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How Super Apps Might Be the Next Big Thing in India

There are three main factors which influence the creation of Super Apps and India scores high on all three.

How Super Apps Might Be the Next Big Thing in India

Photo Credit: Pexels/@cottonbro

Super apps are aready popular in other countries such as China, Indonesia, and Singapore

During the recent Indian Premier League (IPL) 2022, the advertisements for mobile apps caught my attention. A decade ago, IPL ads were completely different – today's ads reflect a dominance of digital, but will "super apps" become a reality as advertisers claim? Just like malls, super apps offer the convenience of multiple stores under one roof in the form of mini apps for consumers to leverage through integration of services, transactions, payments, and identity.

At peak self-actualisation, digital transformation leads to the disintermediation (removing intermediaries) and unbundling of services (separating services typically part of product) and then efficient re-bundling of services (relevant to the personalized customer preferences). Super apps are a perfect example of this re-bundling with the convenience of one app. In the rest of Asia outside India, prominent super apps are Grab (Singapore), Go-Jek (Indonesia), Kakao (South Korea), AliPay (China), and of course, WeChat (China), which now has over 125 crore active monthly users. Prior to the stock market correction, firms breached $1 trillion (roughly Rs. 79,65,700 crore) market capitalizations and headlines read that a US-based super apps could be the next $10 trillion (roughly Rs. 7,96,56,500 crore) tech company.

Factors influencing creation of super apps

There are three main factors which influence the creation of super apps and India scores high on all three.

First, is the proliferation of smartphones, and India has over 75 crore smartphone users.

Second, is changing consumer behaviours and preferences. With the price of data at all-time lows, Indians spent an average of 4.7 hours per day on mobile phones or about a third of their waking hours, downloading ~2,700 crore apps in 2021, installing an average of 80 apps on the average smartphone.

Third, is the growth of the platform economy. The Indian government has consciously invested in public APIs (Application Programming Interface) such as Aadhaar and Unified Payments Interface (UPI), lowering the access barrier for millions of Indians, evidenced in UPI adoption. The API ecosystem has blurred boundaries between industries and heralded the creation of 100 Indian unicorns by 2022, many of whom are digital-native offerings.

Can ideal conditions translate into a successful reality?

Successful super apps need high engagement with users and network effects, which kicks in when the value generated by the network grows exponentially as more users join the network. Indian smartphone users spend almost 70 percent of their time on social media and/or photo and video apps. Those pursuing a super app strategy will need to build an engaging app and create a walled garden that benefits from network effects if they want to have a chance at changing established consumer usage habits.

More importantly, the cost of building digital capabilities is decreasing. This reduces the entry barrier for well-funded entrants who will likely be nimbler than incumbents and large players. Indian sellers have capitalized on this trend to launch digital services, but they still lack relevant digital skills and marketing budgets. In the rest of Asia where super apps are popular, sellers hedged their bets by using super apps' marketplaces to reach new customers, but that was not cheap. Super apps have their own payment mechanisms, policies, and incentives to redirect customer traffic to where their own strategies dictate. This prompted smaller organizations to learn keyword advertising and optimizing techniques to improve sales in these marketplaces or go elsewhere.

Governments and regulators have taken note of the super apps playbooks and are stepping in to support smaller players. India is planning to launch ONDC (Open Network for Digital Commerce) and it remains to be seen how ONDC shapes up, especially because it will face significant competition from incumbent marketplaces (unlike Aadhaar or UPI).

Finally, there is also the matter of upcoming super apps coming under increased scrutiny by Big Tech, who have made it more difficult for third parties to collect user data for advertising. Furthermore, all app ecosystems collect high fees, not only for app purchases, but also for in-app payments made for subscription services. Seeing how the Apple Store does not allow developers to host mini-apps and its device penetration in India is significantly lesser than Google's Android, it ought to leave the door open for Indian super app aspirants to pursue their strategy, while home market dynamics influence their foreign competitors.

The smartphone is the most used device of our times and super apps are vying to be the ‘homepage' of this prime digital real estate. The future for Indian firms seeking to become super apps certainly looks interesting.

The author is Head of Strategy, Digital & Innovation, and Senior Vice President, Wells Fargo India & Philippines.

Disclaimer: The opinions expressed within this article are the personal opinions of the author. Gadgets 360 is not responsible for the accuracy, completeness, suitability, or validity of any information on this article. All information is provided on an as-is basis. The information, facts or opinions appearing in the article do not reflect the views of Gadgets 360 and Gadgets 360 does not assume any responsibility or liability for the same.


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