All-in-one platforms are gaining traction globally, but can they break through in the U.S.?

People are becoming used to having multiple apps on their phones, but what could they think about having essentially all they need in one large application? It’s a question that is gaining relevance with the acceleration of digital commerce during the pandemic, and as companies seek to gain the hearts and minds of mobile users in the years ahead.

The so-called “super app” means different things to different people. Blackberry founder Mike Lazaridis, who first coined the term, said it was “a closed ecosystem of many apps that people would use every day because they offer such a seamless, integrated, contextualized and efficient experience.” In other words, it lets you do a lot of different things, and theoretically you become comfortable enough that you don’t feel the need to leave the app to manage your life. However, the array of companies calling themselves or striving to be super apps varies, hailing from multiple industries, all with unique approaches to capturing this brass ring.

Where did “super apps” first emerge? Founded in 2003, one of the world’s first leading super apps was Alibaba’s AliPay payment service, which became omnipresent in China with the advent of smart phones, and allows members access to myriad third-party applications. It boasts 900 million users worldwide. Tencent’s WeChat platform hit the scene in 2011, branching out from instant messaging to telephony and social media, as well as shopping, food delivery, payment and more. It has about a billion users worldwide.

The Digital Takeover Continues

Global Business-to-Consumer eCommerce Sales ($ Billions)

Source: eMarketer, KeyBanc Capital Markets Inc., Kohls.com. As of December 15, 2020.

Central to the initial success of AliPay and WeChat was a lack of traditional internet access in China, so that when mobile phones became popular, there were fewer electronic competitors or established players to deal with. Many individuals didn’t have access to banks, so electronic payments and banking services caught on quickly, even in the most remote locations in the country. The Chinese mobile phones available at the time were also relatively light on memory, thus reinforcing the appeal of having just a few apps on your phone with many smaller components, rather than multiple full-scale and dedicated apps. Finally, there’s the matter of regulation. For many years, Chinese authorities gave their mega-tech companies free rein to operate and build on their unique economies of scale—something that appears to be changing (see below).

Central to the initial success of AliPay and WeChat was a lack of traditional internet access in China, so that when mobile phones became popular, there were fewer electronic competitors or established players to deal with. Many individuals didn’t have access to banks, so electronic payments and banking services caught on quickly, even in the most remote locations in the country. The Chinese mobile phones available at the time were also relatively light on memory, thus reinforcing the appeal of having just a few apps on your phone with many smaller components, rather than multiple full-scale and dedicated apps. Finally, there’s the matter of regulation. For many years, Chinese authorities gave their mega-tech companies free rein to operate and build on their unique economies of scale—something that appears to be changing (see below).

Imitation Game

Today, various dynamics favor the development of super apps in other parts of Asia and much of the emerging markets. The lack of legacy infrastructure has allowed companies in these regions to leapfrog on-premises mainframe-based technology and go directly to mobile solutions. The dissemination of cheap mobile phones has given underserved populations access to many services that were previously unavailable to them, including bank accounts and credit. Beyond expansion of the customer base, the business model also offers remarkable potential for deep relationships with customers, who may be engaged with super apps for hours at a time, throughout the day. Super apps can not only sell goods and services (or act as middlemen), but they can also access incredibly detailed customer data and use it for their benefit or share it at a price with other companies.

The appeal of super apps hasn’t been lost on the world at large. Many players, large and small, have witnessed the explosion of the Chinese super apps and have sought to mimic their success in their particular markets within Asia and other emerging economies. Although they may be approaching the task from different industries, the core idea that they typically share is to employ a dominant service as their base and capitalize on that popularity to add services and revenue generators.

Everything You Need?

Sample Super App Interface

Source: Grab. For illustrative purposes only

One standout is Grab, a Singapore-based company that began as a taxi service with a locations-based app to connect riders and drivers. To encourage engagement, the company purchased mobile phones for its drivers, who became very active users of an array of services offered within the app. The company expanded to include various ride-sharing services, and moved into food and package delivery, as well as investments, insurance and banking, where it poses a significant threat to traditional banks given their rich customer data and increasing brand loyalty. Other well-known names include MercadoLibre, a Latin American super app that began as a payment platform; Go-To Group, a recent combination of Indonesian ride-hailing and e-commerce startups; and Paytm, another payment platform that offers multiple mini-apps along the model developed by Chinese early actors. Many other companies across regions are working to gain traction as super apps.

