How to build a super app
Image Source: https://www.probewrite.com/en/articles/54/what-is-a-super-app

How to build a super app

Disclaimer: I never thought I would ever write a disclaimer but here it is: This post reflects my personal opinion and not that of my employers. Any error is mine and reader discretion is advised

So I wrote a thread on super apps where I discussed demand and supply side economies of scale, ways to build a super app and also compared Wechat vs Paytm and Swiggy vs Uber. Since reading threads on Twitter is not the most pleasant experience I am turning it into a blogpost

Lets start

There are 2 ways to build a super app: 

1. Start with a core product with high engagement and then build more use cases 

Classic demand side economies of scale where value of the product improves with each new user added to the network

Example. Wechat started with chat whose value increases with each new user in the network. Once they had critical mass of users the focus moved to monetisation of those users. Soon businesses got listed on Wechat and then with their We Chat Pay they started doing C2C payments and later e-commerce. Both users and business (two stakeholders needed for become a platform) was already there. All it was to start facilitating transactions

But note the main difference between Wechat and something like Paytm. Paytm also had demand side supply of scale because the more users they had using the Paytm wallet the more useful the product was for its users. You need a critical mass of users to drive C2C transactions and businesses + users to drive B2C transactions

You need a critical mass of users to drive C2C transactions and businesses + users to drive B2C transactions

And post demonetisation everyone was doing Paytm Karo. It was/is the most popular wallet in the country

They were always doing a huge volume of transactions thanks to mobile recharges. But they needed other avenues to boost GMV

Soon came e-commerce (paytm mall, flights bookings and what not), and a bank (paytm bank)

And it became a payments super app

But what is the difference between Paytm vs Wechat? 

The network effect as well as switching cost is far higher for users in Wechat. Inspite of so many new chat products launching in China Wechat is still the most dominant one. You have your entire network on Wechat, your chat history, their moments product is a social network in itself. It has the entire product suite of Whatsapp + Facebook combined + more

You as a user can move away from Facebook but maybe not Whatsapp

Hence I feel it is Whatsapp and Google Pay which will be the dominant players in payments in India (at least for C2C)

Money transfer to your existing bank account is a far better experience than using a wallet. And opening new bank accounts is a pain

How hard it is to move away from Paytm?

Not much. Transaction history is something which is not as important as your content (historical chat, posts, groups etc)

If your network moves to another payments app there is no need too keep using the old payments app.

The other use cases of the Paytm super app?

Paytm mall is is far far behind Amazon & Flipkart and I don't ever see it competing with them. 

Paytm Chat? Not sure. Have never seen anyone use it

Chat is sticky. Payments is not 

2. The second way to build a super app is to have supply side economy of scale like Uber, Gojek, Lyft, Swiggy 

Uber does not have pure network effects in the traditional sense like Swiggy does. Each new user (rider or driver) helps improve the unit economics/utilization but does not create a lock in like traditional networks. Read this post to know why: No Network For Uber

The difference between Uber and Swiggy:

For you as a user you don't care if your friend Mohanlal uses Uber or not. Or if Mohan or Kishan is driving your Uber

Sure more drivers help reduce wait time and improve unit economics but diversity in supply does not matter to you

Compare this with Uber Eats or a Swiggy. Each new restaurant on the platform does matter to the user because diversity of restaurants lead to more choices for the user and if you want to order from somewhere: The price, time to delivery matters but so does number of food options 

More restaurants -> More choices for users 

More restaurants -> More competition amongst restaurants -> Willingness to do promotions on Swiggy's platform -> Better prices for users

So you have traditional network effects and also see prices go down because of competition between supply

Drivers in Uber don't compete for bids and undercut them. Restaurants in Swiggy do

Hence a subscription product works too. Because restaurants split the discounts cost

Now comes the hard part.

Improving 1) LTV of users 2) Utilisation of drivers

Swiggy has been killing it on the first front. Amazing consumer products to drive up usage (orders/week): Swiggy Pop, Swiggy Super, Swiggy Daily

If I was Swiggy's CEO my first goal would be to replace the Cook of every middle class Indian 

And at this stage I would be super happy with the progress we have made

But more orders also means burning more money because of incentives given to the drivers. And that burn is not sustainable as we have seen in Uber's case

So what do you do?

Improve utilisation of drivers by building more use cases for customers and thereby improving unit economics.

I had written a post on that last year: Thoughts on Dunzo and Swiggy

Soon you will see Swiggy doing 

1. Ride sharing

2. Milk, vegetable delivery with a daily subscription product to increase daily orders

3. Delivery with higher delivery fee

4. Swiggy daily (replace cook and mess system for couples and students)

As a daily user of Swiggy I am definitely rooting for them

/end

Something else I wrote recently and you might find useful: How to learn

P.S I tweet interesting stuff here: @manas_saloi

Sahiba Sethi

Exploring ideas for my next startup | Looking for a cofounder

4 年

Hey Manas J. Saloi I would love to invite you as a speaker to HelloMeets. I am on [email protected] Where can we connect?

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