Investing in Super-applications - the phenomenon of Asia and the Pacific [Guide]

In recent months, the term has been reaching the media more and more often Super application. Although the term has entered the mainstream relatively recently, its concept has been around for over a decade. The concept of Super-Application is assigned to Mike Lazaridiswho is the founder BlackBerry. He formulated the concept "A closed multi-application ecosystem that people use every day because they offer a seamless, integrated, effective and contextualized experience".

While the aforementioned definition may seem unclear, simplifying it, Super-application is a marketplace of services and offers provided by internal technological solutions or by integration with external suppliers. Thanks to such an application, you can, for example, pay for purchases, order food to go home, transport, take out a loan, place funds or contact friends. This article describes the advantages and disadvantages of such a solution, as well as examples of such solutions.

Advantages of the super-application

Super-application has a number of advantages that contribute to its popularity. They are:

• Faster and less risky product launch - by introducing a new application in this ecosystem, you immediately have potential customers. At the same time, data aggregation makes it easier to find user preferences, which allows you to predict which application may be successful.
• Lower application production costs - most of the "mini-programs" included in the Super-application are created by external partners. An example would be WeChat, which has a huge number of third-party application providers who want to take advantage of the huge number of application users.
• KYC (Know Your Client) costs minimization - access to a huge amount of user data (their online behavior, interests, friends) allows you to get more information needed, for example, to grant a loan. For example, AntFinancial can accept a loan application in less than three minutes. Despite a quick analysis of the application, the non-performing debt rate (NPL) does not differ from the market average.
• Ad targeting - because Super-application users spend a lot of time inside the ecosystem, you can profile a potential customer more precisely. This allows you to advertise services that are more tailored to your needs, which increases the client's monetization potential.
• Lower traffic acquisition costs - due to the fact that the super-application meets many customer needs, obtaining external traffic is much smaller. In the case of mini applications, traffic is obtained from within the ecosystem.
• Flywheel effect - the more users there are on the platform, the more and more willing to put their "mini-programs" inside the ecosystem. The more services that can be performed with Superapplication, the more willing to join the ecosystem.

Disadvantages of the super-application

• Less data privacy - by using Superapplication, the user becomes more and more "transparent" to potential advertisers. As a result, they may be "bombarded" with more precise advertisements.
• Activating the user - Super-application wants the user to spend as much time as possible inside the ecosystem. For this reason, it can increase the number of people addicted to social networks, mobile games, etc.
• Content control - the owner of the application may "harness" content inconvenient to the owner's or the government's worldview. This is especially visible on the WeChat application, which limits the content inconvenient for the Chinese Communist Party (e.g. the incident at Tiananmen Square). Sometimes, however, such control can have a positive effect (reducing the number of hours Chinese children spend playing games).

Types of application ecosystems

The ecosystem in which the applications operate is constantly evolving. As a result, the following can be replaced: a single application, an app suite, a multifunctional application and a Super-application.

• When applications first appeared, they were developed in the "traditional way". One application - one solution. An example of this type of application is eg Skype. Its mobile application satisfies only one need - communication (video, audio, text). However, she did not allow me to order food or take loans. For this you need more applications.

• The next "stage of evolution" is the creation of an app suite, which is a collection of applications that are usually created by one company. Apps are a great example Microsoftthat contain the applications Excel, Word or PowerPoint.

• Then some of the applications evolve into multi-functionality. An example would be Asian Gravewhich allows you to order food and transport, for example. It is often backed by its own payment system. Solutions are created by one company.

• There is also an ecosystem that creates one "Super Application" that is linked to many mini programs. These mini programs add functionality, making the ecosystem more and more "complete" for the user. These mini-programs are made by internal and external developers.

Summary of the different approaches to application distribution is shown in the "Traditional Approach" and "Super Application".

source: Fabernovel: Mini-Program Bible 06.2020

Super-application allows users to use the application without having to download it to the phone. As it were, Super-Application becomes the "operating system" for other applications. The application is downloaded directly from the servers of the Super app owner. At the same time, it is updated on a regular basis, so the user does not have to perform additional actions. However, being inside this ecosystem requires the application to be significantly slimmed down. They often require developers to limit their weight to a maximum of 10 MB. This solution means that the user does not have to leave the Superapplication environment.

