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.

DefinitionA Super App is a multifunctional mobile application that integrates a wide range of services, features, and functionalities within a single platform, offering users a seamless and comprehensive digital experience. Unlike traditional mobile apps that serve specific purposes (e.g., messaging, shopping, or navigation), Super Apps provide a one-stop solution for various daily needs, such as communication, e-commerce, payments, transportation, and more. These apps aim to become an essential part of users’ lives, simplifying tasks and enhancing convenience through a unified interface. Super Apps have gained prominence in the mobile app ecosystem, particularly in regions like Asia.
Key ConceptsMulti-Functionality: Super Apps combine multiple functions and services, spanning various domains, into a single application. – Ecosystem Integration: They often create an ecosystem by collaborating with third-party services, allowing users to access a wide array of offerings seamlessly. – User-Centric: Super Apps prioritize user convenience and aim to meet users’ diverse needs efficiently. – Mobile-Centric: They are primarily designed for mobile devices, considering the on-the-go nature of users’ lives. – Innovation and Evolution: Super Apps continually innovate and expand their services to stay competitive and relevant. – Examples: Prominent examples include WeChat, Alipay, Grab, and Gojek.
CharacteristicsVersatility: Super Apps offer a wide spectrum of services, including messaging, social networking, shopping, food delivery, transportation booking, financial services, and more. – Seamless Experience: Users can access various services without switching between multiple apps, enhancing user experience and saving time. – Third-Party Integration: They collaborate with third-party providers to offer an extensive range of services, creating a holistic ecosystem. – Payment Solutions: Super Apps often include integrated payment solutions, enabling users to make in-app transactions conveniently. – Localization: They may tailor their services to suit local preferences and needs, making them relevant in diverse markets.
ImplicationsMarket Dominance: Super Apps can achieve dominance in their respective markets by offering comprehensive solutions that competitors find challenging to match. – User Lock-In: Users may become highly reliant on Super Apps, making it difficult for them to switch to alternatives due to the convenience and breadth of services provided. – Monetization: Super Apps can generate revenue through advertising, transaction fees, subscription models, and more. – Ecosystem Growth: Their expansion often involves partnerships and collaborations, contributing to the growth of a digital ecosystem.
AdvantagesConvenience: Users benefit from a single platform for various needs, simplifying their digital interactions. – Efficiency: Super Apps streamline tasks and reduce the need for multiple apps, enhancing efficiency. – Cost Savings: Users may save money on transactions and services through bundled offerings and discounts. – Innovation: Super Apps drive innovation by constantly adding new features and services. – Market Potential: They can tap into a large user base, creating opportunities for growth and monetization.
DrawbacksPrivacy Concerns: Super Apps often gather significant user data, raising privacy and data security concerns. – Dependency: Users may become overly dependent on a single app, limiting their choices. – Competition: The Super App space can be highly competitive, with challenges from other apps and platforms. – Monopoly Concerns: Dominant Super Apps may face regulatory scrutiny regarding potential monopolistic practices. – Localization Challenges: Adapting to diverse markets can be challenging, requiring localization efforts.
ApplicationsSuper Apps find applications in various sectors, including: – Communication: Messaging, voice, and video calls. – E-commerce: Online shopping and product discovery. – Transportation: Ride-hailing, bike-sharing, and public transit bookings. – Financial Services: Digital payments, banking, insurance, and investments. – Food Delivery: Ordering food and meal delivery services. – Social Networking: Connecting with friends and colleagues. – Entertainment: Streaming music, videos, and games. – Healthcare: Accessing medical services and telehealth consultations.

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 economy (discouraging outside competition and favoring 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.

Taobao Business Model

Taobao is a Chinese eCommerce website, and it is among the most visited websites in the world. 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.

WeChat Business Model

WeChat is a “super app” that can do many things, from messaging to mobile payments and social media. Developed by Tencent, WeChat is among China’s most popular Super Apps. WeChat makes money via value-added services (with services like Moments, Public Accounts, and Gaming), advertising, and payments on the transaction processed through it.

Tencent Business Model

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:

WhatsApp Business Model

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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