Can a Mega App do in India what a Super one couldn’t?

Updated: August 17, 2021 4:48 PM

In the world’s most populous democracy, even the super-app would find it difficult to strike a chord. For, the Indian consumer wants an app for everything, from managing payments (PhonePe, Paytm) to ordering food online (Swiggy, Zomato). However, India is late to the game.  

appsA Super App offers a single platform where users can do multiple unrelated things such as ordering food, or hailing a cab, all under the same app. (Representational image)

By Ashok Shastry,

In the world’s most populous democracy, even the super-app would find it difficult to strike a chord. For, the Indian consumer wants an app for everything, from managing payments (PhonePe, Paytm) to ordering food online (Swiggy, Zomato). However, India is late to the game.

Although the concept remains viable, when it comes to bringing it all under an umbrella, the idea hasn’t yet clicked. That’s what we are doing for car ownership.

India: The Land of A Super Mega App

In the last five years, the number of smartphone users in India has grown by 150% to over 700 million. Meanwhile, recent news reports said that mCommerce grew by 800% over the last one year. With the masses becoming technologically enabled and comfortable with spending digitally, India has become the new frontier for “Super Apps”.

What is a Super App?

A Super App offers a single platform where users can do multiple unrelated things such as ordering food, or hailing a cab, all under the same app.

This is enabled by “Mini-programs” developed specifically for the Super App platform, or by “Progressive Web Apps” (PWA’s) that open within the Super App’s in-app browser outside the platform. WeChat, Gojek, and Grab are prime examples of successful Super Apps across South East Asia that now command multi-billion dollar in valuations. But can an Indian company replicate the same success? Probably not, given that there is diabolically different India and Bharat to be served together. However, we believe that Mega Apps is an idea whose time has come.

What is a Mega App? 

My definition of a Mega App, is a platform that aggregates a very large specialized market, such as finance, eCommerce, food delivery, learning or transportation, all the while sticking to the core and not foraying into unrelated territories. We’ve seen many companies such as PayTM, PhonePe, Uber and even Amazon enter markets outside of their core domain leading to hundreds of millions being squandered away and, in some cases, complete winding up of these experiments.

For example, in 2017 PayTM Mall, a marketplace, was launched to compete with the likes of Amazon and Flipkart. With Paytm’s 400 million strong user base, one would have expected a phenomenal success story emerge even as media outlets pegged it to grow to $10B GMV by 2019. However, it was quite the opposite. In FY2019 PayTM Mall reportedly spent a whopping $300M, to earn a measly $120M– that essentially meant the company was, say buying a bottle of Coke for Rs.80, and then selling it at Rs.30. Discounts drove so much traffic, that when PayTM Mall decided to reduce cashbacks, their traffic tanked by 90%. The only value PayTM’s Super App gave to consumers were its in-house funded discounts. PayTM may have lost the race with regards to the eCommerce domain, but they still dominate the financial services and payments space. The company has filed for its initial public offering to raise Rs 16,600 crore, making it one of India’s largest market debuts of all time. As per their Draft Red Herring Prospectus (DRHP), their GMV has more than doubled from the last fiscal year, primarily driven by online and offline merchant payments and a with a sharp focus on revenue generating business models such as full-suite payment products, and solution to grow merchant’s businesses. This shows that the company quickly rolled back the initiatives that didn’t work and instead focused on their core DNA.

Super App vs. Mega App

While it’s unlikely that an Indian company will emerge as a Super App offering everything under the sun, what’s becoming increasingly clear is that companies expanding into complimentary verticals in an ecosystem can be wildly successful via a Mega App. Swiggy is a notable example of a company that has added complimentary services with Genie and Instamart, offering pick/drop services and daily groceries respectively. In a rare interview with Money Control regarding Swiggy’s recent $1.25B fund raise, co-founder & CEO Sriharsha Majety says that he plans to double down on Genie and Instamart to further diversify their revenue streams with the capabilities they’ve built and the stickiness they have inculcated.

A common theme that emerges in many of these successful vertical launches is the identity of the user base. PayTM expected its users, who were transacting on the app, would easily adopt their eCommerce product. But what they failed to realize is that their user base was transacting offline at retail outlets and many used it only for mobile recharges. They were not accustomed to buying online. Swiggy on the other hand realized this early on and capitalized on their homogenous user base use case– delivery. It was easy for Swiggy users to adapt to buying groceries or having parcels delivered at their doorsteps because they were used to it.

Gojek, Indonesia’s one-stop-shop $10.5B Super App, that offers cabs, bike taxis, food delivery, shopping, payments, daily needs, and news/entertainment among many other services, is a true Super App. The company was birthed in 2010 during the app boom that saw the launch of WeChat and Grab as well. They were very early to the game and offered high-frequency products such as cab hailing, bike taxis and a messaging platform. All were able to capture sizable audiences before a similar competitor could raise enough funds to compete at scale, and by the time they could, these companies offered even more products to their customers to create a stickiness that couldn’t be dissolved.

In a 2019 blog post, Gojek’s SVP Engineering Sidu Ponnappa says, “Gojek runs the equivalent of three Indian unicorns rolled into one”. In India, by the time any one company could encroach into another product or service, the competition and cost to enter was too high. PayTM tried and failed to enter eCommerce, Ola Cabs acquired Foodpanda in 2017 but dropped it in 2019 and pivoted to the Cloud Kitchen model, and UberEats burned $3B only to sell its food delivery business to Zomato a few years later in 2020.

What is the Future?

Despite these cautionary tales, Indian companies still have the chance to successfully deploy a Mega App and dominate a particular 'market cluster' that caters to a homogenous user base. This is due to the fact that these users see a particular company in the light of the domain they are predominantly  known for, and entering into a new market is extremely risky and costly. However, with conglomerates like Tata and Reliance snapping up companies for hundreds of millions dollars, one could speculate there is a consolidation of Mega Apps upon us, and either of these two giants will duke it out to become India’s Super app.

(The author is Co-founder and COO, DriveU. Views expressed are personal and not necessarily that of Financial Express Online.)

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