The rise of super apps: a win-win or winner takes all phenomenon?

A new type of app called "super apps" are gaining popularity. They combine the functionality of several different apps into one convenient package. Originated in Asia, these apps are finally coming to the west. Here's what businesses should know about this new mobile trend in 2022.

The marketplace for apps has become more crowded than ever, with new mobile applications being created every day, vying for attention on the App Store or Google Play. Now there’s a new type of app that aims to make life easier by combining the functionality of several different apps into one convenient package, and they are called super apps. These types of apps are gaining popularity among consumers as they eliminate the need to download and maintain numerous different programs, while still providing all the functionality one may need in one central location.

In China and Southeast Asia, super apps have been around for a while. Apps such as WeChat or Grab have a huge market share (and are used for almost every service you can think of), but in other regions, similar services have yet to truly thrive. Will this trend, originated from Asia, finally come to the West in 2022?

What is a super app?

Imagine one application containing not only all the functions of Facebook, but also Uber, DoorDash, Venmo, AirBnB, Lime, Slack, Robinhood and many more: enter WeChat, a super app that has garnered more than 1.2 billion users since its launch in 2011, and its user engagement is extremely high. 35% of its users spend more than 4 hours on WeChat every day, compared to Gen Z users spending 53 minutes per day on Instagram.

This success model of super apps has quickly been replicated in other Southeast Asian countries. For example, users can purchase medical insurance, buy movie tickets, or subscribe to video streaming services on Grab from Singapore. Indonesia’s Gojek users can enjoy ride-sharing, food delivery, gaming services and even booking massage appointments.

Super apps are becoming super platforms

The newcomers such as Gojek and Grab are expanding their functions into the realm of super apps by having the underlying payment function in place first, and then connecting their core payment service with other related functions such as ride-sharing and food delivery.

The “OGs” of the super apps such as WeChat and Alipay are thus taking one step further to fend off competition: they are becoming platforms or app stores, by allowing third-party developers to build applications and publish them on the main platform. By the first half of 2021, there had already been more than 4.3 million “small apps” on WeChat, and 3 million “small apps” on Alipay. In a sense, super apps are the new app stores, as Alipay and WeChat Pay together already hold 95% of mobile payment market.  In the West, where Apple and Google are reluctant to allow “app stores within apps” or third-party payment into the app stores, the “app store within apps” strategy is arguably more difficult to pull off… for now.  

Beijing is starting to scrutinize Tencent’s (behind WeChat) and Alibaba’s (behind Alipay) duopoly so they are both forced to open up their walled gardens. In the West, this will likely take years, as the Epic Games vs. Apple saga continues and Apple drags its feet to delay allowing 3rd-party payment in iOS by appealing to the ruling of opening up - meaning Apple can remain in status quo until the appeal is settled.

The app retention problem

There is already an endless supply of mobile apps on Apple’s App Store or Google Play Store waiting to be discovered and downloaded. While the average person may have 80 apps on their phone, the reality is most people only stick with 9 mobile apps per day and 30 apps per month. Moreover, according to Localytics, 71% app users churn within the first 90 days.

Furthermore, the top 10 apps in any category on app stores see the lion’s share of the total number of downloads and active monthly users, every single year. From 2016 to 2020, the top 10 chart has been occupied by familiar names, and the list doesn’t change much.

How to create a super app

The phenomenon of super apps seems to be subverting the previously agreed-upon business rule: the target audience for your product or service should not be “everyone”, when in fact, super apps are doing exactly that - offering all kinds of services pertaining to all aspects of everyone’s daily life.

That’s because the super app creators have the money and resources to do so - and only they can do so.

At their core, mobile applications are pieces of software already complex in nature to build, test, release and update. Now, due to super apps' unusual use case, which is essentially “one mobile app catering to every human need”,  super apps have presented developers with a unique set of challenges, including satisfying user requirements and security concerns, managing the testing and releasing processes, and planning for the appropriate infrastructure, building and scaling the engineering team…, to name a few.

Building a super app ecosystem where every element plays well is not easy; merging complex codebases to create a super app requires some fairly intense forethought. You’ll need to ensure that all apps included in your super app are on relatively similar life cycles. You must pay attention to what sort of data lives where. Merging differing backends and systems incorrectly, coupled with inefficient testing and releasing processes, can cause issues down the line that will show up as app crashes on mobile devices or damaging user ratings on app stores… all these are just a tiny portion of concerns listed in the 33 engineering challenges of building mobile apps at scale.

A slice of super app pie. (Credit: Dilyara Garifullina; Unsplash)

U.S. companies hungry for a slice of the pie

Will super apps come to the US market? The short answer is: yes, but.

Yes, with Washington and the European Parliament pressuring Big Tech for allowing more competition in the digital markets, things are looking brighter for Western super apps to form, but it will take years for things to actually change under new regulations.

There is no doubt that companies in the U.S. also want a slice of the sweet, sweet super app pie. For example, Meta/Facebook makes no secret about it by launching the Metaverse, which is essentially their version of app store that could be worth trillions of dollars, according to Grayscale. This is how Meta plans to level up in the competition with Apple and Google, since the latter two created the original “App Store” and “Google Play Store”, which meant the rest must play by the rules they created.

We can also see social apps attempting to combine themselves with e-commerce capabilities, and integrating payment into social platforms that already have high user retention and stickiness. Instagram has doubled down investment in the in-app shopping feature, incorporating commerce and stores into brand and influencer posts so users can buy directly and spend money without leaving the app they already know and love. Users can even share their purchases with friends and family, creating a network effect.

According to Scott Galloway (“Prof G”), nailing “payment processing” would be key to success, which is why we’re seeing the financial movers and shakers from both Silicon Valley and Wall Street are keen to expand into new markets via M&A and mergers, e.g. Square purchasing Tidal, and JPMorgen’s deal with Zagat.

In any case, the applications in the West still have a long way to go in order to keep up with their Asian counterparts in terms of the amount of features they offer in super apps, and only time will tell whether Meta can succeed in building up a “third” app store which is based on the VR technology, or if Apple’s rumored strategy of also going after the augmented reality (AR) sector will be more viable, or if there will be new rulings forcing Google and Apple to allow third-party payment into their apps stores.

All these possible changes benefit the tech giants and large corporations first and foremost, though.

Conclusion

Super apps present significant economic incentives and profit potentials for the app makers; they also promise great user experience and convenience. While it may seem like a win-win for both the businesses and users at the first glance, the scale of engineering challenges of building such apps and ecosystems mostly live behind the curtains and therefore, hidden from public view. From what we can tell, few companies in the world have such resources to build up super app ecosystems. It’s shaping up to be a trend where winners take all, making it extremely difficult for companies without compatible resources with FAANG and BAT to compete.

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