Why super apps aren’t the threat startups imagine

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Since the COVID-19 pandemic hit the world in 2020, a lot has changed in the way we live, work and do business. A radical change concerns the importance of the online space to represent your business and deliver your services and products. While being present and actively selling online was just a pleasurable choice or thing for many businesses before the pandemic, it has become a must now. Online sales account for a larger share of business sales in many industries (the so-called offline to online or O2O transition), and without a strong online presence, these businesses would have serious problems competing and surviving after the downturn. pandemic.

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I think most of these changes in consumer behavior will stick with us even when the pandemic is a thing of the past, and as a result, startups will increasingly have to think about their presence and traction online. They have access to different channels to reach and serve their potential customers online: company websites / portals, online aggregation platforms, social media, mobile and super apps, among others. Super apps are almost everywhere these days: WeChat, AliPay and Meituan in China; Grab, GoTo and Sea in South East Asia; Paytm in India; Careem, Snapp and Noon in the MENA region; and Mercado Libre and Rappi in Latin America, among others. A great app offers several interesting services and use cases to its target customers in a single app.

Source: Dubai Chamber

This one-stop-shop philosophy means that customers would only need to install one app, register once, add their credentials once, and then immediately enjoy multiple apps at at your fingertips, all-in-one. While super apps were born to bring convenience and value to their customers, they can be seen as potential threats to start-ups and online startups. Over time, super apps continue to consolidate demand while expanding their portfolio of services. On the other hand, they should be able to lower unit costs, and pass some of this on to customers in the form of lower prices. More services and lower prices, complemented by an improved experience and convenience for customers, can be interpreted as leaving less room for micro, small and medium enterprises (MSMEs) and start-ups to grow and prosper.

Source: Kearney analysis

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However, this is not true; In contrast, I strongly believe that super apps can indeed fuel the emergence and growth of online startups, especially at times like now as we are gradually emerging from a large-scale pandemic. Let’s start with a vivid example. WeChat launched its mini-programs in 2017. These are third-party applications that are developed and run on the WeChat platform and provide a wide variety of services and advanced features to its native clients. In just three years, the number of mini-programs on the platform has multiplied by 5.5, while in the same period, the volume of transactions on these applications has doubled almost every year, so much so that these mini-programs are already attracting over 800 million per month and 400 million daily active users in 2020. I firmly believe that such leaps and bounds for these apps would not have been possible without the underlying foundation of WeChat. Let’s see why.

1 / Subsidize the Cost of Customer Acquisition (CAC) Customer acquisition is probably the number one priority for any internet startup, whether B2C or B2B; yet ACC numbers show an upward trend in most verticals, which means it is becoming increasingly expensive to acquire new customers in most industries. Several salient factors are contributing to this upward trend, but (hyper) competition in most industries, in addition to the multiplicity of channels (online, social, mobile, offline, hyperlocal) through which customers are approached and bombarded. advertisements and campaigns. , are certainly important contributors to this. With many businesses rushing online throughout the pandemic, the upward pressure on online customer acquisition costs will only intensify. Here, the awesome apps can help new players with their main magic. They’ve spent quite a bit of time and millions of dollars building a healthy, loyal customer base, and once they’ve opened up their platform to the larger ecosystem, all third-party tenants have access to their base. users overnight and benefit from the enormous network effects they have created – much faster and cheaper than they could have done / would have done on their own. It is an essential asset for any startup that can massively accelerate its scale-up journey.

Source: Study on the customer acquisition cost (Cac) of 2019 subscriptions

2 / Build foundations While generating demand is essential for start-ups, building a strong, scalable foundation and backend operations is probably no less important. Building technologies and operations with decent quality and reliability, especially at scale, is neither cheap nor fast in many parts of the world, and especially in less mature environments. When expansion to multiple geographies is added to this equation, it becomes even more onerous for startups as they have to build teams across different markets, process / integrate multiple local service providers, and comply with multiple regulatory regimes. Super apps have been through this tedious journey at scale before and can offer many of these basics like payment, delivery, care, location, analytics, and identity in the form of platform microservices. -form as a service (PaaS) for startups. This would allow startups to focus their team building, product development, and field operations on their core business (something they’re supposed to be good at), and leave as many building blocks as possible. remaining to their awesome hosting apps (while still taking advantage of the economies of scale they’ve captured). It can also speed up time-to-market (TTM) for these startups, especially when they are entering absurdly new territory.

Source: OECD compilation based on data from the US Census Bureau, the UK Office for National Statistics and Eurostat

3 / Improve visibility It takes a large marketing budget for startups to create sufficient visibility and notoriety on their offers, and to build trust with their target audience. It is even more difficult and costly for them to build a solid brand and reputation that will last for decades. Partnering with established super apps is a great way for startups to get ahead of their competition and prove that they’ve already earned the seal of approval from these giants. It can also improve customers’ confidence in these new players and their comfort in sharing their data and credentials with them from the start, as small players working with or running on the super apps are expected to follow their strict security. , confidentiality, integrity. and compliance requirements. Super apps can also create healthy competition in the startup ecosystem in their dominant markets by separating the wheat from the chaff and selecting the best startups they want to host or partner with. In return, they help these startups generate demand, grow their infrastructure, and strengthen their brand in ways startups can’t think of or aren’t capable of. In this way, the emergence of super apps in most markets represents a great opportunity for startups to focus on their core competencies and build sustainable businesses for generations to come, while still being able to choose to operate in such a way. autonomous and manage their own channels in parallel. also. In short, super apps can be the ultimate all-rounder, the Swiss army knife in business for emerging startups, while turning threats into opportunities for them to accelerate their transition from offline to online, post-pandemic and beyond. of the.

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