Tata's "super-app": From conglomerate to consumer platform?

Just a few weeks ago, some credible news emerged that total revenues of Tata Neu in the first year might miss the target by 50% ($4 billion on expected $8 billion), together with some rumors about a strategy overhaul. It is definitely still much too early to call Tata Neu a failure but I think this initial miss illustrates the challenges of Tata’s super-app strategy.

Two things (at least) seem to be critical in building a successful consumer app. First, one needs to have a range of products with strong complementarities. It makes sense to get credit from Amazon as a natural secondary need that arises from buying an item in their marketplace (primary need). Similarly, it makes sense to get health insurance from Ping An if one is already consulting with one of their doctors in the Good Doctor platform. Is it just as natural to need an airline ticket after buying clothes on Tata Cliq? Or go do groceries after buying medicines?

The reason that the complementarities seem so much weaker in the Tata app is largely because the way it has been built, as compared with an Amazon or a Ping An. Whereas those companies built their platforms step-wise by progressively adding related products to their previous offerings, Tata’s approach has largely been to “download” a big chunk of their business portfolio into the app, hoping that the strength of each one of the individual brands is enough to bring and engage the users.

The second critical thing in a consumer app is the ability to leverage consumer data across the brands. Ping An’s knowledge of medical records inform the healthcare policies that are offered to each customer. Amazon transaction history data allows the company to create and tailor good credit products for its merchants. Tata is trying to create that data capability but the nature of the brands in their app (all independent companies, each with its own legacy data architectures and all protective of their data) makes that a very tough task. The frequent glitches experienced by users in Tata Neu’s first year of operations, while expected, are illustrative of that challenge. Perhaps that capability will be built with time but perhaps it won’t.

Despite these challenges, launching a super-app with Tata consumer brands might still be a very good idea. Corporates like Tata are facing increasing pressure to abandon their conglomerate strategies (which favor having businesses that are individually attractive but have little in common with the rest of the company) and instead seek a more focused synergy-filled portfolio. While companies in Europe and U.S. have been suffering some form of “diversification discount” the moment they strayed too far from a related core, companies in the East have largely avoided that discount on the basis of their ability to solve market inefficiencies like access to capital or consumer trust. But that is changing and thus the need to become a more compact and connected company. A “one-stop shop” that includes many of the companies already in the portfolio is an elegant shortcut to building those synergies.

As Tata keeps developing its super-app, a couple of points might be worth of consideration.

First, one can never forget that platform models are still very much about solving specific user problems. Having a lot of (unrelated) products available in a platform is definitely not enough. In a frictionless digital world where everything is one click away, the “convenience for the user” aspect of a digital one-stop shop can be wildly overestimated. So the question is not how much does the app contain but rather what is the specific need (wellness, financial services, everyday consumption, etc) that the Tata super-app is supposed to do better than anyone else?

And in that sense, I believe that Tata should focus first on a part of that consumer ecosystem -say, for instance, the health and wellness category- instead of playing across the entire range of consumer brands. Delight your users in that vertical, make them engaged and loyal and then build further with other categories.

Second, Tata should leverage its physical assets for a strong omnichannel presence of the platform. To reach consumers that are not digital natives, a digital platform has to move some touchpoints offline. And one potential advantage that corporate groups have over the purely digital players is the ability to use networks of sales agents, stores, etc. that they already have. For example, as much as Ping An has turned its insurance business into a leading digital platform, it still keeps close to 800,000 agents spread all over China. The connection online-offline for Tata Neu might be a key driver of success moving forward.

Whatever Tata Neu turns up to be, it is worth keeping an eye on, as it will certainly offer many early lessons on whether and how a giant consumer conglomerate can build a winning platform.