The constant evolution of science and technology is perpetuated through numerous inventions designed to make human life easier, more comfortable. Different parts of the world have different ideas of what makes life more ‘comfortable’. As a result, innovation in different parts of the world is driven by regional/local consumer behaviour and patterns. One such example of innovation inspired by the behaviour and need of a regional market is the emergence of super apps in Asia. While the term “Super App” is not new, having been first brought to focus by BlackBerry founder Mike Lazaridis in 2010 and described as “a closed ecosystem of many apps that people would use every day because they offer such a seamless, integrated, contextualized and efficient experience.“, they have gained rapid popularity and success in the Asia-Pacific region in recent years.
What is a ‘Super App’ ? A super app is an app that offers users the opportunity to avail a plethora of services ranging from chatting with other users, ride hailing, ordering food, making purchases, booking trips, paying bills, etc. The application functions as a multifaceted marketplace, with “mini-programmes” that offer services that will be provided by third party service providers. Essentially, the app acts as a single portal to a wide variety of services making it so that the user can use a single app to accomplish a number of tasks.
Asia’s Super Apps
Perhaps the most successful and well-known Super App in the world right now is WeChat by Tencent, the Chinese tech giant. Originally, WeChat was developed as an instant messenger in2010, incorporating some social networking features. But, WeChat greatly evolved over time; By 2013, it had over 200 million active users to whom they promoted new services such as social gaming, mobile payments, and a digital wallet. In 2014, they integrated an e-commerce marketplace where merchants could open branded stores. Next, by 2017 they allowed third-party apps to enter the ecosystem which ultimately resulted in the massive super app that it now is. WeChat currently has over a billion active monthly users and offers more than one million services through its 2.3 million mini programmes (apps developed by third-party companies, accessible through WeChat). On the flip side, not everyone may wish to make use of these super apps and may instead prefer to go for the less conspicuous, secure messaging apps that are not yet in widespread use. Advanced encryption and security features are what may make apps that utilize pgp chat (or similar software) much more desirable that the mass-market apps, although these have their own appeal too, as the data clearly shows.
WeChat’s closest competitor in the domestic market is Ant’s Alipay, the first platform company to thrive as a fintech company. Alipay is the primary payment medium on major e-commerce platforms Taobao and Tmall, both owned by Alibaba. Alipay has had phenomenal growth over the years from 451 million annual users in 2016 to claiming 1.3 billion annual active users as of March 2020. The leading payment app in China, Alipay, now boasts over 663 million monthly active users.
While China is at the forefront of the super app industry, other Asian countries are not that far behind. Korea’s Kakao has followed a similar model as that of WeChat. It initially focused on building a critical mass of messaging users, and then offering users an e-wallet and finally a complete digital bank. Kakao’s messenger, Kakao Talk, has 46 million monthly active users in Korea which is a mind-blowing 88% of the country’s population. Other than these services, Kakao also has Kakao Games, Kakao Page, and Kakao mobility. Overall, the Kakao group’s prospects as a super app are looking better and better. Meanwhile in Southeast Asia, Grab, Singapore based ride-hailing company, and Gojek, Indonesia based motorcycle-hailing platform, are vying for the spot of market leader in a race that has yet to start proving profitable for either of the firms even after having been in operation for nine and eleven years respectively. However, both the firms are seeking to position themselves as super apps, trying to replicate WeChat and Alipay’s success. They’re both investing in digital banking, hoping to cash in on fintech.
Why Super Apps Have Been So Successful In Emerging Markets
The super app phenomenon started and is taking off in the East, particularly in less developed regions, for a reason. In contrast to developed Western markets where the general populace was exposed to computers and dated infrastructure and later became familiar with a wide selection of applications, the emerging markets in the East mostly skipped the offline era and began directly in the digital age through mobile phones. Hence, the Eastern markets have a greater mobile-first affinity. Furthermore, the Asian smartphone market is much wider and cheaper than anywhere else in the world. What this signified is that in the recent past, mobile devices had very limited storage capabilities which prevented users from downloading numerous apps and shaped their behaviour towards being inclined to install apps that have the most variety of services and offerings all centralised in one app – a super app.
