MUMBAI: MUMBAI: According to people familiar with the situation, Tata Group's ambitious super app is expected to only reach half of its sales target in its first year, necessitating a review of its digital strategy.
People who requested anonymity because the information is not public stated that Tata Digital Pvt's online platform, Tata Neu, which went live in April, will see sales of approximately $4 billion in the year to March 31 compared to the $8 billion goal set at the beginning of 2022. They stated that the company, led by Chief Executive Officer Pratik Pal, is revising its strategy in order to scale the business profitably.
The subpar performance of a project that was touted by Tata Group Chairman Natarajan Chandrasekaran as the $128 billion conglomerate's future exemplifies the difficult task of competing with established e-commerce rivals like Amazon.com Inc. and Walmart Inc.'s Flipkart. Tata Neu, India's first super app, was expected to launch by at least the middle of 2020. It was designed to be similar to China's ubiquitous Alipay and WeChat, but it soon ran into technical issues and customer complaints.
An email seeking clarification did not receive a response from a Tata Group spokesperson.
One of the people stated that the coffee-to-cars conglomerate has invested more than $2 billion over the past three years. In order to expand its e-commerce portfolio, it acquired companies like e-grocer Bigbasket and e-pharmacy 1mg. The individual stated that Tata Digital's online sales at Bigbasket and Croma, a Tata Group-owned retailer of electronic goods, are expanding at a slower rate than anticipated.
Another person said that the group's performance was because it couldn't get money from investors to pay for its plans. According to those who are familiar with the plans, the organization will also reevaluate Tata Neu's performance goals that were established at the beginning of the year.
Before conglomerates led by Gautam Adani and Mukesh Ambani, Asia's richest men, launch similar ventures, the Tata Group is under pressure to get its super app off the ground. In an interview in August, Adani told the Financial Times that he wants his super app, which will be released sometime this year, to be "the Ferrari of the digital world."
In 2020, Bloomberg reported that Tata Sons Pvt, the main holding company of the group, looked into getting financial or strategic investors, like global technology companies, to back the super app. However, some of the individuals stated that the valuation that was sought for a business that was still in its infancy offended potential investors.
One of the people stated that the group's new strategy is to consider selling stakes in individual businesses that are a part of this unit to fund their growth rather than waiting for investors in Tata Digital. After receiving $200 million in funding, Bigbasket's Chief Financial Officer, Vipul Parekh, told Bloomberg in December that the company may offer shares to the general public within three years.