The Rise of the ‘Super App’
The emerging market challenge to Silicon Valley
At rush hour the crowdedstreets of Jakarta become a sea of green helmets. If you want to get anywhere, your best bet is Gojek.
Using the Gojek app, you can hail a motorbike taxi from anywhere in the traffic-choked, sprawling city.
But that’s not all. If you want order food – Gojek. If you want to buy concert tickets – Gojek. If you want a cleaner or a masseuse to come to your home – Gojek. If you want to pay electricity bills, courier goods or get medicines, you got it – Gojek.
Gojek is essentially Uber, Ticketmaster, TaskRabbit and more all rolled into one. It is one of the many rising ‘Super Apps’ emerging from around the world. They are fundamentally altering the way consumers engage with services and challenging traditional digital business growth models.
The Rise of Gojek
Founded in 2010, by Nadiem Makarim, Gojek is Southeast Asia’s leading on-demand, multi-service platform and digital payment app. It was first established in Indonesia as a call centre to connect consumers to its 20 motorbike taxis. Five years later it launched three app services: GoRide, GoSend and GoMart.
Today, Gojek provides more than 20 services with a fleet of drivers that now exceeds one million. Its meteoric rise secured its place as Indonesia’s first unicorn business, and it now operates in five countries across Southeast Asia.
As of February this year, Gojek’s estimated value was about US$10 billion and it is ranked #11 on Fortune’s ‘Change the World’ Index.
The Bounty of Emerging Markets
Emerging markets, like Indonesia, are exciting places to work.
They have rapidly growing populations and economic growth rates well above those of developed markets. Crucially, most also have rapidly growing, underserved, urban middle classes that are demanding better access to quality services.
In Indonesia the middle class is expected to reach 135 million by 2030. For comparison’s sake, that is more than entire population of Mexico or Japan today.
So if you want to set up a consumer focused business, Indonesia is one of your best bets.
In fact, Gojek is one of four unicorn businesses to have taken off in Indonesia.
Alongside Gojek, there is Traveloka, which enables users to book flights, train tickets, hotels, movie tickets, and car rentals. Tokopedia is an SME online marketplace that also provides skills development sessions for platform users. Tokopedia has also branched out in to organising music and cultural events to support Indonesia’s creative industries. And finally, Bukalapak is another e-commerce platform. All grew from a single focus to covering a range of consumer services.
These companies all have two things in common.
The first is second mover advantage. As businesses that were formed later than most Silicon Valley tech giants, they have been able to learn from the development of these businesses — and adapt.
The second is local knowledge. This has enabled businesses to adapt to specifics local requirements, including an understanding of local regulations as well as consumer preferences, and scale up rapidly to fill the gaps in consumer demand.
They have not had to spend time honing a specific service, but quickly taken the best features of all services and incorporated them under one platform in a rapidly growing market, which is not easily accessible to silicon valley.
Super Apps Elsewhere
This phenomenon – starting with one service and rapidly expanding – is a familiar model across other emerging markets.
China’s WeChat is simultaneously Twitter, Whatsapp, Instagram, Line, Paypal and Tinder. It is literally the “app for everything” allowing users to message, post ‘moments’, set up a profile profile, make e-payments and calls.
China’s Meituan Dianping is even bigger. It began as platform for small businesses and has grown to include food delivery, restaurant reviews, hotel reservations, home rentals, movie tickets and travel bookings for 400 million users.
In Brazil, ‘super apps’ have become a popular way to save storage space on mobile phones. In Brazil, both food delivery services iFood and Rappi are expanding to other services integrating both merchants and consumers.
And fintech companies are now getting in on the action.
Brazil’s NuBank, which originally focused on banking the unbanked has now extended to insurance, wealth management and lending. Banco Inter is just about to launch its ‘super app’ to offer its customers a ‘one-stop-shop’ for ride hailing and food delivery services.
These super apps are taking advantage of a large mainly urban user bases and of big investments from international VC firms interested in the growth potential of these underserved markets.
The convergence of services is having significant social impacts — both positive and negative.
On one hand, WeChat’s ubiquity is giving rise to China’s infamous social credit rating system and enabling pilots across the country, and Brazil’s Banks attempts to leverage lifestyle trends could be seen as a cynical attempt to boost their loans business, trapping low-income users into unsustained levels of debt.
But on the other, Brazil’s unbanked are rapidly being provided with access to services that are improving and transforming their lives.
We are now seeing silicon valley businesses attempt to branch out into other services. Uber has introduced Uber Eats. Airbnb has moved from providing a platform for accommodation to incorporating experiences. Facebook’s rapid acquisitive expansion has grown to include the development of a digital currency.
But the super apps growth in emerging markets is leaving little space for silicon valley giants. As a result they are likely to miss out on access to these potentially lucrative new markets.
With growth models that are predicated on racking up a large user base across a number of geographies while operating at a loss, this “too big to fail” model may not be able to achieve its potential upside if it is out-competed in emerging markets.