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Asia's 'superapps' bundle ride-share, food delivery, even financial services – and they're beating big tech

China backed the concept of tools users perceive as an extension of the OS, not just an app

Catch a ride, pay your utility bills, order your dinner, top up your insurance, chat with friends – how many apps did you need to get that lot done? In much of the world North America and Europe your answer could involve a fistful of apps, but in Asia you could do it all in one, thanks to rise of the "superapp".

Superapps are, for now, largely an Asian phenomenon, although the concept is more than a decade old. Blackberry founder Mike Lazaridis coined the term in 2010 to mean "a closed ecosystem of many apps that people would use every day because they offer such a seamless, integrated, contextualized and efficient experience".

Academic and researcher of digital business models and ecosystems at Singapore's ESSEC Business School Dr Jan Ondrus thinks a better definition for a superapp is essentially "an operating system".

In conversation with definition to The Register, he likened superapps on mobile devices to using Windows on a desktop.

"With a superapp," said Ondrus, "you don't need to use multiple apps, you can use just one app and tap into a lot of other services – you can live pretty much inside the superapp."

In the West we love our Google search – in some respects that is our superapp

That convenience matters, because the crowded real estate of a smartphone home screen only has so many slots. App publishers have come to realise that offering more functions in one app is their ticket to prominence and ongoing user engagement.

WeChat, the boss of all superapps

To truly understand superapps, consider the most popular of them all – and probably the original superapp – WeChat.

WeChat began as a messaging platform for Chinese tech giant Tencent in 2011. It is now a gateway to more than one million services – including ride hailing, booking flights and hotels, making medical appointments, accessing social media, making payments, and even arranging a date.

Plenty of those services are offered by third parties through "mini-programs" – tools that allows businesses to create their own digital products and offer them to WeChat's users. WeChat takes a fee on transactions.

While users can choose to use only Tencent's messaging services, there's no reason to leave for almost any other service.

As of the end of December 2020, WeChat and Weixin – the version of WeChat for mainland China – had a combined 1.23 billion monthly average users.

Other prominent superapps include Korea's Line & Kakao, Indonesia's soon-to-merge Gojek and Tokopedia, India's Paytm, and Vietnam's Zalo.

Singapore-based Grab deserves special mention because when Uber tried to enter Singapore, Grab was already entrenched. Uber eventually sold its entire Southeast Asian efforts to Grab. Uber's blog post when it announced it was leaving the region read:

One of the potential dangers of our global strategy is that we take on too many battles across too many fronts and with too many competitors.

This transaction now puts us in a position to compete with real focus and weight in the core markets where we operate, while giving us valuable and growing equity stakes in a number of big and important markets where we don’t.

That's an admission that Uber's approach was too limited to succeed against superapps.

"The approach of integrating as many services as possible in one app makes you extremely powerful," explained Dr Ondrus. "What most companies are searching for is the relationship with customers. WeChat is intermediating the relationship with everyone, making them a very powerful intermediary."

Superapps also thrive because offering many services lets them understand customers better.

"[Superapps] have a better AI system to predict what you are going to do because they integrate all the data collected. When using separate apps, it will be near impossible to replicate that," Ondrus explained.

China set the snowball rolling

While superapps have spread across Asia, and made inroads in South America, other regions have not displayed the same enthusiasm.

"If you take a step back you can see why the apps are [in the East] and not [in the West]. I think it comes down to where these markets started from and the drivers of adoption, and the initial market was China, wasn't it?" KPMG's Singapore-based Head of Financial Services Anton Ruddenklau pondered in a Zoom call with The Register.

"The Chinese government actually mandated tech firms to move into these adjacencies," added Ruddenklau. Each company was given a specialty to develop to drive digitization across sectors and make them work to scale.

WeChat is intermediating the relationship with everyone

Superapps were helped by the fact that they were native to mobile devices. In the West, many users' formative internet experiences were on PCs and other platforms dominated by Google, Facebook, Microsoft et al.

Most Chinese netizens skipped straight to smartphones and sought out mobile-first services. Early in China's internet boom, such services weren't prevented from building horizontal platforms.

Much of Southeast Asia also went straight to mobile devices for internet access. Again, that wave of netizens had no PC-centric habits to adopt on their smartphones. New market players had an opportunity to create a new ecosystem that catered to Asia's youthful demographic, even as the likes of Google and Facebook worked to make existing services more mobile-friendly.

Superapps also understood their target markets' culture in ways that Western firms did not. Yet superapps aren't big enough to understand every culture. ESSEC Business School's Dr Ondrus points out that Alibaba acquired Singaporean e-tailer Lazada to access its growing regional footprint.

"It was much easier for Alibaba to buy Lazada, which had already established activity in Southeast Asia. For big companies, starting from scratch is very painful," explained Ondrus.

Where are the West's superapps?

While superapps are huge in Asia, they're hard to find in the West. Facebook tried to pack more third-party services into Messenger and Instagram, but with limited success. Some Facebook services, like marketplace, are free – seemingly because Facebook values engagement over the kind of revenue it could win from taking on eBay, Gumtree, and Craigslist.

"The difference in the West is we love our Google search – in some respects that is our superapp," said KPMG's Ruddenklau. While Google mostly wins revenue from ads, rather than taking a cut of transactions, Ruddenklau sees that as an advantage because the lack of full integration between Google products means users have a perception of privacy.

"Westerners like to be able to ringfence certain apps or services, so that they don't think anyone has a full picture of their lives," said Ruddenklau.

Even if Western users wanted superapps, Big Tech might not be so keen to build them.

Ruddenklau told The Register clients often ask how to build platform-based business models. He replies that banks can comfortably make over $1,200 a year from each retail customer, but superapps like Grab, Alipay or WeChat might pull in a handful of dollars per user.

"Which [business] do you want want to be?" Ruddenklau asks. ®

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