Race to win consumer for India’s trillion dollar digital economy
Every tech company wants a Super App. In the post-Covid world, they want one. Google Pay is building one, WhatsApp needs one, Amazon is trying in it, Jio is putting one together, Flipkart (and Phonepe), and Paytm are the other contenders. And now, the venerable Tata Group not to be left behind in the race for India’s trillion dollar digital economy wants one.
Everyone has the some trophy in their side: India’s massive internet user base, the second largest in the world. The race to dominate the stakes in India is modelled along what happened in China, where Super Apps from Tencent (WeChat) and Alibaba.
Not everyone calls their digital offering a Super App. But make no mistake, the Super App is that Holy Grail of the internet economy that just keeps giving. A self-preserve, high-velocity flywheel of consumers, transactions and services. Super Apps funnel billions of customers and transactions and become ‘operating systems’ for the daily lives of consumers like you and me. WeChat, Alipay, Gojek are the model-Super Apps that all tech giants want to emulate. In the US, Walmart, Microsoft and Oracle were locked in a battle to acquire TikTok — and that might have become the foundation for a Super App strategy.
so let’s see basics how the super app work? Super Apps are massive consumer aggregators that drive the consumers down a path to the most popular service providers and merchants. They create a layer of Super App services (payment, loyalty, logistics, escrow, refunds) that act as enablers to a smoother transaction for a broad variety of services. Once they have the consumers’ trust (and wallet), they become mega-portals to multiple services and usually craft their own offering of financial services (savings, lending, insurance, investment) that deepen their stranglehold on customers.Paytm is small example in india which tried for super app.
In China, Super Apps have even created their own currency WePay and Alipay. These are used more than the official currency of the nation. You cannot survive a day in China without WeChat or Alipay.they have replaced credit cards and have become pseudo -banks for consumers. They are super aggregators for everything hire a cab, order a meal, book a spa, make a donation, send or receive money, buy insurance, watch a movie, sell a product, buy a product, build a small business… name it and the service exists as a micro-app within the Super App. Today, they even substitute as official electronic IDs for citizens. With over a billion monthly active users these Super Apps are not built on the Chinese internet, they are the Chinese internet.
Super Apps are formed on a backbone. The backbone for WeChat was a social media and instant messaging platform like WhatsApp. For Alipay, it was a payments wallet like Paytm.
Still super Apps have thrived only in a few markets in the world where mobile first ecosystems developed rapidly and allowed them to survive.
The cost of reaching a consumer over a smartphone is near-zero
With network effects a business can drive it down to negative zone — consumers invite their peers and the platform grows on its own. Example: WhatsApp, with a staff of 35, grew to near 600 million users in just four years. Its revenues were about $10 million when it was acquired by Facebook for a mind-boggling $22 billion. Today, it is used by 1.2 billion people a month. WhatsApp single-handedly destroyed the SMS revenues of many telcos around the world, especially in India.
Proctor & Gamble (P&G), the soap company , is a $80 billion monolith. It now sells 40 billion units of consumer products a year to 4 billion people — that’s almost the entire adult population of the globe. Yet, it enjoys no direct relationship with them.while tech products get benefit here to stay connected with their consumers
We can apply this lens to pretty much any traditional firm, which built a stranglehold over what they thought were strategic assets production and distribution. They used their bargaining power to build humongous physical brands and networks. However, they have little by way of contact with their end customer. And therein lies the rub it takes little to disintermediate them, and startups are attacking this weakness.
It’s happening every single day, in every sector.
Amazon on the other hand, enjoys a deep relationship with its customers. It knows exactly what they buy, when they buy and what they are willing to pay. It has created a plethora of services to wrap around its users: Prime, Prime Video, Amazon Dash, Amazon Go, Alexa among others. All designed to increase the depth of engagement with a customers’ life.
Engagement with the consumer is becoming the new moat. Amazon is not playing with Economies of Scale and Scope. It fights with a third weapon, which we call Economies of Engagement. These are the hooks they create to keep us addicted.
