Today, it has become possible to message a friend to schedule a meetup, book a restaurant or movie, and order a ride, all from within one single app - which also happens to allow you to pay for every transaction you would come across in this outing.
This is the reality enabled by super apps, which have taken Asia by storm. Slowly but surely, we have seen this business model make its way to the Middle East and North Africa, and players both big and small are stepping in to make users’ lives easier.
The dawn of the super app
When Apple launched the App Store in 2008, users were treated to a sea of new apps serving a multitude of purposes. Over the years, as we’ve gotten more used to relying on apps for work, play, and everything in between, the scope of services offered by these programs only expanded - as did our reliance on our smartphones for everyday tasks - so much so that it has become unwieldy to navigate between a dozen or so apps to get through the day.
Enter the super app, a conglomerate application that combines multiple app functionalities into one, essentially simplifying the user experience of getting things done on our smartphones. It becomes even more enticing when a user realises that they won’t have to fiddle with sign-up forms and other registration processes, since their personal data is often already saved on these apps for their original purpose.
For example, it’s exceedingly easy to avail of any of Careem’s super app services since users of the app had already registered to ride-hail in the first place. This natural transition from one service to a multitude is part of the allure of a super app.
The poster boy for super apps has unquestionably been WeChat, a Chinese platform that began life as a messaging and photo-sharing app in 2011, only to expand and introduce new features over the years like payments, e-commerce, gaming, booking, translation, real estate listings, and so much more. The numbers don’t lie either: WeChat had over 1.2 billion active users and earned over $16.5 billion in revenue in 2020. To this day, it is the number one app in China - a fact that has not been lost on regional entrepreneurs and investors.
Customers line up in Shanghai's Minhang District Central Hospital at a Self Registration and Payment Area, where WeChat and Alipay are accepted.
Consider also that super apps provide businesses with multiple revenue streams generated from a variety of industries (leisure, hospitality, mobility, banking, etc.), instead of just one. Given how the pandemic had a devastating effect on certain sectors over others, it makes sense why businesses are spreading their risk this way, especially since they often already have the user data and infrastructure for it.
Is the MENA market ready for super apps?
With this in mind, it starts to make sense why everybody is jumping on the super app bandwagon.
However, in the MENA region, with only 60 per cent of internet access being done through the use of smartphones, the smallest share of access worldwide in comparison to other regions, one could be sceptical about the success of super apps. After all, while having a high smartphone penetration, MENA consumers have historically been non-trusting of online payments, opting to use cash for most e-commerce transactions. How, then, could you convince them to use the services of a super app and to transact online?
Fortunately for online apps and vendors, the COVID-19 pandemic and stay-at-home orders in effect throughout most of 2020 have forever shifted consumer behaviour within the region. Trust in online payments has improved, as has adoption, and these trends are expected to be permanent. After all, Careem saw fit to debut its super app at the height of the pandemic during June 2020, and has since reported impressive growth and demand for its newly-added services.
Emerging regional super apps
A Careem social media promotional post for its super app in 2020.
Today, Careem is at the forefront of super apps, offering everything from payments and digital wallets, to food delivery and cleaning services, as well as car rentals. While some services like food delivery are handled in-house by company staff, others like cleaning and car rental services have been made available in collaboration with third-parties - JustLife (previously JustMop) and Swapp respectively.
Aside from the big players like Careem, Uber, and noon, new competitors are starting to emerge with their own take on this model. Entrepreneur Jaideep Dhanoa told us that his latest venture, electric mobility startup FENIX, was founded with the goal of becoming a super app from day one. Nearly two years after launch, the Abu Dhabi company has grown to offer payment and grocery delivery services, and has most recently announced a personal shopper feature. Electric mobility, Dhanoa explained, is used as the launchpad helping drive adoption to their platform, while more services continue to be added.
Foregoing a staggered approach, the Tawasal Superapp has gone all out from day one. Beginning operations last month, the startup is closely emulating the WeChat model, launching with a slew of services that mirror those offered by the Chinese giant.
Over in Egypt, MNT-Halan, originally a ride-hailing startup, is focusing its super app efforts on financial services and inclusion. This is a common theme, in fact, that runs across most of these companies. Given the high percentage of unbanked individuals currently present in the region, and the relatively low volume of online transactions, most emerging super apps focus their initial expansion efforts on encouraging online finance to power a new generation of consumers.
“Super apps enable previously unbanked people to do financial transactions and become part of a wider financial ecosystem,” a Mastercard study recently highlighted.
Payment services then can serve as a gateway to the rest of a super app’s services.
Challenges facing super apps…
While super apps have seen tremendous success in relatively homogenous territories (in terms of economy) like China, India and Vietnam, the same can’t be said for a diverse region like the Middle East and Africa.
“The MEA region consists of more than 60 countries with over 1,000 languages and divergent economic, policy and cultural environments,” the Mastercard study noted. “Although the African Union and Gulf Cooperation Council are fostering the harmonisation of industrial and data policies, for super-apps seeking to further their reach, the current fragmentation presents a significant operational, legal and financial burden.”
The report also throws the spotlight on governments’ role. As the biggest spenders in the region, government choices over which direction to orient industrial and data policies will be key. Beyond the policies of individual governments, the harmonisation of policies across the region is expected to be the core strategic choice that will determine the future of super apps.
The report noted that one of the reasons why super apps don’t succeed in a country like the US is due to the market-led nature of its economy, where fiercely competitive private companies and strict antitrust and data protection laws have resulted in a different ecosystem, from which the emergence of dominant super apps has not occurred.
In China, apps such as WhatsApp and Twitter are blocked which means that a company with a strong super app business model like WeChat can come in to fill the market gap left by their absence. China’s state-led development of the economy also creates an entirely different landscape for business, innovation and success.
…and the present opportunity
Could MENA be facing a similar situation as the US?
It’s possible, but not likely. Firstly, while competition is certainly fierce here, the existing business landscape is quite different. Regional governments have taken a proactive approach to nurturing the business ecosystem, especially in the GCC, in hopes of creating an innovation-led, knowledge-based economy. This means that the floor is open for any company, big or small, to deliver a super app that solves user needs.
Secondly, in regards to the threat of American tech giants like Meta or Google stifling a regional upstart, the Careem-Uber saga proved that massive capital and endless resources are not enough to succeed here. Careem, as a homebred ride-hailing app, was able to compete with and outdo its Western multibillion-dollar rival, so much so that it was eventually acquired by said rival. This was possible because Careem understood the culture and tendencies of regional riders, adapting their services to meet their needs. Careem put emphasis on their willingness to accept cash in exchange for rides, for example, at a time when Uber was more reliant on card transactions, alienating MENA users.
Today, the greatest opportunity for super app success lies with a company that understands the idiosyncrasies of the region, as Careem once displayed. A melting pot of different cultures, languages and expectations, navigating MENA as an all-encompassing super app is no easy feat, but it is doable.
“The development and future trajectory of super apps is highly contextual to the geography and location in which they develop,” said Walter Pasquarelli, Research Manager, Tech & Society, Economist Impact, commenting on the Mastercard report. “Some of the ripe sectors in MEA who could throw up players to become super apps are insurance across the GCC, the second-hand car market, online property brokers in the UAE, and digital remittances across Sub-Saharan Africa.”
So far, Careem is leading the charge - at least in the GCC. Given its existing and massive user database, and people’s familiarity with the app, the tech unicorn is well-positioned to capitalise on its dominance to become the go-to super app of the region.
However, there is plenty of competition to go around, and it will be interesting to observe who the runner-up in this race towards ubiquity will be.