Tata Group's Tata Neu, the flagship super app launched by Tata Digital in early April, offers to unlock a value upwards of $15 billion. It, however, needs sustained investments from the group to succeed, said a recent JM Financial report. What favours the super app is a product coverage that spans 95 percent of market space, with a strong presence in grocery, electronics and fashion.

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The Tata Neu app offers access to the conglomerate's major brands like BigBasket, 1mg, Tata CLiQ, Croma, IHCL hotels, UPI payment and more. While it’s a digital gateway for consumers to discover multiple products and services offered by the Tatas, many of its consumer brands, such as Vistara, Air India, Tanishq, Titan, among others, will be onboarded soon.

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“Tata Neu is not merely a digital front of a hypothetical Tata mall hosting multiple brands at one place, but it is an ecosystem bringing the conglomerate's data-driven omnichannel experience to consumers across multiple channels,” said the brokerage report.

The core purpose of such a super app for any digital enterprise is to increase utilisation of its underlying assets, such as software, customer data, a delivery fleet or fulfilment centres. Compared to WeChat, with a 1,200-million user base, Tata Neu has just 120 million users. And that brings two key challenges for Tata Neu to bring in customers to its platform.

First, the categories on Neu are neither adjacent nor all-encompassing. It, therefore, will not be an automatic choice for customers looking for a one-stop-shop. Second, inventory in categories such as hotels, flights, and food is limited to Tata's own brands and will, therefore, limits the customer's choice and price discovery.

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"We believe Tata identifies these challenges and does not expect most users to shift to Tata Neu immediately. While Tata Neu does offer NeuPass as an incentive for customers to transact on its platform, the underlying construct is not to change a customer's preferred shopping destination," the report said.

Will Tata Neu spur consolidation in the e-commerce sector? The report said Tata's leadership in the fast-growing e-grocery segment via the Big Basket acquisition and strong omnichannel presence in two of the largest e-commerce categories — lifestyle (Westside) and consumer electronics (Croma) — position it well to take market share away from the incumbents.

It is primarily pitted against its main rivals — Flipkart, along with Myntra and Amazon in the e-commerce space, and Reliance Retail in the omnichannel retail segment.

"Entry of another large player into India's already crowded e-commerce space could spur further consolidation in the market. Smaller 'me-too' players are likely to lose out. Further, we see these large players continuing their hunt for specialised e-commerce players to fill their portfolio gaps in order to maintain leadership," the report added.

(Edited by : Shoma Bhattacharjee)