Super App: A whole new approach to the Digital Economy

Recent news about Grab going public through a SPAC merger with the largest valuation to date in the SPAC space seems to signal the formidable rise of Super Apps. Originally defined by Blackberry founder Mike Lazaridis as “a closed ecosystem of many apps”, “Super App” became a buzzword after the recent rise of Asian super apps such as WeChat and Alipay. To simply put, a super app is basically an end-to-end digital platform aggregating various digital services. With rising user adoption, we see a developing momentum for the emergence of a whole-new business model in the provision of digital services.

Major Offerings of Super Apps

The immense popularity of Super Apps is underscored by a few major players in Southeast Asia.

Grab launched in 2012 as a ride-hailing app in Singapore. Nearly a decade later, it has developed an ecosystem with forays in payment services, food delivery, healthcare services and digital banking apart from its core business of transportation. Grab’s omni-presence in the Southeast Asia region has allowed it to acquire 144 million of users.

WeChat, a Chinese messaging app virtually ubiquitous for smartphone users in China with 1.2 billion active users, has evolved into a digital marketplace of services, with an ecosystem of over 1 million mini programs, which is half the size of Apple’s App Store. Hosting such a large amount of digital services allows WeChat users to conduct all kinds of transactions, within the WeChat app.

KakaoTalk, part of the South Korean Internet Company, has grown from a messaging app into a Super App with virtually 100% digital penetration rate in South Korea. Capitalizing its huge popularity in the instant messaging sector, Kakao has integrated a set of digital services including digital wallet, digital entertainment, transportation services, to the app.

Key Strengths and Potentials of Super Apps

Expedited Product Launches: Super apps typically enjoy a critical mass of users before its pivot from a single-purpose app to a super platform of multiple mini apps. Thus, already equipped with loyal users, Super App developers can skip the whole cumbersome process of market research, promotion and marketing to acquire users for novel digital services. Moreover, with existing user data, developers can easily shape the right service offering based on known user preferences and behavior.

High Scalability: Another prominent characteristic of Super Apps is its modularity. A super app is actually a cumulation of years of efforts to integrate various kinds of services into one single app on a platform-based solution. As a result, the platform-based approach of super apps allows developers to easily develop and integrate new services in various areas in modules. Such an ability to integrate new services quickly whenever needed in turn enables them to avoid the problem of “sunsetting” — the gradual declining popularity of a particular service — commonly faced by developers of single purpose apps. For instance, a typical Alipay mini game has a time limit of several weeks, but such a short product lifespan does not threaten the survival of a super app given its ability to constantly integrate new mini programs.

Much Lower Development Costs: The business model of running a mobile app as an end-to-end platform of multiple services allows developers to pivot from in-house development to 3rd party integration. For instance, most of the mini programs of WeChat are 3rd party applications connected to the WeChat platform through APIs. It allows developers to focus costly in-house development on the development of core services and shift the costs and risks of developing additional functionalities to 3rd developers.

Success is NOT guaranteed

Despite the ability of Super Apps to leverage 3rd party innovations to become a one-stop-shop of the daily digital life of consumers, there are immense threats to such business models.

Reliance on Core Services: One of the challenges is that Super Apps have heavy reliance on its core services, such as instant messaging for WeChat, and payment services for Alipay, to sustain a critical mass of users for its integrated services. Given that most of the mini-programs on the Super Apps are developed by 3rd parties and provide generic digital services, when the core services of the Super Apps lose their public appeal, Super Apps would no longer be able to sustain a critical mass and prevent users from migrating another super app that can offer the same generic services.

Conclusion

It seems that the trend towards Super apps will continue given its scalability and strong allure to developers. Yet, it is believed that such approach to digital innovation has both clear benefits and threats, with implications to super app developers on the significance of its core services.