Why isn’t there a super-app in the West yet?
Super-apps are so successful in the East. But what’s stopping them from gaining traction in the West?
What’s the hold up?
It’s 2022, why doesn’t Canada, USA or Europe have a super-app yet? In this three part series, I’m going to document my thoughts about upcoming tech trends in the next decade via bite-sized posts, starting with super-apps.
In December 2018, I had an opportunity to visit China and a couple of countries in SE Asia for five weeks. Before my trip I got one piece of advice that was almost unanimous — install WeChat and Grab. If you’ve been to Asia in the last decade, especially China, you’ve probably used a super-app. If not, you might have heard of apps like WeChat, Alipay, Gojek or Grab.
Most super-apps that exist today started off as a single app with one purpose but have morphed over time into an ecosystem of hundreds or even thousands of mini-apps. Why is it that these super-apps did so well in Asia but have not caught on in the Western economies?
The Impetus for a Western Super App is here
Apple’s rollout of its App Tracking Transparency (ATT) program in iOS 14.5 has caused a rift in the way consumer data from 3rd party apps is shared with other companies. Users now have to opt-in and consent to be tracked across apps and websites owned by other companies. So, if your core business model is based off of selling targeted advertising, you’re SOL. That, coupled with the fact that iOS has ~70% market share in the developed countries, is a big deal. Google is also planning a similar approach for Android and has already announced the end-of third-party cookies in the Chrome browser in 2023.
Simply put, if ad-driven platforms like Meta and Google can’t track how their users interact with other apps, they will be incentivized to keep users within their own ecosystem. This is especially true for activities that directly involve monetary transactions like shopping (Instagram, YouTube, Google Shopping etc.)
Why were super-apps so successful in Asia?
Mobile-first population — Emerging economies like China, Indonesia and the Philippines missed the desktop internet revolution in the 90s and 00s. So when smartphones and cheap hardware hit the market, a previously unconnected population of ~1.5B people suddenly was able to adopt the internet. By leapfrogging desktop internet, mobile-first computing became the norm and the adoption of mobile apps and services became second nature.
Banking the unbanked — Before smartphones and digital payments. A large population of China/India were unbanked. Super apps gave them an opportunity to adopt digital banking and access their hard-earned money and assets through their smart devices. WeChat and AliPay also spurred micro-economies in rural areas, that lacked traditional infrastructure, by allowing merchants and consumers to trade goods and services in a cashless environment. This drove adoption even further.
Government support — The Chinese government heavily supported WeChat in its early days. The government lacked the digital capabilities to interact with and serve its citizens, so they partnered with Tencent to build out public service apps on WeChat. This was another lever that drove WeChat’s viral growth loop in China.
Why are super-apps struggling to gain traction in the West?
Lack of consumer trust — The biggest risk to companies with super apps is the increasing scrutiny of the tech industry’s power. It seems like every week there’s a news story about a public trust slip-up from big-tech. Over the years, this has gradually eroded consumer trust. Contrary to my first point about the mobile-first generation in emerging economies, the developed economies have experienced the desktop era of the internet and have “grown-up” with it over the last three decades. They’re aware of the potential for security loopholes and data abuse from app providers. So, to convince users to adopt a super-app built by Google or Meta (or anyone else), the value proposition better be really compelling.
Lack of homogeneity — One of the reasons super apps worked in Asia is because of the homogenous populations of China and Indonesia. Even though the countries have a rich set of languages, tradition and culture, there was a certain homogeneity in terms of how they consumed content online. Not having to cater to widely different personas and customer segments allowed these apps to attain viral growth. However, the internet consumption culture for each Western economy is inherently different because they’ve had the time to develop their tastes and hone their preferences. Building one super-app to cater to all of the disparate needs of the Western economies will be an uphill battle.
Regulatory issues — Regulators around the world, particularly in the European Union and USA, are contemplating laws that would further restrict the sharing of user data between different companies. A lot of countries also have strong competition legislation. For instance, if Google were to buy a competitor in hopes of adding them to the Google super-app, it would be really hard for them to pass regulatory screening. The regulatory oversight in the West can prove to be prohibitive for one provider to build a super-app.
Where to go from here?
Super-apps have catalyzed the economic, cultural and social growth of the emerging markets over the last decade. However, replicating their success in the West is going to be challenging given the cultural, regulatory and consumer trust barriers. That said, I don’t think it is impossible. It will have to be a model that involves coopetition between the likes of Uber (ride-sharing, food delivery), Google (payments, search), Meta (social, metaverse) and Amazon (e-commerce, fulfillment) to really build a super-app that will be compelling enough for me to download. Maybe I’m better off hoping for gas prices to go back down to $1.10/litre.
Who am I?
I’m a product leader with almost a decade of experience across startups, scale-ups and consulting for large enterprises. I’ve led the go-to-market for successful digital products in multiple verticals (manufacturing, B2B SaaS, fintech, ecommerce) and have consulted for some of the largest brands.
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