Tata Super App: Can it win the Digital Supremacy battle?

31 May 2021  Read 2271 Views

Just imagine having a supermarket in your pocket... from shopping to booking to chatting - all in one app! Cool, let’s analyze whether Tata is all set to disrupt this concept.

What makes you prefer stuff online? Ya ya, we heard you... price, variety, quality, blah blah blah. But above all, we know you’ll agree, the forte is - convenience. Eh? A case in point is railway tickets. Tell us when was the last time you booked tickets standing in a queue in the station? For most of us, it’d not be in the past few years at least. The perk here is not price, but convenience.

And it seems visionaries are willing to take this convenience bit to yet another level! You may no longer need a Myntra for apparel, Amazon for electronics, JioMart for groceries, PharmEasy for medicines, MakeMyTrip for bookings or even a Google Pay for payments! Some companies have raised the bars and could be offering all of these services in one app - a Super App.

Super App - an umbrella of apps

A super app is an application that integrates a host of services in a single platform. You could book hotel rooms, buy groceries, shop clothes, fetch medicines, hail cabs, get insured, obtain loans, make payments and do everything under the sun in a single digital mall!

Just like you look up to superheroes to solve all your problems, ‘super apps’ could be your new digital ‘superheroes’! As someone puts it - “an app that makes people wonder how they ever lived without it.” You too, right?

And while the likes of Reliance & Amazon are in this race, an unlikely contender is the Tata Group.

Off late, it’s been the talk of the town. So, let’s dive deeper into Tata’s vision of a Super App and analyze whether it can win this digital supremacy battle.

Inside Tata’s Super App Vision

This salt-to-software conglomerate seems desperate to ride the digital revolution. It ain’t something one would generally expect from a 153-years old legacy-bound behemoth like the Tata Group.

But when you have a billion-dollars-market for the taking, why not give it a shot, eh?

Especially with the kind of brand equity and diversified lines of business that the Tata’s have, the premise for a super app fits quite well. You see, no business house touches Indian consumers the way this $ 113 Bn-revenues Tata Group does. From salt and tea to clothes and accessories, from airlines and hotels to satellite television and insurance - there isn’t much that Tata doesn’t offer.

And it’s not like Tata doesn’t have an online presence either. It operates e-commerce platform Tata CLiQ, online grocery store StarQuiks and online electronics platform Croma. Strategic tie-ups with Tesco (and probably with Justdial) would provide many synergies, especially in terms of customer data. Moreover, it’s in talks with the RBI to set up a payment network through its subsidiary Ferbine Pvt. Ltd.

Anyway, integrating everything under one roof would require several acquisitions & platform developments, which naturally demands a significant outlay of funds. This explains why Tata has increased the funding for its digital arm by more than 10x times. Tata Digital is also planning to raise over Rs 5,000 Crore through commercial papers (type of short-term unsecured loans). Besides, rumor has it that retail giant Walmart Inc., which owns e-tailer Flipkart, could be investing in Tata.

And all of these investments could help the group ramp up its war chest for the digital battle.

However, the reason why Tata is making headlines is its frequent acquisitions in recent months. So, let’s make sense of how these deals contribute to its vision.

Tata Group on a buying spree

  • BigBasket

Tata Digital has acquired a 64.3% stake in online grocery store BigBasket for Rs 9,500 Crore. The ~ $3 Bn high footfall online grocery market is a huge opportunity as it’s poised to grow at a massive CAGR of 60% to reach a whopping $18 Bn by 2024! And the market leader BB, serving three lakh orders per day & generating revenues of over $1 Bn (nearly half of the market figures), was just the missing piece in Tata’s digital plans.

  • 1mg

Tata Digital has acquired a 65% stake in e-Pharmacy startup 1mg for Rs 780 Crore. The underpenetrated e-Pharma sector is all set to be a $3.7 Bn industry by 2022! And 1mg could help Tata grab a pie of this competitive market.