WeChat - the first Super-Application

WeChat is best known as the largest instant messaging app in the Chinese market. It was established in 2011 and has quickly become a synonym for communication via a smartphone. In 2018, WeChat had over 1 billion active users. WeChat has a "application for everything" patch. How did it come about?

Unlike Western solutions, which focused on creating refined "point" solutions, the Chinese preferred to create an entire ecosystem around the main product. The first milestone in building Superapplication was adding payment solutions like WeChatPay. It was launched in 2013 and has become a competition for the dominant market leader Alipay (a payment system created by Alibaba). The solution allowed to create a digital wallet thanks to which users could transfer money to their contacts. The solution was quickly adopted on the market. After just three years, the number of WeChatPay users exceeded 300 million.

The real breakthrough in the development of this application was the introduction of a functionality called "Mini Programs" (Applets). It appeared in 2017 and allowed companies to create mini applications inside the WeChat system. The mini program is therefore an application inside the application. Clients install the program not on their phone, but inside the WeChat application. In January 2018, there were over half a million mini programs in the WeChat ecosystem. In mid-2020, their number exceeded 4 million.

Thanks to the huge number of them, the expectations of even the most demanding group of users are met. By joining the WeChat ecosystem, the user can use the messenger, mobile games, online shopping, ordering meals or transports. As you can see, the most popular 50 applications on the WeChat platform had a wide range of applications.

A huge advantage of joining the WeChat platform is the relatively low cost of customer acquisition. Entering the WeChat ecosystem enables app developers to connect with over a billion users. This can be seen in the chart below. Almost 40% of traffic in the new mini application came from "sharing", i.e. interactions within the platform. Ads generated only 14% of traffic.

The mini-programs are used not only by small players, but also by recognizable brands that want to be closer to a billion platform users. As a result, brands such as Nike or McDonald's introduced their mini programs on WeChat. For example, McDonald's had to slim down its application. As a result, inside the ecosystem there were 5 mini McDonald's applications that can be accessed from the main panel of the "main mini program". This can be seen in the chart below:

It is not a record. For example, Ikea has 8 working mini-applications inside the platform.

Of course, the huge competition among applications means that many owners decide to advertise their offer within the WeChat ecosystem. Ads can appear in many places, including inside games, in articles, "moments", inside mini programs, or advertisements during checkout.

Of course, you cannot advertise everything and in any way. WeChat has some advertising policy in its ecosystem. Advertisers must, among other things:

• Avoid terms such as "highest quality", "best in the country" etc;
• Use real statistics, data etc;
• Logos, images, music, etc, may not be used in an unauthorized manner;
• Remember that the image and security of the state, nation and society should not be violated;
• Lotteries with prizes must have a jackpot of less than RMB 5000.

The success of the WeChat platform (owned by Tencent) made the more and more Chinese application owners want to build their own ecosystemwhich can be called a Super Application. 

They have their solutions, among others Alipay, meituanor even tik tok. All of these players aggressively develop their solutions, collaborating with developers so that their own ecosystem has the most mini-programs. Alipay has over 120 mini programs. It is a much less complete Super Application than WeChat for now. However, a huge advantage of the Alipay solution is the wide number of users of the Alipay payment service (leader in China) and the popularity of shopping websites (Taobao and T-mall).

Alibaba chart, interval W1. Source: xNUMX XTB.

Super-applications outside of China

Super-applications were born in China, but their success has attracted followers. Mainly in the Asia-Pacific region and Russia. Among the solutions that aim to obtain the Super-Application status, the following can be mentioned:

• Hornbeam;
• GoTo;
• Russian clash: Yandex and Mail.ru;
• Indian clash: Paytm, Flipkart, Reliance Jio.

Grave

It is a company that recently debuted on the American market. The company operates mainly in Southeast Asia (including Malaysia, Philippines, Singapore, Thailand and Cambodia). Imitating Chinese competitors, Grab began creating its own ecosystem that combines food delivery, passenger transport services, a digital wallet and insurance offer. At the same time, you can rent a car or a bicycle from the application. In 2020, GMV and TPV platforms exceeded $ 12,5 billion net. The company's net revenues exceeded $ 1,6 billion last year. Grab is not a full-fledged Super-Application yet. However, it has a chance to transform its offer into a Super-Application (similar to Alipay). Its disadvantage is the lack of a WeChat social networking platform.

