Originally published on the Infopulse blog.
The platform-based business model is taking a stronger grip on the digital economies. In fact, seven out of ten of the world’s most valuable companies today are platforms. Most recently, this trend has accelerated even further as companies cross-industry have started to shift away from single-purpose to multipurpose apps, resulting in the rise of a brand new breed of product — the Super App.
What is a Super App?
Originally, the term ‘super app’ was coined by BlackBerry founder Mike Lazaridis back in 2010. He defined it as “a closed ecosystem of many apps” that people would use every day because they offer such a seamless, integrated, contextualized and efficient experience.”
In short, a super app is a marketplace of services and offerings, delivered via in-house technology and through 3rd party integrations.
Today, however, super apps have become synonymous with the rising array of Chinese super products, namely WeChat and Alipay.
WeChat launched in 2011 as a messaging app. Nearly a decade later it has morphed into an ecosystem, hosting 1 million “mini-programs” that allow users to do a lot of things — order a taxi, apply for a loan, transact with local businesses, government service providers or even celebrities. The best part is that all of these transactions (including payments) happen within the WeChat ecosystem.
As a result, WeChat managed to achieve a $7 average revenue per user (ARPU) — that’s 7X the ARPU of Whatsapp.
Alipay, part of Alibaba, has an even more tightly knit ecosystem of services. First, it’s the main payment method on popular e-commerce platforms Taobao and Tmall (owned by Alibaba). The company collects social and transactional data from these three services and sends it to Ant Financial, its financial services arm. Ant Financial, in turn, uses it to build a credit-rating system for merchants and consumers and provide personal and business loans. The secured funding will then return to one of Alibaba’s e-commerce platforms as merchants will purchase more inventory.
Furthermore, the benefits of the super app approach extend to:
- Faster and less risky product launches: You already have an audience to market to, as well as a wealth of data that will help you shape the right offering and pitch it to the right people at the right time.
- Lower product ownership and development costs: Most of the ‘mini-apps’ on WeChat were not developed in-house, but created through integration by companies who wanted to conduct business with WeChat’s immense user base. Most ‘super apps’ follow the platform-based approach to scale their products.
- Minimized KYC costs and effective onboarding: Ant Financials managed to reduce their loan application and approval process to 3 minutes (while maintaining very low default rates). Most KYC data is automatically synced from the customer’s all-encompassing social and financial profile. Onboarding new users for new services becomes simpler as well.
Cross-Industry Super App Examples — From the East to the West
WeChat isn’t the only super app taking over the East in one massive swipe. Grab, a ride-hailing company headquartered in Singapore and with heavy market presence across the SEA region acquired the local sub-division of Uber and UberEats. Later the same year, Grab started paving its way towards payments. The company invested in OVO, a popular payment platform in Indonesia. This year, they are negotiating another deal with DANA, an Indonesian FinTech payment platform, and plan to merge it with OVO.
Grab also raised $2 billion from SoftBank and China’s Didi Chuxing to launch GrabPay — a branded mobile wallet app and payment service. As bank penetration rates in the region are as low as 27%, Grab decided to step forward in the arena as a more affordable, inclusive and convenient financial service. Beyond e-hailing and payments, Grab is in the process of adding another suite of offerings to its platform:
- A telehealth platform in partnership with China’s Ping An Good Doctor.
- GrabFresh — a food delivery service, offered in partnership with HappyFresh service.
- Microloans to drivers in partnership with Credit Saison, Japan’s biggest lender and US-based insurer Chubb.
- The online insurance marketplace for entrepreneurs and SMEs is underway, backed by Zhong An, China’s first fully-online insurance company.
Furthermore, Grab will likely continue onboarding even more partners as part of their new, open-platform strategy allowing 3rd parties to effortlessly leverage the company’s APIs.
Line Corporation, a Japanese messaging app boasting 44 million users, also unveiled their major platformization plans during September’s presentation:
- Line Score — a new AI-driven social credit score system (opt-in only) that will assess a user’s social data and pitch relevant deals and offers.
