Building a Super-app — Part 1

Building a Super-app — Part 1 1

Originally published on Medium on Dec 1, 2019 

There is a lot of talk around super-apps in MENA recently. Major retailers are realizing that their current offering isn’t sufficient to create the ‘stickiness’ they’re prone to expect from their offline stores. Some retailers, without a strong infrastructure, are even planning to build a super-app. The definition of superapp itself is nebulous — the popular belief is that if you slap together a bunch of standalone features in an app, you have a super app! Unfortunately, this buzzword sells and there are many buyers in the corporate boardrooms — driven by misinformation and general lack of aptitude.

So, amidst the chaos, this series has been set out on building the foundations of a super-app, using a popular local ride-hailing service, Careem, as the foundation.

Structure

Since this will be a long one, we’ll break it into 3 parts — each part tackling an increasing level of complexity, starting with the ‘Why’, leading into the ‘What’ and ending at the ‘How’.

And to keep things interesting, I’ve decided to change the format — I told a set of people of this concept and captured the questions that I got. Disregarding the obvious questions of ‘Are you mad?’ and ‘What’s wrong with you?’, we’re going to tackle this topic using questions that I got (Would be great if you could let me know in the comments it worked for you, or if it helped to make the article more palatable?)

Building a Super-app — Part 1 2
Organization of this series

So without further ado, let’s jump in!

Why build a super-app?

Building super-app is not easy. There are massive costs associated with building a framework that may or may not work, depending on its availability and efficiency. There is also the willingness of external partners to give this platform a try. Similarly, there may be user skepticism to enable such apps — there are content, UX, and UI challenges that, if badly managed, may end up breaking the entire platform.

Despite this, there are two major viewpoints that drive the super-app need:

Business viewpoint

In the context of the MENA market, specifically the UAE market, there is a saturation of e-services. For everything you would want to be provided from the comfort of your living room, there are at least 2 players. For established organizations, the question of ‘build or buy’ plays regularly. Even within the organization, the existing features can only be milked so much — every major change or improvement brings in minor incremental results:

Building a Super-app — Part 1 3
As you add more features to a property, the returns slowly degrade, ultimately resulting in: costs to build > returns

As such, the incentive to pivot or add new functionality doesn’t return more users, or higher revenue — on the contrary, you’re stuck with a set of features that cost more to build and maintain and result in higher costs overall.

The concept of shared growth
At some point, it would be impossible for an organization to pivot its existing offering or add services that are not connected to their brand. E.g. if Uber started tailoring services, the costs of building and maintaining that service, along with the advertising cost of changing the perception of Uber (you know it as a ride-hailing service, not a tailoring service), is too high with no guarantee of success.

This is where Uber could look at integrating with an existing tailoring service — providing it with technical/business and user inputs to improve its service while growing their portfolio — a shared growth is borne from a symbiotic relationship. Moreover, Uber could extend this service to many such services without incurring the setup costs.

An example of this is Amazon. Amazon really didn’t want the hassle of buying the inventory — it only provided a marketplace of inventory. The aggregator stance only came after they were saturated with their initial offering of books. Every other service — warehouse, last mile, and payment — is offered to the vendor at a price. Capital investment is minimal and only used to build services:

Building a Super-app — Part 1 4
Amazon doesn’t have to invest in a vendors bulk cost of inventory. Every other cost is handed out to Amazon for adding into their margin.

In addition to that, Amazon’s services like Payment gateway, warehousing, and delivery allow Amazon to realize an operational profit by ensuring revenue doesn’t go elsewhere.

This is where the concept shines, in theory. Amazon provides vendors with a channel that they can realize a profit on, utilizing the plethora of services Amazon provides. Amazon in-turn get better utilization of their services, data and more importantly, users’ mindshare.

Users view

This brings us beautifully into the super-app concept from a user’s viewpoint. As a user, you’d want none of the sign-up, selection, payment, and after-sales worries. Visually:

Building a Super-app — Part 1 5
General steps for any online transaction

The ones in orange are the things you have the highest inertia for… in fact, measuring the drop-off rates for motivated users (users who want to avail a particular service):

Building a Super-app — Part 1 6
Drop off potential for providing the information required for completing a transaction.

You, as a user, would like to provide these details once and never have to bother providing them again.

Again, Amazon wins here. They can provide identity (sign in with Amazon), delivery location (they have your delivery locations) and payment (Amazon Pay). All you have to do is select the products/service you want to purchase and Amazon takes care of the rest.

These are shared services — all vendors have access to the same set of identity, payments, and locations — reducing the users’ need to provide vendor-specific information.

Habit-forming

Think of your app usage. Rank your apps by the most common ones (I’m assuming a communication app like Whatsapp or Messenger followed by a social network like Facebook, Linkedin or Twitter). Now rank the time spent using the apps. Here is how it’ll look:

Building a Super-app — Part 1 7
App usage by rank

See the disparity between the first and the second app? That’s habit for you. Whichever app you have in your top list will be used much more than any other app in your device. We are creatures of habit.