What About the U.S.?

Even as Asian and Latin American players speed into the super app model, the going is much slower in the U.S. and Western Europe. These geographies tend to have a well-established technology infrastructure, limiting the need for mobile-based alternatives. In addition, players are entrenched and competition is fierce, with many financial companies looking to protect their territory and multiple technology names vying for the consumer from different vantage points.

Amazon is probably the closest thing to a super app in the U.S., given its omnipresence across the retail and publishing landscape, its role in entertainment and its thriving cloud business. However, the array of services it provides in one platform remains limited compared to some foreign counterparts, and the company would probably prefer not to call itself a super app for fear of attracting further regulatory scrutiny. Apple and Google also come to mind, but again their platform-based consumer offerings are not as comprehensive, and they have different priorities. Apple is more about combining its software and hardware to reinforce and expand its customer ecosystem; Google’s far-flung operations certainly have extensive consumer components, but rather than drawing on a single app, the company seeks to leverage advantages in search, advertising, cloud and data to expand its reach.

In contrast, payments giant PayPal is clearly aspiring to be a financial super app, recently releasing an all-in-one digital wallet and payment application. PayPal got its start over 20 years ago in peer-to-peer (P2P) money transfer, and over time built its platform among merchants and consumers to become one of the largest branded e-commerce wallets globally—but to date has focused primarily on payments. The new app will feature a broader suite of financial services, such as high-yield savings accounts, coupons/deals and cryptocurrency trading, with the idea of selling multiple products to consumers on the platform, but also to increase the frequency of their engagement. Square is following a similar strategy, trying to capitalize on the traction it has with consumers in P2P with its Cash App to include additional financial offerings (stock and Bitcoin trading, debit card, buy now/pay later). Other well-known companies could have the ability to leverage their core platform to build a broader offering. For example, Airbnb has a trusted brand associated with lodging, which plausibly could extend into a broader array of travel-related services. Ride-sharing leaders Uber and DoorDash have already expanded into food and package delivery, while Intuit is looking to be an all-encompassing platform for small business.

Cloud of Regulation

Although there are regional differences in the progress of super apps, one issue of general concern is regulation of technology companies and whether that may inhibit further growth and innovation. China was long willing to give tech leaders relatively free rein in light of their important role in modernizing the country. But increasingly wary of tech companies’ concentrated power, the government has recently initiated a range of restrictions, freezing a high-profile initial public offering and enforcing anti-monopoly rules focused on the “platform economy.”

Beyond the implications for Chinese companies, a key question is whether other governments will likely become more heavy-handed when it comes to tech regulation. For businesses operating within more democratic, less centrally planned regimes, there may be less danger and a greater ability to navigate the fine line of partnership with government and independence on operations and data. In some cases, for example, super apps have been able to facilitate vaccinations, albeit at the expense of reduced user privacy.

In the U.S., the issues of concentration and personal privacy have raised red flags across the political spectrum, and led to investigations and legal actions involving top technology companies. Although they certainly want to grow their businesses, Amazon, Google, Apple and Facebook in particular understand that they are under scrutiny, and face criticism regarding alleged uncompetitive practices from rivals and partners. Thus, the appeal of stepping out of their already substantial “lanes” must be carefully weighed against potential blowback. That said, less high-profile names may look for opportunities to build out their platforms and be less reticent about proclaiming their “super” status.

Bottom Line

When it comes to technology, language can be less than precise. And while the term “super app” sounds exciting, to some degree it is more about marketing than reality. Could a company with a limited footprint be a super app because it says so? Or does the fact that a technology giant may not fill every last niche of the human experience somehow not make it super?

Labels aside, we believe that the development of broadly encompassing applications that incorporate many capabilities is a trend with legs, particularly in those geographies where companies have been able to move into mobile services directly and there is minimal legacy infrastructure to get in the way. This includes various emerging markets where the super apps are multiplying. Whether the narrowly defined super app gains traction in the U.S. and Europe remains an open question for us, but we believe it may be less interesting than how companies evolve to provide services that please consumers and minimize regulator angst.