The Rise of the Super App in China

To succeed in China, Western businesses need to respect the power of the super app.

In the United States, businesses assume a customer’s path to purchase covers multiple disconnected touch points, offline and online. In the automotive industry alone, a U.S. shopper visits up to 16 sites, ranging from OEM websites to review apps, before making a purchase.

But those assumptions don’t work in China.

In China, consumers live on super apps such as WeChat. Super apps act as all-in-one Swiss Army Knife managing a consumer’s needs in one place, ranging from communicating with friends to getting taxi service. Brands need to experiment with what lovable experiences mean for consumers living inside super apps.

Examples of Super Apps

In the United States, mobile experiences are often unbundled, but both enterprises and consumers have figured out how to navigate standalone mobile apps to get what they want. Apps such as Facebook, Foursquare, Messenger, Uber, Skype, Yelp, and Venmo all exist separately, but you can book an Uber through Snapchat and integrate Messenger with PayPal. But in China, all of these app-like experiences are accessed through a bundled experience through major apps. For instance, you can get everything you need through WeChat, and WeChat doesn’t want you to integrate with any other app. Here are some examples of super apps:

WeChat

I’ve heard WeChat referred to as “the one app that rules them all,” and The Lord of the Rings metaphor is not far off the mark. WeChat, developed by Tencent, is a mobile, social, and commerce platform that combines the best features of apps such as Amazon and Uber into one experience. Quite simply, WeChat is the top dog. If you’ve been to China lately, you can appreciate the ubiquity of WeChat, which is embedded at the point of sale in popular retail outlets such as Starbucks.

With more than 580,000 apps on its platform, WeChat is investing heavily into its mini-apps program, which turns WeChat into an operating system unto itself, allowing third parties to develop self-contained experiences to showcase within the WeChat walled garden. Global retailers such as Michael Kors, Swarovski, Longchamp, and Dior have released mini-apps for functions such as eCommerce, photo sharing, loyalty, and card gifting.

Alipay

You think PayPal is big? In fact, Alipay, developed by Alibaba, overtook PayPal in 2013 to lead the global mobile payment platform market although since then Alipay has faced stiff competition from WeChat and others. Together, Alipay and WeChat command 90 percent of mobile payments in China. Alipay is based on a third-party services/partnership model, upon which the app introduces new capabilities to allow users to accomplish a variety of tasks, such as purchasing movie tickets, booking a ride, or getting lodging.

Pinduoduo

Pinduoduo (which includes Tencent as an investor) is reportedly the fastest-growing app in the history of the Chinese internet. At its core, Pinduoduo is an app for group buying, similar to Groupon. Members receive rewards such as discounted products by signing up more members. In fact, if you get enough people to sign up, you can get some products for free. The promotions create wildly viral engagement for the products offered on the app, and more usage for Pinduoduo itself. Pinduoduo uses a number of other tactics to encourage user engagement such as coupons with two-hour durations and the ability to ask friends to help you bargain for products. (The online bargaining function taps into a common offline shopping experience in China.) It’s no surprise that Pinduoduo is gaining in popularity.

 Ecosystems

Super apps are part of ecosystems. They are enclosed experiences that make it easy to accomplish certain tasks -- so long as the tasks occur within the walled garden. To understand how these super apps operate, take a look at your smart phone. How many apps do you have on your screen? I’ll bet you need to toggle from one to the next to get what you need. In China, you don’t need to navigate an app map on your phone screen. You just open, say WeChat, and stay inside WeChat.

These super apps don’t necessarily make completing tasks across super apps easy, either. For example, a customer completing a purchase through WeChat lacks the ability to complete a transaction through Alipay. And vice versa. Alipay is part of Ant Financial, which is closely connected to Alibaba, and WeChat is part of Tencent. Therefore, the battle between Alipay and WeChat Pay is often regarded as a proxy war between Alibaba and Tencent, the two internet giants in China. But each app provides so many functions that consumers living inside those walled gardens have little motivation to leave.

And the apps go well beyond providing functionality. They provide personalized experiences. On WeChat, for instance, huge celebrities promote brands like influencers do so on Instagram in the United States, and clickable buttons make it easy for consumers to buy products.

Western brands need to tap into these super apps to provide meaningful experiences – and understand that connecting those experiences outside the app won’t be feasible for now. In addition, Western brands need to understand the mindset of the Chinese consumer as they live inside these apps. WeChat isn’t just for completing tasks, searching for products, and buying things with the brutal efficiency of an Amazon. No, WeChat is where consumers hang out, play games, interact with celebrities, and live their lives. WeChat is an experience.

As a recently published Verge article pointed out,

It may be hard for people outside of China to grasp just how influential WeChat has become there. Consultant and founder of the blog Stratechery, Ben Thompson, wrote:

“For all intents and purposes WeChat  is your phone, and to a far greater extent in China than anywhere else, your phone is everything. There is nothing in any other country that is comparable: not LINE, not WhatsApp, not Facebook.”

Global retailers can succeed on these super apps in a few key ways:

• Explore eCommerce capabilities that are native to super apps. Whereas in the United States the default strategy is for retailers to “own” their webstores (think mobile apps, ecommerce sites, etc.), there are nuances to showcasing produce directly in super apps that might make more sense than asking customers to “leave” a super app and convert on an owned webstore.
• Explore the influencer network. Individuals who have built up meaningful followers on WeChat are called KOLs – key opinion leaders. They represent a powerful network for brands to tap into to drive awareness into products and services. Features on WeChat like “moment” ads and “subscription account” ads have been met with less than impressive results, where KOLs have been met with better results. Check out this article for more insight.

How Moonshot Helps Retailers

Moonshot works with global companies to discover, design, and deliver lovable customer experiences that tap into China’s super apps. We recently helped a global omnichannel retailer supercharge its eCommerce foundation by integrating WeChat Pay into its mobile app. In doing so, we provided a seamless way for the brand to interact with customers in a number of ways such as:

• Logging on to its native mobile app with WeChat features (just as it’s possible for Facebook to act as a single sign-on in the United States).
• Extending extend the WeChat experience into its loyalty program, providing an easy way for customers to enroll, earn rewards, and redeem rewards through WeChat.
• Exploring the role that WeChat could play in post-purchase customer service and in-store experiences (often referred to as O2O).

The brand was thus set up to insert itself into the customer journey inside WeChat’s world.

Next Steps

Ecosystems such as Tencent and Alibaba have their upsides and downsides. You have to play by their rules and accept the limitations of living inside a walled garden. But you also benefit in a few major ways:

• Your brand can become an active digital participant in the world’s largest consumer retail market.
• You can more easily track customer behavior inside each ecosystem through Tencent and Alibaba, gaining deeper insight into consumer preferences.
• You have stronger access to the businesses that live inside the walled gardens – potential business partners that have been vetted before they can gain access.

To prosper in the land of the super apps, I suggest a few approaches:

• Do your homework on the customer journey in China. I can’t stress enough: your assumptions about the Stateside customer journey won’t hold up 1:1 in China. 
• Pick a solvable problem such as gaining more engagement for a loyalty program or creating a better connection between your online and offline experience. Then ask, how does a super app factor into solving that problem?
• Adopt an experimentation mindset to discover how ecosystems and super apps can deliver lovable experiences in your customer journey. Don’t go all in. Solve a problem first, and learn from that experience.

A number approaches exist to help you get started, including the design sprint, a tool for testing new ideas in a way that manages cost and risk. We often work with our clients in a workshop fashion to identify the right approach and apply our own design capabilities to build solutions. Contact Moonshot to learn more.