Retail in Asia


Super apps: From Asia to the world, the rising digital disruptors building brand loyalty

Since the introduction of the iPhone in 2007, the app ecosystem in Silicon Valley and the US has been the envy of many countries around the world. The Asia-Pacific region, which accounts for 39 percent of the USD91 billion global app ecosystem, has been no exception to this trend.

However, there is a recurring theme being talked about in management presentations by tech giants in the US, which originated in Asia: super apps.

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Spearheaded by WeChat, which launched in Asia in 2011, the rise of super apps was initially driven by strict digital marketplace regulations. In a market where app stores were restricted from offering many digital services, people jumped at the chance to use a homegrown application that hosted all the digital services they needed.

Today, super apps have become a megatrend in the global mobile ecosystem and platform expansion strategy, with around 50 apps globally. Notably, the APAC region is leading this trend and has become a leading benchmarking practice. In Southeast Asia, we have Grab and GoTo, and companies like Shopee, Traveloka, and AirAsia are also expanding the range of services they offer on their respective applications.

Most Asian countries have their own versions of super apps, such as Southeast Asia’s Grab, which competes with Goto, a partnership between ride-hailing company Gojek and online marketplace Tokopedia. More than 50 apps around the world are now evolving into super-apps.

Key lessons from Asia’s hero super apps 

Low customer acquisition costs 

The first advantage of super apps is lower customer acquisition costs. It has been proven that the cost of acquiring a customer for a new service within a super app that acts as a single platform is much lower than attracting users to different apps that maintain a consistent brand for a company.

In 2018, Gojek founder Nadiem Makarim revealed that the marginal cost of bringing an existing user to a new service converges to zero, creating a ‘positive cycle’ where the cost of acquiring a new customer to move into a new business model with this super app model continues to decrease. This economic effect has contributed to Gojek’s success, with the company valuation reaching USD1 billion in 2016 and growing to USD10 billion three years later in 2019, becoming Indonesia’s first unicorn and decacorn. For example, if a food ordering app typically pays around $50 to acquire one new customer, it can only recoup its customer acquisition cost (CAC) after the customer has ordered eight or more meals. On the other hand, super apps can recoup their CAC after only two or three orders because customers order food, taxis, airline tickets, and other services all in one place.

Create new customer touchpoints and maximise LTV

The more diversified a super app’s services are, the longer users tend to stay in the ecosystem and the more money they tend to spend. In 2019, Uber made the decision to merge its separate ride-hailing and food delivery services into one app, allowing Eats to be cross-sold to its ride-hailing customers. According to Uber’s CEO Dara Khosrowshahi, engagement on the platform “more than doubled” when customers used two or more products.

Third, create strategic synergies with core services  

AirAsia, an international airline based in Malaysia, diversified its business in 2020 with the launch of the AirAsia Super App, now known as Capital A. The goal was to find new revenue streams and reduce risk by diversifying its business. As the airline struggled to acquire new customers in 2020 and couldn’t rely on its existing ones, it needed to boost its low-frequency, low-margin businesses, such as food delivery, to supplement its lucrative air travel business. This decision proved successful, as it increased its share of net new customers and nearly doubled its average monthly active users.

AirAsia identified delivery and ride-hailing services as having the greatest potential, as it could cross-sell higher-value services to customers ordering food and taxis, and increase the company’s presence on the street with branded vehicles. In 2020, the group launched the AirAsia Super App and changed its name to Capital A to showcase the diversity of its business. It now offers 15 products and services under three main pillars: e-commerce, travel, and fintech. In 2021, over half of its delivery users were new users, resulting in a 236 percent increase in average monthly active users for Capital A in just one year.

Improve customer retention

Super apps are known for their high retention rates. Grab, a Singaporean tech company that provides daily services in eight Southeast Asian countries nearly doubled its customer retention rate thanks to a super app launched in 2018. Grab’s story is a great example, especially if you’re competing in a highly competitive country or industry.

Founded in Malaysia in 2012, Grab initially started as a service to connect drivers and riders, before expanding into car and bike sharing. Facing stiff competition in the region, the company realised it needed to offer more than just rides if it wanted to retain customers. That’s why it launched Grab Express, a payment platform, and Grab Platform, a collection of APIs to help partners develop services faster. In December 2020, Grab reported a 4.5 times increase in the percentage of users purchasing two or more services, thanks to its super app strategy. As a result, its one-year customer retention rate increased from 47 percent to 79 percent.

Fifth, provide better monetisation opportunities, such as advertising businesses

In the midst of stricter privacy protections and regulation of app ecosystem operators, super apps are becoming a safe haven for data, thanks to user trust.

Super apps provide a closed digital ecosystem where data stays within the system, allowing for more personalised content and minimising the risk of cyber fraud and identity theft. This helps increase user trust and provides a safety net for both operators and users.

As a result, the Malaysian super app Grab is developing its own advertising service, GrabAds, which asks users for consent to be tracked and does not send user information to third parties. The data will be used to match businesses with verified and interested users, providing a more efficient and targeted advertising experience.

What you need to launch a successful superapp 

Successfully developing and operating a super app requires an ecosystem of internal development teams and external partners who can build modular micro apps and deploy them to the super app. This network of providers amplifies the value of the super app by quickly delivering more services to it.

Many technology vendors already offer tools and platforms to help software engineering leaders build super apps. Examples include platform-as-a-service (PaaS) vendors that provide cloud platform solutions, front-end frameworks that enable the deployment of mini-apps across web and mobile apps, multi-experience (MX) development platforms, low-code application platforms (LCAPs), and development service providers.

Super apps are more likely to store larger amounts of personal data to facilitate service delivery, and users are at a greater risk of becoming victims of serious data breaches. 

Finally, different users have different app preferences and usage frequencies, so maintaining consistency across mini-apps published in a super app and providing a unified messaging interface that maximises convenience can have a significant impact on customer engagement and retention.

Super apps: All the rage and in demand among consumers

Super apps are gaining in popularity, with consumers increasingly interested in the convenience of having multiple digital experiences consolidated into a single platform. However, there are doubts about their success in the United States. In an August 2022 article, Forbes reported that the future of super apps in the US may be uncertain, despite the model’s success in Asia, Africa, and Latin America. Nonetheless, several American companies have already begun exploring the super app concept, such as DoorDash’s foray into the cosmetics market and Elon Musk’s plans for a Twitter-based super app called X. Other tech giants, including Meta and Microsoft, have also expressed interest in creating super apps, hoping to capitalize on the trend.

As companies pursue this new direction, consumers continue to show interest in super apps. A recent survey found that two-thirds of US consumers are interested in consolidating digital experiences into a single super app. Millennials, in particular, expressed a desire for a comprehensive channel for online banking and payment services, as well as convenient super apps for groceries, health, work, social relationships, and home.

About the author

Sanghee Lee is the general manager at Sendbird APAC.