Many of the Asian countries share similar cultural habits which translate into similar consumer behaviour. This, in turn, affects the homogeneity of markets which enables different businesses to operate and offer uniform services in different countries in the region. Consequently, when super apps were introduced in the region, the demand for their services swiftly proliferated across the region, contributing to the popularity and subsequent success of super apps.
Another contributing factor is that 73% of the Southeast Asia population does not have their own bank accounts or use banking institutions. For instance, in China there are a lot of places that do not support credit card payments but are able to process online transactions. This gap in the market was addressed by the super apps WeChat and Alipay.
How Are Super Apps Growing So Rapidly?
Super apps use a combination of strategic and market tactics to drive their growth.
On the strategic side, most super apps start by first developing a core business offering (social, payments, e-commerce, ride-hailing, or online delivery are the usual options for a core offering) and expanding from there. For instance, Boku is a payment app that can be used to buy goods and services; however, it can also be employed for betting and casino game transactions (payments and deposits). You can do some research online to learn more about use cases for Boku or similar other payment apps. This helps the business achieve great usage, both in terms of daily and monthly active users as well as the amount of time that aforementioned users log on each day. Subsequently, super apps benefit from impressive user data. This data provides a number of benefits -ability to cross sell, upsell as well as lower acquisition cost of customers. Additionally, super apps are characteristically highly localized and are particularly inclined in forming partnerships outside of their core competencies. WeChat, for instance, expanded beyond its core offering by allowing third-party apps called mini programmes to tap into the ecosystem.
On the market side, locations where smartphone and internet penetration took place almost simultaneously are where super apps tend to thrive, and provide them with the opportunity to direct consumer behaviour. Super apps are well able to fill gaps in the physical infrastructure of a country, for example, lack of physical bank branches or an efficient logistics network. Being highly localized means that super apps are generally well adapted to local conditions and because they address a gap in the market, they usually hold high levels of usage and log on lots of user activity. Lastly, in many markets where super apps operate, there are protectionist laws in place to restrict the level of foreign competition.
A Closer Look At Home
Pathao began as a simple motorcycle-hailing app in Dhaka and has now turned into an app that users frequent for so much more than just bike rides. Users throughout Bangladesh look to the app for bikes, cars, food delivery, grocery delivery, medicine delivery as well as on-demand logistics service. The app has gained phenomenal success and popularity in the market since its inception, so much so that it operates in 5 cities across Bangladesh and has started operations in neighboring country, Nepal. The app has gained over 5 million downloads and has 200,000 registered drivers across Bangladesh and Kathmandu. Its founder, Hussain Elius, envisions the app as the ‘super app’ of Bangladesh and is working towards realizing the vision.
However, Pathao is not the only super app hopeful in the country. Shohoz is also in the race to become the first super app of Bangladesh. In 2014, Shohoz started working with ticketing and after gaining great success, it entered the ride-sharing industry with the introduction of Shohoz Ride. Since then Shohoz has expanded their offering to include more locally needed daily services as well as launched its own food delivery service, ‘Shohoz Food’. According to Shohoz’s founder, it is aiming to introduce the concept of a super app in the market.
Are Super Apps Going To The West?
Dismissing and ridiculing super apps as an Asia phenomenon would not be difficult, but the fact is that super apps are emerging in almost every market around the world, and in unexpected ways. Even the West has started moving in an identical direction, granted at a much slower pace. This slower pace can be attributed to the more pronounced and regulated privacy laws in the West compared to the Asia-Pacific region. Integrating numerous services all in one app can raise eyebrows about the handling, storage and use of personal data as Facebook and Google can already attest to. Nonetheless, companies in almost every industry are aware that a super app in the West can disrupt the whole industry. But, the change in consumer preference is giving rise to the shift towards a form of super apps. Research suggests that consumers are starting to revert towards bundling as they are attracted to the convenience and simplicity that comes with super apps. Case in point, Spotify CEO Daniel Ek recently explained how the popular music streaming platform decided to incorporate its new podcast service into one app instead of building a separate, single offering app. This illustrates, to a degree, how companies are trying to identify a solution which will enable them to transform into the WeChat and Alipay of the West.
Written by Muhammad Fahim Shahriar