The more engaged your users are, the more revenue you stand to make. This is proven:

Building a Super-app — Part 1 8
Typical engagement (DAU/MAU) vs revenue graphs

Summary

Here is why a super-app is the next step for an organization that has milked every other revenue stream of its existing portfolio:

  1. Adding new revenue streams is a gamble — the costs may not justify the returns.
  2. Shared growth concept — with product maturity, you can go beyond your service offerings and partner with other players, growing with them.
  3. Reduced capital expense — all the joys of having a baby without the pains of having a baby 🙂
  4. Increased engagement within your app — it will be used far more often due to the increased offering — thereby increasing your revenue per user (ARPU).
  5. Shared services — the services you offer (payment, delivery, recommendation engines, etc) can be used by more than one party — again, improving usage and efficiency (more engagement, better insights, better product)

Why use Careem as the starting point?

Careem is MENA’s largest ride-hailing service that has already forayed into the world of food delivery, wallets and much more! The level of technical, business and product maturity is evident in their constant innovation and feature releases.

Other prime candidates for this are Talabat/Zomato, Uber and some larger retailers that are close to the level of maturity displayed by Careem. However, having known their product/business maturity, there are a few checkboxes they need to tick before they go and help out other brands succeed. This is, of course, my personal opinion. Also, it helps that Careems designs are fairly easy to adopt and are built on a user-friendly framework — so it’s easy for me to manipulate and adopt within my gamut of free online tools.

Careem checks all the boxes listed in the previous sections summary:

  1. Adding new revenue streams is a gamble
    The stakeholders in Careem have already tried multiple revenue streams that have been shut down at the trial phase due to a lack of ROI visibility. This has brought a lot of understanding, both from tech and business viewpoints.
  2. Shared Services
    After having their infrastructure exposed to various services like Careem now, Careem bike and food delivery, they’ve essentially prepared themselves for the super-app infrastructure. The wallet is currently available for external parties to use as a payment method.
  3. Shared growth concept
    Careem powers a lot of smaller enterprises within the region — providing delivery services to payment services. Being one of the first startups in the region, they’re well aware of the pains of running a business.
  4. Large Capital
    It also helps that Uber acquired Careem for a whopping USD 3.1 billion — allowing them to branch out to other services while they keep a healthy competition with Uber.
  5. Large user base
    With an estimated 3 million users in the UAE (~50%) they have one of the largest mobile spending users in the region.
  6. Well begun is half-won
    With corporate changes and already a foray into a super-app, Careem is aligned for the super-app transition (source).
  7. One democratized platform
    Careem will be the one platform that new startups can jump onto for quick validation of their services. Existing service providers will have to battle it out, providing services and goods at competitive rates and excellent customer experience. And Careem gets orchestrate the entire evolution, watch it unfold, learning along the way to bring improvements within its and its partner services.

Why would you integrate with Careem?

Let’s look at the benefits you and your customers derive from integrating & using Careem Super-app:

Your Business View

These are the reasons for you to integrate with Careem Super-app:

  1. Customer Acquisition Cost
    Careem has over 3 million users in the UAE. In retail, you spend around AED 50–100 to acquire a customer and further AED 40–60 to retain them, depending upon sector. With Careem integration, your acquisition costs will be much lesser and retention costs will be nearly nil — as long as your service is reliable and delivers on the promises.
  2. Additional channel
    While you can rely solely on your existing channels — like a mobile app, website, etc — this will act as another channel for your services/products. The way it benefits you depends on how you use it and how Careem positions the platform — if they give you marketing powers and some behavioral insights, you can effectively improve your marketing ROI!
  3. Service improvement and first-mover advantage
    With more users using your service, you can find the chinks in your experience and improve it. Remember, nothing is stopping your competitor to jump on this bandwagon and provide a better service and experience to your customers — effectively taking customers away from you. It will be a battle for the best services at the best prices.
  4. Transition to the volume game
    If you’re not already playing the volume game (more revenue with tiny margins), you’ll be beaten soon. The entire market is shifting to better prices, with a better experience. You have to keep your costs low — a Careem like integration will help you focus your energies and revenue on the service/quality aspect keeping the prices down.

Your customers’ view

Your customers will love this! Most, if not all, are already using Careem as their ride-hailing service.

Building a Super-app — Part 1 9
Careem takes care of everything!

Additionally:

  1. Democratized environment
    Your users love choice — they’ll get to try out every service within the Careem Super-app and evaluate for service, price, and quality.
  2. Data privacy
    With Careem being the custodians of your data, they need not worry about data privacy. If Careem provides only masked information to the brands, they can rest assured that they won’t get pesky, irrelevant mass emails and notifications from you.
  3. Less number of apps
    With all these apps living within the Careem space, your customers will have more space for their games and other frivolous applications (and their cat photos!).

Conclusion(ish)

A lot of questions remain unanswered, which will be taken up in the next part. While this article is long, I wanted to use it as a setup and mostly for paving the way for the technical and user-experience decisions that’ll be taken. It has been a month-long affair in thinking and researching — the fun user experience, technical and marketing bits are coming up in the next two parts — so stay tuned!


A word on the missing WeChat

I’ve avoided talking about the real super-app, WeChat — which will feature in the subsequent articles — mostly because it is cited & consumed ‘as is’, leaving the rationale behind the evolution of WeChat to their current stage to the imagination of the reader. There are also demographic variations in this region, against the WeChat regions, that factor in the UI/UX & product decisions which we’ll tackle later.


As always, thank you for reading. I would love to hear your feedback. It helps to know your thoughts.

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