Asia’s best kept secret

There are interesting and sometimes dramatic differences between the East and West that have led to the preponderance of superapps in the East.

The East has the world’s largest population of mobile-first internet users and that uniqueness is a key protagonist in the superapps story. In his book, AI Superpowers, China, Silicon Valley and the New World Order, leading AI guru and ex-Google China president Kai-Fu Lee mentions an interesting difference. Most of emerging Asia was/still are cash-based economies where even today debit and credit cards penetration is growing but pales in comparison to cash. Large stores in much of emerging Asia accept plastic but mom and pop shops beyond the metro cities hardly had POS devices to process card payments. Whereas the West has extremely high penetration of plastic money on both the demand and supply side. Now, mobile payments are an improvement on cards but not as dramatic an improvement as the jump straight from cash. And that’s what Alipay and Tencent banked on when they introduced mobile payments to a population that had leapfrogged internet access through desktops and directly experienced the internet on mobile. Suddenly you had millions of people for whom the convenience of mobile payments was just too dramatic to ignore, because their comparison was to cash, not cards.

There is another often underlooked aspect of why superapps take off in the East and that boils to a fundamental difference in the way Silicon Valley operates and Asian tech operates. Barring the likes of Amazon, Silicon Valley has traditionally stayed out of merging the offline-online worlds, take Facebook, Paypal, Instagram, Netflix, Google. There is an underlying belief that code alone can create great products and there is some truth in that no doubt. But in the East, startups have shown their willingness to get their hands dirty and blend the physical and digital worlds. Initiatives like introducing physical QR codes on store counters across the length and breadth of large countries like China and India is no joke but Asian startups have demonstrated their willingness to deploy fleet-on-street as well when the need arises. What that does is to make daily life super convenient for Asian consumers, whether it’s booking beauty services at home, ordering food delivery, hailing a ride, buying medicines online. This creation of a seamless ‘phygital’ experience that positively enhances daily life is another aspect that spurs the creation of a superapp. There is no superapp that exists without the creation of this seamless ‘phygital’ environment.

Superapps need oceans of data in order to make the experience personalized and intuitive for consumers. When they commute, what time do they order their food, their location every second of the day, the SMB’s (small and medium businesses) they interact with frequently prove invaluable to these startups in providing a great experience because this treasure trove of data combined with deep-learning algorithms give superapps an unmatched advantage in creating a hyper-personalised experience. Alipay’s underwriting algos have even drawn a correlation between password strength and the ability to repay a loan! This greatly outshines what Silicon Valley’s leading companies can decipher from “searches”, “likes” or occasional online purchases.

Nobody really talks about this aspect much but conscious choices on UI/UX also differentiate the East and West as far as superapps are concerned. WeChat allowed companies to build an app-like experience within the superapp. For instance, the experience of ordering through WeChat’s JD.com interface—JD is an e-commerce major in China—will be akin to doing so directly on JD’s app. And so consumer’s felt at home when they switched. The psychological switching cost wasn’t too high. This is anathema in the West…to allow another company to build within your app.

Even on UX, while WeChat has taken on the functionality of Facebook, Messenger, Uber, Skype, Paypal, Amazon still isn’t a perfect substitute for any of the apps that it did replace and consciously so. But it can perform most of the core functions of each, especially with payments already built in. In the West, creating a perfect UI/UX has been the culture and that has what helped created iconic products/services but ironically, that resoluteness may come in the way of rapidly creating a superapp.

What’s also fascinating about the superapp race is everyone’s starting point. The destination of superapp remains equal for everyone but their starting points and therefore the ensuing trajectories are what makes the story so fascinating. Some like PayTM, PhonePe and BharatPe in India start with payments and then expand into other financial services adjacencies; some like Grab and Gojek start out with ride-hailing and then expand into deliveries; some like Whatsapp start with messaging and social communications much like WeChat did and we know have legacy conglomerates like Tata and Reliance in India who have the valuable physical part of ‘phygital’ but need to acquire online competencies. It makes for a great story to see all them racing from different angles towards the same pot of gold.

Wanting to be a superapp isn’t enough to get you there. You have to make it worth the customer’s while to want to “check in and never leave”. An average adult has 80 apps on their phone in total but only uses about nine on a daily basis. Clearly, customers are drawn to the idea of a one-stop shop, which gathers up and organizes the best features of all their apps — like an operating system for their life. So what bases does an app have to cover to get that coveted superapp status?

To sum up, apps that have all of the above four qualities and do so superlatively will be the ones that reach superapp status. Various brands are currently in their different stages of their trajectory. Some have got payments wrapped up, some have frequency of usage wrapped up, some have the advantage of ‘phygital’ offerings. But the ones who ticks all these four boxes will be the ones who will be humming “you can check out but you can never leave” all the way to the bank.

Authors:

Vishal Nicholas 

EVP and Head - Brand Strategy, DentsuMB and Dentsu Impact  

Shashank Lanjekar

iEVP and Head- Strategic Planning, Taproot Dentsu