Be sure to read: Food delivery companies - is it worth investing in them? [Guide]

Goto

It was created as a result of combining the Gojek solution with Tokopedia, creating the largest ecosystem in Indonesia that combines the functions of payment, food delivery, passenger transport and the e-commerce market. In 2016, Gojek himself became the first unicorn from Indonesia (start up with a valuation of over $ 1 billion). In turn, Tokopedia is the largest e-commerce platform in Indonesia. It is also present in several other countries of the region. In 2019, the platform's GMV exceeded $ 5 billion. The GoTo concept is the foundation for the Super-application of Southeast Asian countries. As a result of the merger, the company is valued at over $ 18 billion and plans to debut on the New York Stock Exchange in 2021.

In Russia, however, two internet giants: Yandex and Mail.ru try to create their own Super Apps. Both solutions have their strengths and weaknesses. Strong point Yandex is a very popular Internet search engine and a strong position on the transport market (Yandex.Taxi) and food delivery (Yandex.Eats). Additionally, Yandex is developing food delivery services (Yadex.Lavka) and e-commerce (Bieru). At the same time, you can rent a car using the Yandex.Drive application. Yandex is missing two important components so far: a payment platform and a social platform.

Yandex chart, interval W1. Source: xNUMX XTB.

Mail.ru

It is a leading social platform (Vkontakte) and cooperates with Sberbank in the payment segment and with Alibaba in the e-commerce segment. Mail.ru plans to create a Russian Super-application and create competition for Yandex in the passenger transport, food delivery and e-commerce markets. The advantage of mail.ru is that it has its own social networking platform, which can be the flywheel of the new Superapplication.

Mail.ru chart, interval W1. Source: xNUMX XTB.

 The Indian market is one of the most promising Asian markets. Some commentators believe that this is "the new China of the 90s." That is, a huge economic area that has demographic potential and is starting to develop dynamically. It comes as no surprise that players present in this market hope to become the new “Indian Tecent” and create their own Super-Application with a scale similar to WeChat. One of the players in this market is Paytm Mobile Solutions. Paytm intends to create a multifunctional application around its payment platform. Currently, it has a platform for processing payments, insurance sales, e-commerce and mobile games. The company's services are used by over 400 million users. The company's shareholders are, among others, Alibaba and Softbank. Therefore, the company does not have to worry about obtaining additional financing, at least for now. The company's competitors in the field of Superapplication include, among others Flipkart (e-commerce platform) and Reliance Jio (telecommunication services).

Where to invest in Superapplications

Below is a list of selected offers Forex brokers offering an extensive stock offer, including companies creating Superaplications.

Broker
End	Poland	Denmark	Poland
Shares on offer	approx. 3500 - shares approx. 2000 - CFDs on stocks 16 exchanges	19 - shares 8 - CFDs on stocks 37 exchanges	approx. 1 - stocks + CFDs on stocks 5 exchanges
Min. Deposit	PLN 0 (recommended min. PLN 2000 or USD 500, EUR)	0 PLN / 0 EUR / 0 USD	PLN 0
Platform	xStation	SaxoTrader Pro Saxo Trader Go	MetaTrader 5
	REVIEW	REVIEW	REVIEW
	CREATE AN ACCOUNT	CREATE AN ACCOUNT	CREATE AN ACCOUNT

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. From 72% to 89% of retail investor accounts record monetary losses as a result of trading CFDs. Think about whether you understand how CFDs work and whether you can afford the high risk of losing your money.

Summation

The ideal environment for Superapplication development emerged in Asia. Paradoxically, this was partly due to the technological backwardness in the first stage of the Internet. In the United States and Western Europe, entry into the world of the Internet took place through computers and websites. Internet access preceded the "smartphone era". As a result, the behavior of consumers online was completely different than in countries at a lower stage of development. In the case of Asia, three factors emerged: government support, dynamic economic development and rapid adoption of mobile devices. For example, for Chinese society, the first contact with the Internet was usually related to the use of smartphones. They were also used very quickly for payment processing. As a result, the economy was becoming more and more "mobile first". The support of the Chinese government made it possible to create technological behemoths that used this effect to create Super-applications processing various user data (shopping behavior, interests, friends, financial condition). Huge benefits for the owners of the super app meant that the concept found followers in Asia-Pacific and Russia. In Europe and the United States, due to cultural differences and the protection of personal data, such solutions have not yet been created. The following years will show whether "West" will create its counterparts of a super app, or whether it will follow its own path.