Over the past year, a couple of Indian conglomerates launched their ‘super apps’. Going into the launch, the hype was intense. After the launch, the success of these Indian super apps was modest at best. So what are super apps? And why is it that other than in China, they have not really worked in any large free market economy? This piece from Connie Chan casts light on these questions and in doing so illuminates why most conventional companies struggle to thrive in the digital world.

First, let’s start with the definition. Ms Chen says “In brief, a super app is an application that builds upon its core functionality to mix and mash a bunch of seemingly unrelated services — but ones the user would need or want to do anyway — into one place. Imagine a single app that allows you to shop for groceries, pay your rent, review work documents, refill prescriptions, book a trip, and chat with friends, interest groups, and businesses — that’s a super app. Sounds more like your entire iPhone than one app, right? That’s because it essentially is. True super apps are more akin to an operating system than any Western app, with the bonus ability to share fun selfies with your friends.”

The Chinese internet giants are famously good at super apps: “The poster child for super apps has long been China’s omnibus app WeChat. Launched by Tencent in 2011, WeChat allows its users to text each other, access city services, pay for your utilities, send peer-to-peer payments, stream videos… the list is practically endless. Another popular super app is Go-Jek in Indonesia, which combines a ride-hailing app with additional services like paying utility bills, moving and shipping, pharmacy delivery, all in one spot (its app description is literally “One app for every need”).”

Ms Chen says that a company needs to do three things well if it wants to execute successfully on a super app. Firstly, the super app needs to take existing traffic and then turn it into a virtuous spiral of traffic: “The secret to a super app’s success is its ability to use existing user traffic and distribution (in WeChat’s case, the flywheel started with messaging) to drive lead generation and traffic to its partners. The more you can do on the app — with as little friction as possible — the stronger the flywheel.”

Secondly, super apps are fundamentally a play on users’ trust and on lots of data on these users: “Super apps also aren’t possible without ample user trust. This is because in order to be successful, super apps need to aggregate a great deal of user data, so their parent companies must be incredibly thoughtful about what data they share (or more importantly don’t share) with their partner networks. They must also be sensitive to user control. With WeChat, for example, if you want to prevent a business you’ve engaged with from contacting you again, one swipe is all it takes. However, once this trust with the user is established, it paves the way for payments, one of the most important and foundational components of super apps. Looking to WeChat again, this equates to hundreds of billions of dollars in transaction volume AND users keeping balances on the app, making micro-transactions frictionless and economical.”

Given that historically Indians have trusted banks with their payments and given that the RBI has not allowed Indian conglomerates to build banks, one can immediately see why it will be hard going for an Indian conglomerate to launch a successful super app.

Finally, when a company launches a super app it has to think about the long term profitability of the app as a whole rather than focusing on short term divisional P&L (another notoriously hard challenge for listed Indian conglomerates), Ms Chan says that “First, leadership at the highest levels of a company that wants to build a super app needs to prioritize vertical over just horizontal growth. The reason you need executive buy-in is because switching to a super app model may negatively impact things like ad revenue in the short-term, as you give more screen time to partners than your core service — but it’s key to driving traffic to those partners so the flywheel spins. Second, Western companies may need to dramatically rethink their systems of identity and user control. If I’m going to use one app for everything, I want control over what information about me is shared as a part of 1:1 friend conversations versus interest groups versus brands. Third, teams must ruthlessly focus on building truly mobile-first experiences to take advantage of all the sensors and inputs our smartphones have to offer. This will help remove friction and reduce clutter for the user, especially as they are bouncing around services.” Connie Chan

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