Superapps have revolutionised the way we interact with technology, catering to multiple aspects of our daily lives within a single mobile application. Originating in China, the superapp model has expanded into Southeast Asia and Latin America, reshaping the digital landscape and offering integrated solutions for various daily needs. Let's take a closer look at the rise of superapps, their futures and our concerns.

Understanding Superapps and Their Popularity

A superapp is a digital native concept, originating with the rise of WeChat in China. Developed by Tencent, WeChat integrated messaging, payment, and various mini-app services into a single platform with an aim to be in every moment of the user's daily life, be it hailing a ride, shopping for groceries, identity verification or any other important or small occasions. From a customer's perspective, a superapp is a one-stop solution for multiple daily needs, making it a highly attractive proposition for users seeking convenience and efficiency.

While China is the birthplace of superapps, they have also gained traction in Southeast Asia and Latin America. The rapid adoption of smartphones and mobile internet in these regions has played a significant role in the growth of superapps. As these regions embrace the superapp model, new players like "X" are aspiring to enter the market and create their own versions of these all-in-one platforms in the United States as no superapp has penetrated into the market. More on “X” later.

The Rise and Expansion of Superapps

The success of the superapp model in China has inspired tech companies to replicate it in emerging markets across the globe. The model offers numerous advantages, such as increased user engagement, diversified revenue streams, and lower customer acquisition costs due to cross-platform promotion.

Most superapps share an expansion strategy - starting in a sector with a massive user base and then branching out into other high-growth sectors. This approach allows them to leverage their existing user base and infrastructure, resulting in more efficient expansion. Examples include MoMo and Alipay (fintech to superapp), Grab and GoTo (ride-hailing to superapp). The expansion can be organic, where the company develops new services internally, or strategic, involving partnerships and acquisitions. Yet it rarely stems from failure in standing foot in one space and pivoting into a new space.

The Absence of Superapps in Mature Markets

In Hong Kong, North America, and Europe, the superapp model is less prevalent due to several factors. First, fierce competition and market saturation make it challenging for new players to expand into other sectors. Existing platforms with dedicated purposes have already established themselves, making it difficult for a new entrant to gain a foothold.

User behaviour also plays a role, as consumers in mature markets are not as reliant on mobile devices for in-app purchases compared to users in emerging markets. This difference in behaviour could be attributed to the relatively higher trust in traditional institutions and a preference for a diversified range of apps for specific tasks.

Market size influences expansion strategies, with companies like Lalamove, GoGoX, Klook, and 9Gag opting to expand overseas rather than entering new sectors. This approach allows them to capitalize on the rapid growth of emerging markets while avoiding the challenges associated with penetrating mature markets.

Emerging Players and the Future of Superapps

AirAsia SuperApp, founded by Capital A, is a travel-focused superapp that takes care of travellers' needs holistically. Available in Malaysia, Philippines, and Indonesia, this spin-off from the popular budget airline aims to have non-flight revenues account for 50% of the group’s total revenues within five years. The app was valued at USD 1 billion in 2021, while the airline's market capitalization stood at only USD 88 million.

Elon Musk's "X" is a yet-to-take-shape superapp that he envisions as an "everything app." Musk's acquisition of Twitter is believed to be a strategic move towards creating a WeChat-like platform in the United States. Little is known about "X," apart from Twitter recently being merged into a shell company named X Corp. The enigmatic nature of the project has piqued the interest of the tech world, and it will be fascinating to see how Musk's vision for "X" unfolds.

WhatsApp has recently introduced a new feature in Brazil that enables users to make payments to local businesses directly through the messaging platform. This marks the second superapp-like feature to be launched in Brazil, following the Yellow Page-like business directory introduced in 2022. At this time, it remains unclear whether Meta, WhatsApp's parent company, intends to expand these features to other parts of the world.

Superapps have changed the digital landscape, offering integrated solutions for various daily needs. While they have successfully expanded in emerging markets, their impact in mature markets remains limited and their profitability is in doubt with GoTo remaining in the red a year after its IPO. However, the emergence of new players like AirAsia SuperApp and Elon Musk's "X" signals the ongoing evolution of superapps.

Looking out for the All-Encompassing Possibilities 

Despite their potential, superapps also raise concerns and controversies. Issues such as data privacy, market dominance, regulatory compliance, and user addiction are increasingly being scrutinised by governments, industry watchdogs, and the public at large. As superapps consolidate vast amounts of personal information, users become more vulnerable to data breaches and privacy violations. Additionally, the dominance of superapps in certain sectors can stifle competition, limiting consumer choice and potentially leading to monopolistic practices.

Regulatory compliance is another challenge, as superapps navigate complex legal frameworks across multiple industries and jurisdictions. This complexity can lead to unintended non-compliance or even deliberate attempts to circumvent regulations. Lastly, the convenience and ubiquity of superapps may contribute to user addiction, as people become increasingly reliant on these platforms for a wide range of services.

As the superapp landscape continues to evolve, it is crucial to strike a balance between the advantages they offer and the potential risks they pose. Open dialogues and responsible innovation will be essential in ensuring that superapps continue to grow and serve their users while mitigating the adverse effects associated with their rise.