In my previous post I covered the basics of the platform business model, its characteristics, and benefits. One of the most prominent uses of this model is in the development of so-called super apps – an emerging trend set to dominate mobile business. As we see the first of these super apps launch here in South Africa, it is useful to understand this (relatively) new approach to mobile business and how South African companies may benefit from it.
As before, this is not meant to be a comprehensive piece on the subject, but rather a high-level introduction to some of the fundamentals and a foundation on which to build a deeper understanding.
Please do contact me directly though should you have any questions not covered here or if you simply wish to discuss the topic further. And, if you find value in this, please consider paying for my next coffee via the button on your screen.
Super apps and South Africa
As a new way of doing business, the platform model represents a significant improvement on more traditional business models in many ways. The potential for exponential growth due to factors that include the near-zero marginal costs of scaling should be enough to warrant the interest of anyone involved in the success of a company.
This would be true at any point in time, but in a post-COVID world this could be a lifeline for many businesses facing the challenge of generating revenue under operating restrictions and reduced consumer spend. By building on some of the key concepts behind the platform model, embracing partnerships has proven to be an effective solution for many businesses abroad in a trend which has arrived on SA shores: the super app.
In simplest terms, a super app is many apps under one umbrella app. It is the antithesis of a single-purpose app and very much a response to users’ behaviour patterns by providing seamless access to multiple services. While most people are now spending at least as much time on their mobile devices as they do watching TV, they tend to spend that time using only a handful of apps. A single app fulfilling multiple needs holds much more appeal than multiple single-purpose apps. For example: Indonesian super app, Gojek, offers transport and logistic services, food and groceries, medicine deliveries, payment and credit solutions, and even come-to-you massages – all in one app.
Super apps first gained popularity in China, a country that largely leapfrogged the connected-PC era of the internet and went straight to mobile connectivity, not unlike South Africa. One of the key characteristics of these types of mobile-first users is that they prefer to use apps rather than the mobile web browser. While this means greater online audiences for businesses to target, it makes it difficult for those companies who have a dependence on long-tail customers. Users are hardly likely to download an app for a product or service they require once a year, after all.
The solution then for these low-frequency businesses is to partner up with those that are more regularly present in the everyday lives of their customers – sharing distribution and data to retain mindshare. By combining high-frequency/low-margin services with low-frequency/high-margin services in this manner, businesses could acquire new customers at low- to zero cost.
Of course, for any partnership to work, both parties need to bring something to the table and for a business looking to partner with another which falls within that high-frequency sweet spot, data represents their most valuable contribution. In many cases it is the complimentary insights mined from the data of the partners that allows the whole to be greater than the sum of its parts. While a hotel-booking service would benefit from the frequent traffic of a ride-hailing service, the ride-hailing business could benefit by knowing when a user is travelling and more likely to require a taxi.
By being able to access an array of services in one platform environment, the consumer benefits through centralized access with one login, increased levels of security and cross-retailer payment functionality – removing many of the pain-points associated with mobile commerce. Add in mobile-specific features like scan-to-pay and location services wherever you go, and the appeal to consumers becomes a no-brainer.
Strategic thinking such as this has seen super apps grow to dominate the markets in China and South-east Asia, taking full advantage of the platform model’s ability to enable interaction between external participants. With the launch of Avo by Nedbank and Vodacom’s announcement of their partnership with Alipay, South Africa is likely to see similar developments. To know then what super apps hold for the future in SA, simply look to the East and companies like WeChat, Gojek, Grab, Line and Alipay – especially when it comes to solving the problem of serving unbanked consumers. The super app has arrived and is likely to stay as part of “the new normal”.