  • Cult.fit (deal not yet finalized)

Tata has also set sights on acquiring online health & fitness startup Cult.fit (erstwhile ‘Curefit’), which would help its foray into the $21.3Bn-opportunity health-tech sector.

And it seems its acquisitions are some kind of match made-in-heaven. These deals could help it up the ante against the likes of Reliance and Amazon in this fierce digital war.

But it won’t be a walkover for the Tata’s!

Who could upset Tata’s plans?

Clearly - Reliance. Tata is facing a RIL-sized stumbling block in its super app vision. And how, you ask?

Well, Reliance is, undoubtedly, India’s largest retailer. In whatever business you are, you got to fear this oil-to-telecom conglomerate! From Ajio for apparel to JioSaavn for streaming to Reliance Digital for electronics, It’s clearly in wars with everyone.

The name’s JIO, Jumbo JIO!

Backed by an intense penetration through its telecom vertical, Reliance has rolled out JioMart in over 200 cities. Moreover, its acquisition of Future Group would give it over 2100 supermarkets and 2500 fashion retail stores!

In contrast, Tata has touched only about 60 supermarkets under its Star chain and a little more than 270 fashion retail stores, including chains like Westside & Zara. Launched around the same time, in the electronics space, Reliance Digital has 3x the number of outlets Tata’s Croma has. Besides, Reliance-acquired Netmeds is a stronger player in the ePharma industry than Tata-acquired 1mg.

And because the geographical spread is of the essence for super apps, Tata seems to lose out the battle to Reliance. Also, the $25 Bn kitties that Reliance built through fundings last year and a tie-up with the ubiquitous WhatsApp takes it way ahead of its peers. But that’s not all.

The most important aspect that gives Reliance an edge over Tata is its structure. You see, Reliance is kind of a single entity as a whole. This allows the sharing of data and interoperability.

On the contrary, Tata is basically a coming-together of many independent companies, with some hailing from foreign countries (Starbucks, Tata AIA, Tata AIG, etc.). The problem with this fragmentation is that it limits sharing of customer data, which is crucial to developing an all-encompassing platform. Tata companies would not readily share customer data either due to competition within them or, as a Tata IQ executive notes - “because it could be a breach of trust.” So, now you know.

Tata’s are a bit late in the market, as the chairman of retail consultancy Technopak rightly depicts, “They woke up after years and decided, let’s talk about something exciting.” What say?

The bottom line - 'WeChatization’ of sorts in India?

Indian visionaries are trying to create India’s own version of China’s WeChat. But replicating WeChat in India is next to impossible! Because WeChat is not any other app in China, it’s ‘the’ national app of the country! Whether people want to chat or hail cabs or do anything for that matter, WeChat comes in handy. When it started emerging as a super-app, it already had an existing audience and a robust use case, which of course, was chatting.

While the Chinese use WeChat daily to talk to friends and family, why does a user need to return to the Jio or Tata app each day? When you have specialized businesses with good brand propositions like Ola & Uber for ride-hailing, Zomato & Swiggy for food delivery, Myntra & Ajio for apparel, Google Pay for payments, etc, why would you switch to a (sub-standard) super app? Meaning, the Indian retail giants are gonna have a tough time attracting and retaining users!

The only way out of this fix is - customer loyalty programs. Whether by means of tokens, freebies or deep discounts, you got to make your all-in-one app compelling enough for a customer, so much so that he reconsiders his go-to markets!

The likes of Paytm and Hike have already tried their hand at integrating and failed! Flipkart Plus’ Loyalty program hasn’t worked much either. It’s high time Indian visionaries realize, as someone succinctly directs - The first rule of building a super app is to not set out building a super app.”

You need to break ground before sowing seeds. Eh?

About the Author: Abhishek Sahoo | 32 Post(s)

Abhishek has a love for numbers and words alike. With a passion for finance and interest in writing, he’s blending both as a Finance Content Writer at Finology. He writes to simplify the toughest of the technical stuff for readers and tries to make the reading exercise interesting. He is a CA Final candidate and aims to pursue a management degree from a top-notch b-school.

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