super-app

What Is A Super App And Why It Matters To Understand Mobile-Based Business Models

Super Apps first formed on the digital native mobile-first Chinese market. In short, these apps comprised a whole range of services, spanning from entertainment, messaging, mobile payments, and e-commerce. Indeed, super apps like WeChat became a universe for mobile users to perform anything from messaging to payments. Therefore, the super app is an enhanced version of an app that doesn’t have just a vertical application but a horizontal array of use cases, almost like a swiss-knife for mobile apps.

The Chinese Mobile-First Internet Ecosystem

The Internet ecosystem in China really scaled around the years 2000s, and most of the population started to join in around the 2010s.

This has made the Chinese market extremely well versed for mobile-based applications. Therefore, in a western market, that evolved and scaled primarily through desktop computing, and where the transition to mobile is still going on. China was a native mobile digital player. That made it much easier for the Chinese market to become the hotbed to various mobile-based business models.

In the FourWeekMBA interview, professor Jeffrey Towson, author of The 1-Hour China book highlighted:

Mobile apps take off like crazy and they spend more time online than other consumers in other countries. They contribute more. They post more. They add content more. So it just turns out they are some of the world’s most enthusiastic netizens are Chinese. That wasn’t necessarily predictable but it’s true.

The Chinese digital market then is so different from the Western counterpart, which is hard to imagine. Indeed, as Jeffrey Towson highlighted in the same interview:

One of the things that were different early on was people don’t use email. I mean you send an email to someone in China, you better wait a week because they’re probably not going to check their email. It was all about messaging. So it started out with messaging with QQ (an instant messaging software part of Tencent) and that led to WeChat.

Therefore, instant messaging, like WeChat really started early own as powerful commercial use cases for the consumer Chinese market. From there, as those apps quickly scaled up, more and more features got added. From, mobile payments, to e-commerce, these apps really became a Universe of possibilities for people.

Thus, the name Super App.

Horizontal vs. Vertical Apps

Another key difference to appreciate why in the Western world we didn’t see before Super Apps are also, and again peculiar to the Chinese market. Indeed, where US companies, like Facebook had to move very fast in conquering their vertical markets (in Facebook and its other products like Instangram and WhatsApp these were social media and instant messaging), thus they remained constrained to a fewer, more restricted markets.

Thus, Facebook and Google perhaps took respectively a decade and two to move to other markets. For Chinese companies, as outside competition was reduced by the Government intervention, and massive tech monopolies were incentivised, it was possible to move the expansion of these application horizontally.

Therefore, not just entertainment but also shoppiong and payments.

Indeed, in the US, as the same companies that just a few years ago managed to monopolize their markets only there they started to use the “Super App” strategy. In fact, as a monopolist it was now possible to scale horizontally.

That is why Western tech companies took notice and started to emulate this model, as Towson highlighted:

Facebook is basically copying WeChat right now. They’re consolidating their messengers, which is WhatsApp, Instagram, and Facebook Messenger first, and then they’re going to try and add mobile payment, which is Calibra, and then they’re going to try and add E-commerce. They’re basically trying to copy WeChat, but I doubt it will work.

What’s the next Super App? WhatsApp vs. WeChat case study

As we say, the features of the Chinese digital market (the Internet really scaled to the Chinese population in the 2010s, so the Chinese people were native mobile users) and given the features of the Chinese’s economy (discouraging outside competition and favouring the rise of a few tech monopolies in a shorter span of time) Super Apps really were something that could easily form as a result of this context.

A great example of that is WeChat, part of Taobao, within the tech conglomerate Tencent.

how-does-taobao-make-money
Taobao is a Chinese eCommerce website, and it is among the most visited websites in the world. Within it also comprises its payment arm, Alipay. Taobao is part of the Alibaba Group, founded by Chinese tech entrepreneur Jack Ma. The company makes money via its Tmalls (e-commerce platform), and through Alipay, mostly via its Escrow service fees.
how-does-wechat-make-money
WeChat is a “super app” or an app that can do many things, from messaging to mobile payments and social media. Developed by Tencent, WeChat is among the most popular Super Apps in China. WeChat makes money via value-added services (with services like Moments, Public Accounts, and Gaming), advertising, and payments on the transaction processed through it.
what-does-tencent-own
Tencent is a Chinese multinational conglomerate founded in 1998 by Ma Huateng, Zhang Zhidong, and Xu Chenye. Among its various global subsidiaries are companies in the online services, music, and artificial intelligence industries. But it is perhaps best known for its interest in the video game sector – both as a game developer for the Chinese market and the acquirer of several established gaming companies. Tencent is a vast company with a stake in more than 600 companies. Following is a look at some of the companies and subsidiaries it has a majority stake in.

In the western world, tech companies like Facebook are trying to emulate this strategy. Facebook perhaps is trying to transform WhatsApp into a Super App:

how-does-whatsapp-make-money
Founded in 2009 by Brian Acton, Jan Koum WhatsApp is a messaging app acquired by Facebook in 2014 for $19B. In 2018 WhatsApp rolled out customers’ interaction services. WhatsApp might be transitioning toward a set of features from video chats to social commerce that might transform WhatsApp into a Super App.

Read Next: Alibaba Business Model, What Does Tencent OwnWeChat Business Model, WhatsApp Business Model, Facebook Business model.

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Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"