While BigBasket is expected to close the financial year with $1.5 billion of gross merchandise value, GMV for 1mg would be $300-350 million, according to the people cited above. However, electronics retail brand Croma, which had a very small digital presence earlier, has gained from the launch of Neu, with a significant amount of its online sales coming from its integration on the superapp, sources added.
“About 80% of transactions on Tata Neu were driven by grocery and epharmacy,” said one person close to the development.
This was “to get the user to spend time on the app. It was part of the first-year objective,” said the person cited earlier.
Tata Neu was launched on April 7, 2022, with an aggressive marketing campaign centred around the IPL. Another high-decibel round is expected as this year’s tournament starts on Friday.
A person aware of the matter said the Tata group recognises that “the superapp hasn’t taken off as per the initial plan.” Pointing out that “the overall adoption has been low for Neu so far, resulting in lower number of new or existing users transacting for various Tata products and services,” the person said “existing users of BigBasket and 1mg have tried using Neu… many have resorted to transacting directly through the independent app.”
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The Tata group’s ecommerce team has gone back to the drawing board to revamp the Neu landing page and is considering changes to the superapp’s consumer-facing interface, according to people privy to the developments.Tata Digital did not respond to queries as of press time on Wednesday.
“They (Tata Digital) are working on which Tata products to show on the landing page of Neu. This year, it will also rely heavily on customising based on data from its operations of the last one year,” another person aware of the matter said.
Coins and new integrations
Neu Coins, an aspect of loyalty for Neu users, have gained acceptance as users can encash these coins for future purchases on the app. Neu Coins are credited as a percentage of the total transaction size.
Walmart-owned Flipkart has Supercoins, which work in a similar manner.
Tata Digital feels Neu Coins are a well-understood product, and plans to go aggressive with them during this IPL.
It also has a loyalty programme, Neu Pass, that offers benefits to shoppers across Tata products, including Indian Hotels Company’s properties. There may be changes to Neu Pass too, but these won’t play out in the upcoming IPL season. Neu Pass has over 50 million users.
Tata Digital also has about 200,000 Neu Cards in circulation, in partnership with HDFC Bank. “They (Neu) have gotten a lot of feedback since last year,” said one of the people cited above. “In the upcoming IPL, a lot more changes and experiences will be based on this feedback. Loyalty (features) and Neu Cards will be pushed.”
While brands such as Titan and Tanishq have recently been added to the superapp, Air India and Tata Motors are expected to be integrated later this year. However, it may take longer to begin adding non-Tata brands to the app.
Tata Sons executive chairman N Chandrasekaran last year said the group will be looking to bring external brands on board as well. Chandrasekaran also joined the board of Tata Digital last year.
Leadership rejig
Meanwhile, Tata Digital president Mukesh Bansal has now formally left the organisation, according to people aware of the development.
ET was the first to report in January that Bansal, who founded Myntra and later cult.fit, had “stepped away” from day-to-day operations at Tata Digital. Bansal had joined in June 2021 and the Tatas invested $75 million in cult.fit as well.
Tata Digital chief executive Pratik Pal, who was working with Bansal, has been leading operations and key decision-making at the firm. Sources added that the Tata Digital leadership team has stabilised now, after at least two senior executives left last year, followed by Bansal’s exit.
Bansal was involved in some executive recruitment from ecommerce firms such as Flipkart Group, Udaan, Blinkit (earlier Grofers) and others.
Tatas vs Flipkart, Amazon
Tata Neu, at the time of its launch, was being seen as a significant challenger to ecommerce majors Flipkart, Amazon India, Reliance Industries’ JioMart and others. The Tata group has invested over $2 billion in the last two fiscal years and brought all key new commerce businesses under the Neu umbrella.
“From outside, it may seem very simple to stitch it (together) and make it seamless, but it takes more than that. Also, the Neu team has been cautious on its burn to acquire GMV. They don’t want to build a business like that, which has cost them a fast rate of growth,” another person close to the group said.
In December last year, the Tata group put in $200 million in BigBasket, valuing it at $3.2 billion. 1mg raised a $40-million round, after which it turned unicorn. Tata Digital has been investing in other key units, including Croma and Cliq.
Analysts are of the view that the Tatas have faced the same problem as other conglomerates. In the backend, they have a lot of capabilities and offline reach, but the front face application has not given a clear proposition to users. “Flipkart and Amazon are also selling a wide range of categories, but customers aren’t comfortable with about 20 brands in one app,” said Satish Meena, a senior ecommerce analyst.
Industry sources said Neu, on its own, is yet to make a dent into the market share of existing players. Individual merchants ET spoke to also said the Mumbai-based firm had gone quiet last year in new seller onboarding.
However, one of the sources quoted above said, “These things have stabilised now. Fashion will be a big part of Neu, with Cliq integrated properly now.”