- Line Pocket Money — a separate micro-loan service that will determine rates and credit limits based on the user’s Line Score.
- Line’s Mini App platform will enable companies to provide mini apps within the platform, similarly to WeChat. The platform will allow more businesses to leverage QR codes to let customers receive coupons, scan loyalty cards, review services, etc. Embedding QR-based payments will likely be the next step.
- Line Pockeo — another service that will complement Line Delima food delivery. The new service will let users order take-aways and pick them up from a nearby restaurant. The company also plans to roll-out a business-focused version of Pockeo that will assist restaurants with offering takeout options.
Other ‘superpower’ apps hailing from the East also include:
- Gojek/Get: Indonesian ride-sharing service, the biggest regional competitor to Grab.
- Meituan: Chinese app offering a range of “travel-life” ranging from food, travel essentials, and leisure/lifestyle products.
- Alipay: Alibaba’s payment system offering a multitude of additional services via mini-apps such as retail, bookings, utility bill payments and more.
- Fave: Singapore-based mobile payment and deals platform that recently acquired two local food delivery startups and plans forays into finance through micro-loans.
- Paytm: Indian mobile wallet service that recently added merchant transaction functionality allowing users to book airfare and train tickets; and buy goods from its e-commerce sub-division Paytm Mall.
- PhonePe: Flipkart-owned Indian payment app hosts a number of mini-apps from popular local providers such as Ola (ride-hailing), Oyo (hotel booking) and MakeMyTrip (travel booking service).
- Reliance Jio: an Indian telecom player that has amassed a major user base thanks to affordable data plans to launch a new super app. Packed with over 100 services in one platform, it can become the world’s largest offline-to-online platform, rivaling WeChat.
In the meantime, the West is yet to see the rise of the local super apps. Some experts even say that a WeChat scenario will never be possible in the European markets or Northern America. Indeed, due to the different regulatory environment and market conditions, it’s hard to imagine the exact super app scenarios, which we are seeing now, in the East.
However, it does not mean that local players aren’t pursuing platformization and marketplace routes. Quite the opposite. Take Google Maps for example. While the company’s executives never stated that they want to pursue the ‘super app’ route, over the last several years they have continuously expanded the scope of features:
- Using Google Maps app you can search and book hotels, tours, and tickets to popular attractions and local events.
- Receive navigation and plan your daily commute.
- Hail an Uber.
- Make a restaurant reservation via OpenTable, Resy and other similar services.
- Organize food delivery via DoorDash and others.
- Book a flight (via desktop version).
- Find and contact a variety of services operating nearby and even make direct appointments.
Google Maps does not have a connected payment service like WeChat does, and, perhaps, that’s the reason why it’s not boasting a super app status yet.
Verizon also started the process of consolidating its media powers. Earlier this year, the company announced a new ‘shoppable’ strategy, devised by Guru Gowrappan, a former Alibaba executive who took over as Verizon Media’s CEO 9 months ago. The company has already introduced a new ‘deals’ tab on Yahoo Mail as the first attempt towards enabling ‘inbox commerce’. Further, Gowrappan said that they plan to monetize content and other assets on all of Verizon’s media properties and enable users to effortlessly shop for goods and order services without leaving the website or the app.
Arguably, the most prominent example of super apps in the West is Facebook’s already controversial Calibra digital wallet and the underpinning Libra cryptocurrency. The company’s short-term goal is to launch a new digital cryptocurrency wallet by 2020 and integrate it with other Facebook major products — Messenger, Whatsapp, and Instagram. The newly formed Libra Association, in charge of the project, already has several high-profile bakers on board including Uber, Lyft, eBay, FarFetch, PayPal and several other tech and financial services providers. If the project ends up being successful, Facebook will be the first US tech company to tap into the financial market, capable of further expanding the scope of services from P2P transfers to merchant transactions, loans, credit and commerce — a clear page from the WeChat’s books.
However, despite increased interest from tech players, it is the financial sector that strongly gravitates towards the super app approach. In particular, the newly-emerged digital banks and FinTech players are at full speed ahead into transforming their ecosystem of services into open banking marketplaces.
