Authors: Abhinav Mishra and Abhishek Murarka
Tata has sponsored the IPL this year. Is there a reason for it? I believe there is a reason for it. If you are following the Tata IPL, you would have seen a new hoarding across the stadiums – Tata Neu. Are you not curious to know more about it? It could be a game-changer for Indian digital consumers. So let me talk about it.
Outline
What is Tata Neu?
Tata Neu is a super-app by the Tata group scheduled to launch on 7th April. The app has been used and tested by Tata employees since November 2021. It is a super-app that will bring together all of Tata’s digital services and apps on a single platform.
Which services are available on Tata Neu?
You know Tatas are now presumably in every business domain. Like other business giants, Tatas are also focusing on digital services. Tata Neu has all of Tata’s digital services, and you can do a lot on the app. You can:
- Book flights tickets on AirAsia India or Air India
- Book hotels at Taj Group properties (they are promising 50% discount!)
- Order groceries from the BigBasket within the app
- Get medicines from 1mg
- Purchase apparel from Westside (Trent market size goes up 10x as per CEO)
- Get electronics delivered to your home from Croma
- Pay all bills in one go at Tata Pay
This is exciting stuff and promises to be India’s first real super-app!
What are Neu Coins and how can you benefit?
You may already be using some of these services from one of Tata’s companies or their competitor. Why should you switch to Neu?
When you buy a product from the Tata Neu app, you receive a reward for every spend as Neu coins. These are redeemable on the other services provided through the app. Every Neu coin is worth one rupee. When you order from BigBasket in the Neu app, you receive Neu coins as rewards. You can redeem these coins while ordering medicines on 1mg within the app. The deal looks lucrative!
You receive 200 Neu coins equivalent to Rs 200 on signup to the app.
Why are Indian giants going for super apps?
Coming to the important question – why super-apps?
India’s consumer digital economy is estimated to reach a massive $800 billion by 2030. Online retail will make the bigger pie of it. The online retail market in the country is likely to grow to $350 billion in gross merchandise value (GMV) over the next decade (RedSeer report).
It is not only Tata, other businesses are launching or planning to launch their own super-app. India already has Paytm as a super-app, and Reliance is on the way to officially launching its super-app (it has everything to do it).
Is it the best time for the super-app? If so, why?
Yes, it seems it is the best time to launch a super-app. A super-app can become successful only when the country’s population is a smartphone first instead of a desktop. Between 2014 and 2016, many companies started to go mobile-only but were unsuccessful, as India was not ready for it.
One can say – we are ready now. The majority of us use phones to do transactions and make various purchases. The user behavior has hinted to these companies that now is the best time to enter the super-app world.
Tata Sons plans to invest around $2 billion in the super-app. As per the reports, it plans to sell a minority stake in some listed companies and use the amount in marketing the Neu app. The super-app also provides increased revenue realization due to the consolidation of services in one place. Over time, they will get to learn our user behavior and user data is the gold. The business seems lucrative.
Competition
Yes, Tata is a brand and perhaps the most trusted brand, but it will face tough competition from existing super apps (or so-called super apps).
Paytm has come a long way from being a mobile wallet to a one-stop solution for every online need. Technically, it is not a super-app, but it can easily convert itself into a super-app.
Perhaps the biggest competitor for Tata Neu will be Amazon. It is the baap of all super-apps. It has everything from food ordering to video streaming that a user wants online.
The Chinese duo of Jack Ma and Pony Ma have carved up major chunks of China’s internet businesses. The battle for control of 1.3 billion Indians’ data could become a two-horse race between the two big business houses. I believe the real competition will be between Tatas and Ambanis.
In the last 18 months, Reliance has acquired many new-age companies, and hence they are also in the competition. They have the largest subscriber base through the Jio platform, and retail is looking strong. Hence, when they officially launch a super-app, they will have an edge among all players.
The Tatas are in over 100 different businesses, and if you have seen Shark Tank, you would know one essential aspect of running a business is to have a good supply chain. Tatas have 100 different supply chain networks, and all are well-established. They have some clear winners like Bigbasket and 1mg when it comes to food and medicine ordering. But the real challenge could be to offer a compelling platform and services. A platform that can compete and win over players that seem to have a bigger slice of the pie.
For now, it is tough to predict the competition they will face. It is too early to talk about it. However, it would be an exciting battle to witness.
What’s in there for retail investors?
Tata Group now hosts 24 companies, of which 18 are listed. If you check share price of most businesses over the last 2 years, it is sure to give you FOMO if you are not invested and a wide grin if you are invested.
Many group names are up 3-10x, but let’s stick to direct beneficiaries of Tata Neu
- Trent (Westside): The ecosystem of captive users expands addressable market size for Trent by 10x as per CEO Noel Tata
- Indian Hotels, i.e the Taj Group of hotels have some massive expansion plans and are a good play on the increasing discretionary consumption by a young and aspirational population
- Nelco, one of the very few licensed players in Satellite Communication (VSAT) segment. With Air Asia and Air India in fold, Nelco will power in-flight Wifi for these carriers, apart from many other applications. Tata Neu coins will come in handy here if you are not willing to shell additional bucks.
- Tata Consumer Products: Remember Tata group had removed the wholesale distribution layer for Tata Tea an year back. A super app can bring in digital distribution and improve margins.
There can be more names here – let us know which ones you are excited about?
Till then do try the app.
P.S – We have already signed up.