Which just gave them boost in the race of creating super app.
Control of the relationship with the consumer is more valuable than the underlying transaction.
Let’s come back to Topic of super app.
This unique bundle of code, which wraps itself around a consumer’s life is simple to imagine, but hard to build.
There are many reasons for that
First is “The underlying ecosystem” A Super App usually needs an orderly, integrated ecosystem to sit upon. Consumers will shift from individual apps and services to the Super App, only if it seamlessly initiates and completes a transaction.Let me give you an example: Your Google Maps app has had options for booking an Uber or an Ola cab for a few years, but not many use it. Why? Since it merely hands you over to Ola or Uber and leaves you to complete the transaction on your own. It just saves maybe a couple of clicks, not much else.
Whereas, a Super App will create a deeply integrated layer that will call for the taxi within the app itself, show you options, track location and complete the entire journey of payment, invoice, refunds etc within the Super App itself. You could book a taxi within WeChat in China since 2014.
WhatsApp’s and Google’s struggles with building a Super App come from the same place. Their typical Silicon Valley world-view and DNA is to write code, not to organise underlying ecosystems they hate dealing with the chaotic real world and fixing broken customer journeys. They are already late to the mobile first world of Super Apps that was built in China, and has exploded in India. Contrast this with Amazon, which is willing to roll up its sleeves and handle the grit and grime of the real world and build the missing pieces (logistics, warehouses, payments) as may be required in a local market. Google Pay, for example, got a boost only when they had a UPI backbone to build upon. However, both firms quickly realised two things: 1) that their advertising-led business model is under threat, and 2) that India is the last frontier to win the non-China internet — and India will serve as a sandbox for mobile-first transaction models they could deploy elsewhere. Hence, now the fight for partnerships, committing resources, and empowering local teams in India.
That’s also the primary reason why big investors poured billions into Jio Platforms at a mind-numbing $70B valuation for a venture that’s yet to take off. Even Google and Facebook, blocked out of China’s superapp race by the Chinese state, realise that they will miss the boat in India, if they don’t make fundamental shifts in their strategy
Second reason is Consumers are at their most demanding on the internet.Simply because they can access the best provider in a few swipes. You can’t shortchange them with an inferior offering. A Super App has to aggregate or offer the best in class and not force people down paths that they don’t wish to go. Just because I use you for payments, doesn’t mean I will use you to buy my movie ticket or book my flight. If there is a superior alternative available, you better make it available on your platform.
In a sense, Paytm’s attempts at launching its own movie/event booking service may have been misplaced. Consumers could have been well-served by deep-linking with BookMyShow rather than setting up a rival service. Similarly, setting up an online travel business requires expertise, infrastructure and handholding of consumers at multiple touch points. The idea is, bring the service within your fold and charge a rent on the transaction.
Jio is the first off the mark with full flow offerings of its own in content, commerce and data access. It has built or acquired several potential components of a Super App ecosystem, however it’s yet to reveal what the solid base of such an ecosystem will be. While online grocery (Jiomart) is a massive opportunity but it is not really a driver of high-frequency stickiness (you don’t check your grocery app multiple times a day).
WhatsApp is still deciding when it will grow up to be WeChat. Despite having an unchallenged run in the Indian market for years, it has little to show.
Google Pay is adding discovery and online ordering within the app, but is staying away from actually handling any part of the real-world physical transaction.
On the other hand, Amazon, a full-stack player, is willing to dirty its hands, but we’ve yet to see them make any big moves with Amazon Pay even after being way ahead of the rest of the field in ecommerce. The Flipkart/Walmart combo has many internal issues on their marketplace to solve, before they can get going on their Super App strategy. But, its payment wallet, PhonePe, is doing well, and could be a countable player in the race.
One final word. The Indian digital consumer won’t be won over by the physical assets you own. The consumer will be won by how you organise the world for them, by the way you make and the choices you create. Whether you get the job done in a simple, hassle free manner and if you live up to your promises. Unlike China, the Indian opportunity is still relatively small because of the low purchasing power