Super Apps Part 1: Expanding Horizons
Redefining Super Apps: An Exploration of Their Evolution and Potential from Diverse Industries
Introduction:
In recent years, super apps have dramatically transformed our interaction with mobile applications. While we often associate super apps with messaging and social media platforms like WeChat and Kakao Talk, this report ventures beyond this conventional perception. We explore the possibility of super apps originating from varied sectors, showcasing their defining attributes and providing examples from diverse industries, coupled with an analysis of overarching trends. Our goal: to demonstrate that super apps can emerge from anywhere.
I. Attributes of a Pre-Super App:
Understanding how an ordinary app becomes a super app requires us to identify key attributes that drive their success. These attributes include a strong retention mechanism, effective use of data assets to enhance the user experience, savvy traffic sharing and distribution, and a driven approach to expand revenue streams.
Retention
A compelling retention mechanism forms the cornerstone of any pre-super app. Consider WeChat and Kakao Talk. These apps, originating as simple messaging platforms, have seamlessly integrated into users' daily mobile routines. The introduction of voice and video calling features further amplified user retention, marking a natural evolution for a communication app starting with text-based messaging. The great leap forward occurred when WeChat Stores was released.
Hidden Data Assets
Understanding the significance of WeChat Stores requires insight into its strategic social campaign that onboarded hundreds of thousands of businesses and the introduction of WeChat Pay. Trust built over time between brands and users, coupled with increased usage of WeChat Pay, generated a wealth of transaction data. This data, an often-overlooked asset, empowered WeChat to better serve its users and businesses, exemplifying the second attribute of a pre-super app.
Sharing Distribution & Traffic
The third attribute – sharing distribution and traffic – plays a crucial role in the growth of pre-super apps. As WeChat amassed this large volume of activity, they learned to direct this traffic to grow other areas within their app such as gaming, transportation, advertisement, and of course commerce.
WeChat's "mini-programs" feature enables users to access a wide range of services within the app, allowing for a seamless and personalized experience. Imagine you’re playing a game, an add pops up for some fried chicken, you place an order and paid, then you resume your game all without leaving the app. On the backend, the game developer earned some ad revenue; the restaurant earned some profit, the delivery driver got paid, and WeChat is the source for all of that activity. This integration of services contributes to WeChat's ability to provide better user experiences and retain its vast user base.
Revenue Expansion
Lastly, the pursuit of diverse revenue streams forms an integral part of a pre-super app's growth strategy. The absence of initial monetization options compelled WeChat to seek alternative revenue sources, leading to an expansive product portfolio. This drive to generate revenue underscores the significance of a platform's continuous product development and value capture. This point may seem obvious but it’s an important one. For without this drive to generate revenue, WeChat may not have had as much focus on shipping products.
These four attributes aren't exclusive to messaging and social media applications. Not all apps aspiring to be super apps will need all four, as we'll discuss next.
II. Showcasing Super Apps from Non-Social Origins:
Gojek & Grab
Transportation services, specifically Gojek and Grab, emerged from the transportation sector, demonstrating the ability to morph into Super Apps. Both Gojek and Grab began as ride-hailing services but expanded to include food delivery, e-commerce, and even financial services.
Gojek, with a reported 170 million users in Southeast Asia as of 2022, and Grab, boasting about 187 million downloads, illustrate their scale. Though these may not be traditional measures of retention but since these transportation apps are on an as-needed basis, the sheer number of downloads and users is a good proxy for user retention. The convenience of multiple services in a single app contributes significantly to this retention.
By using the hidden data assets from their user interactions across different services, these platforms offer personalized experiences. For example, based on ride history, Gojek can suggest popular dining locations to its users. Another example would be Grab offering insurance to drivers and delivery personnels on a per-trip basis.
Both Grab and Gojek funnel their network of drivers to perform a myriad of services such as food and package delivery to enrolling in their Grab Map initiative, where drivers are paid to collect street data to improve Grab’s internal mapping system.
Other Industries (Commerce & Finance)
But super apps aren't confined to transportation. Commerce platforms JD and Meituan similarly exemplify the super app model. JD began as an online retailer but now spans logistics, finance, cloud services, and more. Meituan, starting as a group-buying/coupon website, has grown into a one-stop platform for services including food delivery, hotel booking, movie tickets, and bike-sharing.
In the finance sector, Alipay and PayTM have also emerged as super apps. Offering services ranging from digital payments to investment and lending services, these platforms have established themselves as comprehensive solutions for their users' financial needs.
Each of these examples, originating from transportation, commerce, and finance sectors, underline the point that super apps can come from various industry domains.
III. Macro Trends to Achieve Super App Status:
Super apps are more than a fleeting trend – they reflect significant macro trends across industries and regions. There are reasons why super apps rose in the east and struggles to find footing in the west. I believe these macro trends are the reasons. Regional preferences, internet penetration rates, mobile phone usage, user behaviors, and market competition all influence a super app's potential for success.
Understanding regional and demographic preferences is vital to unlocking the potential of super apps. Market research and surveys offer insights into these preferences for all-in-one mobile applications. For instance, in 2020, an impressive 98.5% of internet users in China used a Super App, demonstrating the massive appetite for such integrated platforms in specific markets.
The growth rate of internet penetration, especially in emerging markets, serves as a linchpin for the adoption and evolution of super apps. Internet penetration globally rose from 16% in 2005 to 59% in 2021. This trend, paired with the increase in mobile penetration and usage rates, expands the potential user base for super apps, creating a fertile ground for their development and growth. Mobile reliance is on the rise, with smartphone penetration in India expected to reach 38% by 2025, hinting at the higher potential for super app adoption in mobile-centric markets.
The mobile versus PC usage imbalance underscores the importance of super apps. Mobile internet usage began surpassing desktop usage globally in 2016, and the ongoing dominance of mobile devices in terms of user engagement, time spent, and transaction volume all underline the value of comprehensive platforms like super apps that consolidate multiple services within one ecosystem.
Another key factor contributing to the emergence and success of super apps is the net decrease in new-app downloads, combined with users spending an increasing amount of time on existing apps. This trend signifies a move towards consolidation, where users prefer comprehensive platforms that offer a multitude of services, thereby reducing the need to switch between multiple specialized apps.
Furthermore, the lack of stringent regulations, the absence of traditional banking services, and high competition in certain markets can provide an advantageous environment for super apps to flourish. These circumstances allow for the innovation and introduction of all-in-one platforms that can more effectively cater to users' needs and deliver a seamless, integrated user experience.
These trends showcase that super apps, with their versatility and comprehensiveness, are not only meeting the evolving needs of users but are also aligning well with global macro trends, making them a formidable force in the app industry.
Conclusion:
In conclusion, the conventional notion that super apps must originate from messaging or social media applications is no longer valid. By examining the attributes of pre-super apps, showcasing examples from various industries, and analyzing macro trends, this report has demonstrated that super apps can emerge from any sector. As technology continues to evolve, super apps may even emerge from unexpected industries like gaming, opening new avenues for comprehensive experiences – perhaps maybe even expanding beyond mobile.
