10