The flop of super apps in India — Mistakes and Lessons.
In 2022, Tata Group came out with a big announcement. India’s oldest conglomerate launched its super app — Tata Neu to the public. Tata pitched this app as Tata’s competition to Amazon, Flipkart, Swiggy, Zomato, MakeMyTrip, Oyo, Uber, Ola, and every other Indian e-commerce app. “Our aim is to make the lives of Indian consumers simpler and easier. The power of choice, a seamless experience, and loyalty will be at the center of Tata Neu, delivering a powerful One Tata experience,” said N. Chandrasekaran, Chairman of Tata Group, during the launch of Tata Neu.
This suddenly started a gold rush of sorts, and every Indian conglomerate was on a rat race to build their super app to capture a lion's share of the ever-expanding Indian Consumer market. Reliance announced the integration of all their services on the ‘MyJio’ app, and the Adani Group announced they’re working on the ‘Adani One’ super app, Paytm integrated food delivery services and branded its app too as a super app.
But, two years later the super app frenzy is yet to entral the Indian consumer. Amazon, Flipkart, Zomato, Swiggy, and PhonePe still reign supreme, and super apps weren’t able to become the market leaders it was much hyped to be.
So what went wrong where? Let’s analyze.
What are super apps?
Imagine Malls, why were they successful in India? Malls brought in a very unique experience — They housed restaurants, hypermarkets, boutiques, multiplexes, and gaming parlours all under one roof. This concept, ie; the aggregation of services was their USP, and for a decade they have thrived. There are close to 1 million malls in India and they are predicted to grow 17% CAGR.
Super apps are the digital version of malls. The idea of a super app is to have a single app that offers basic services like chat and payments and also has a host of other third-party ‘mini-apps’ for e-commerce, food delivery, healthcare, etc.
In technical words - A super app provides customers with a set of core features plus access to independently created mini-apps. The super app is built as a platform to deliver a mini apps ecosystem that users can choose from to activate for consistent and personalized app experiences.
In layman’s words, a super app is WhatsApp, Google Pay, Uber, Zomato, Amazon, Dunzo, Oyo, and BookMyShow in one single app. It’s an app that aggregates your everyday services and provides you with a seamless UX across all services. The below principles make an app super:
- Multi-service
- Single app for all services
- Consistent transacting experience
- Data sharing across services
The novel idea was birthed in China via WeChat, which combined the instant messaging service with a digital wallet function. The idea became a rage in East and South East Asia, with apps such as WeChat, KakaoTalk, MoMo, and Gojek successfully capturing the markets of China, South Korea, Vietnam, and Indonesia respectively.
WeChat is the best success story among all super apps, boasting more than 1 billion active monthly users and more than a million “mini-apps” on the app. It’s interesting to note WeChat started as a messaging app and kept on integrating diverse services into the app. Now WeChat has close to 120,000 services(mini-apps) inside its ecosystem and has a market penetration rate of 90%, ie; about 90% of Chinese smartphone users use WeChat in one way or another.
Why hasn’t the super app rage picked up in India?
Most of the super apps announced in India haven’t picked up steam. Tata Neu reported a net loss of $165 million as of Q3 2023. The report card was so worrisome that Sauvik Banerjjee, founding member and CTO of Tata Neu, resigned just four months after the app’s launch.
While we can classify Tata Neu's bad performance as an initial hurdle for an app that’s just starting out, the condition of established players is just as bad. Paytm’s and Reliance’s super apps are infamous for quality control. Amazon and Flipkart have integrated quick commerce for groceries, offering same-day delivery. But these intergrations have had little to no impact on their market share.
The Indian consumer is highly value-conscious, shows no brand loyalty, and has diverse needs.
The primary reason for the initial failure of super apps in India is market saturation. There are already established players for each niche service in India, who have burnt their cash to acquire significant market share.
Most of the sectors Tata Neu was hoping to serve already had major duopolies. Uber and Ola have captured ride-sharing. Google Pay and PhonePe have captured UPI payments. Amazon and Flipkart have captured quick commerce.
The challenges ahead
Customer Retention: Companies burn cash to acquire customers by giving them discounts and lock them into their ecosystem by offering subscriptions. Take quick commerce. You might shop from Amazon, just because you have purchased the yearly Prime subscription and now you want the 3% discount every time you shop. The moment your Prime membership ends and you see Flipkart offering a better subscription plan, you won’t think twice to jump ship.
The Indian customer is hard to please, and Tata Neu needs to dig deep into their pocket and offer them an incentive to use their services.
A hook is already in place in the Tata Neu app, by offering customers Neu points whenever they shop in the app, which can be redeemed for money for in-app purchases.
Culture: The success of super apps in East and South East Asian countries can be attributed to the cultural dynamics of the place. China, for example, shares a common language, culture, and values which have fostered a deep sense of unity and homogeneity.
India for example, has 22 official languages, and the culture changes every 100 km. If you don’t believe me, get on a train and see for yourself. Keeping such a diverse set of users glued to one app, engaging them for the longer term, and preventing them from switching to competitors is mission impossible. For a super app to work in India, it must first offer hyper-personalised and hyper-localised user experience and overcome users’ reliance on already existing apps.
The road ahead
India has around 1 billion smartphone users and the number is only expected to grow. A recent Goldman Sachs report predicts that over 100 million Indians will have a yearly salary of $10k. With a sizeable number of Indians having a higher disposable income, the primary aim of super apps is to provide a clean, well-integrated UX and attract consumers onto their platform.
Super apps were already late to the digital India party. However, they are backed by conglomerates with pockets deep enough to survive the cash burn phase and grab a sizeable market share.
While we have a lot of aspirants, we don’t have a winner yet. Let’s see what 2024 has in store for super apps.
