#22-Why Most Super-Apps candidates will fail?
What is a super-app? A unified gateway
A Super Application (SuperApp) is a one-stop solution in the form of a mobile app to multiple customer needs.
They serve as a unified gateway to all the possible needs a user may have- in social networking, payments, banking, investing, e-commerce, mobility, food-delivery, and healthcare, etc.
A made and evolved in China-Idea
WeChat evolved into a SuperApp from a chat app with functionalities across social media, payments, banking, e-commerce, food and grocery delivery, taxi-hailing, healthcare, etc. Other SuperApp examples include Alipay, PingAn, and Go-Jek. Grab is also in the race to be the ASEAN’s Super App.
Will the phenomenon work outside China?
The Super-App battles usually end in a duopoly kind of situation and the last two contenders get the pie eventually.
In Asia, we are seeing the race to be the super-app from the Telcos, Banks, Digital Wallets, Mobility, and Ecommerce Players. As a result, most of them will fail in their ambitions.
To be the super-app you must first be the orchestrator of an ecosystem- that has critical mass when it comes to suppliers(vendors, partners) and consumers.
The core-proposition must be with high user stickiness and customer must feel positive about staying locked in the orchestrator’s digital ecosystem
To win the super-app crown you need a core-profitable business (cash cow) to fund expansion into adjacencies and new verticals
Super apps are not built on VC funds, alone
We are seeing a Gold-Rush? The Gold-rush to be the Super-App of the region
ASEAN and India are two regions that are trying to mobilize the super-apps.
In ASEAN- Grab and Gojek have clearly laid out their vision to be the super apps. However ,COVID-2019 pandemic derailed their mobility business so much that the plans may have been delayed by a couple of years.
Reliance’s Jio platform in India is building a formidable digital ecosystem with platform partners that can enable its super-app ambitions. Reliance is yet to prove itself when it comes to building superior front end platforms.
It has strategic partnerships with FB, Google, and its own entertainment platforms along with external OTT partners. Its enterprise communication solution Jio- Meet came out as an imitation of Zoom. Digital Talent and full-stack engineering capabilities to build superior UI/UX platforms are yet to emerge.
Reliance Jio plans to serve the full customer journey (mobile moments), but the mobile app version is yet to emerge
PayTm as a wallet(funded by Ant Group) is still a far cry from being seen as a Super-App. Users in India, view it like a digital wallet. Its losses are greater than its revenues and competition is catching up fast (Google Pay, Phone Pe etc)
Why most Digital Ecosystems, Super-Apps, and Platforms fail?
There are many reasons why platforms and digital ecosystems fail. However, below are specific primary reasons why the digital ecosystems, super apps, and platforms fail to turn profitable and eventually fail:
- Failure to map digital ecosystem and platform opportunity- Before you start investing in a digital ecosystem strategy, you need to do an opportunity mapping and competitive landscape study. The opportunities to be the orchestrator of a digital ecosystem are limited in every industry and region. It helps to be the early mover, but it does not necessarily guarantee success.
- Trying to build a digital ecosystem without a keystone business- The digital ecosystems have their gestation period depending upon the industry they operate in. Hence, it helps if the orchestrator has a foundation business that can fund the journey and experiment. This is the reason why the incumbents are best placed to orchestrate a digital ecosystem. Having a strong keystone business is not a necessity, but it is desirable. The non-incumbents or unicorns can also orchestrate a digital ecosystem if they get the business model right.
- Failure to build a customer-centric value offer- A digital ecosystem is successful due to a customer-centric offer and the fact that it has high user stickiness. It is critical that the requisite amount of planning must be given to developing the customer value proposition.
- Failure to reach a critical mass- The user base, as well as the partner network, must reach the point of critical mass. The digital ecosystem is most of the cases also acts as an online marketplace, and hence the proper balance between the demand and supply is critical. It is generally advisable to get a loyal user base first, as that gives more negotiation power to the orchestrator with the current and future partners.
- Not enough value creation for the partners or regulatory risks- If a digital ecosystem fails to create enough value or new growth for the partners, then they will exit the same. The partners in a digital ecosystem should not be better off as individual entities.
- Biased or weakly structured partnership agreements- If there are enough new value and revenue growth opportunities available for the partners, then the orchestrator must lock them in through partnership agreements. Few e-commerce companies have exclusive agreements with certain consumer electronic brands for exclusive rights to sell their products. The contracts should be fair and create a win-win.
- Weak or inferior data analytics engine- The long-term success of the digital ecosystem is also dependent on how reliable and robust its data analytics engine is. It is imperative to build a data lake view of all data captured from consumers, partners, and business processes. A robust data-analytics engine can help in personalizing customer proposition, giving real-time insights, and generating new revenue streams through 3rd party data monetization models.
- Not leveraging network effects or diversification into profitable categories- Post building the critical mass, the digital ecosystem must also leverage the network effects. They should always be adding more quality users and onboarding new partners that can add more value to the overall proposition. If a digital ecosystem is not growing, it is stagnating.
- No feedback loops and quality checks in the system- The customer and partner quality in the digital ecosystem should not deteriorate. To ensure optimal quality, mobility, e-commerce, travel aggregators, and food delivery ecosystems give the option to provide feedback and review ratings. This review and feedback loops maintain the quality of the digital ecosystem.
- User experience and customer trust- The user experience must be superior, and consumer trust must not be taken for granted. There have been instances of mass-exodus of users from a digital ecosystem when the user data and consumer trust was compromised. Cybersecurity walls must be robust around data, payment information, and user agreements must be respected.
- Data guidelines-Macro factors that influence the success or failure of super apps — data regulations in a region, and consumers willing to share data with one Super App platforms/orchestrator. This could be the key issue in western and developed markets
I will like to repeat that when there is a Gold-rush, sell Shovels. This is the reason why payments integrators/processors will gain the most out of the super-app race
is a Digital Ecosystem and Platform Expert
With experience in Fintech, TMT, and Consumer-tech sector
