Ever since he bought Twitter, Elon Musk has made it clear that he wants to transform the application into an “everything app”. This new direction is reflected in the company's recent name change: a simple "X", in reference to the unknown in the equation, which can take on several values. This type of model is better known as the “super-app”, in reference to the extremely popular applications that combine a multitude of services, like WeChat, Meituan and AliPay in China. In a recent Harvard Business Review paper , a super-app is defined as a:
"single application, accessible by mobile device or web browser, that offers multiple diversified services for everyday personal or commercial life, relies on a common financial transaction platform, leverages intra-app data to tailor offerings, and is widely adopted.”
Instead of being a dense ecosystem made up of several interconnected and popular mobile applications, a super-app is actually a Swiss Army knife application integrating various services under a single banner. For example, instant messaging, online payment, train and plane ticket purchases, taxi reservations, and home-delivered meals are just some of the services offered by WeChat, the app with 1.25 billion monthly users.
In our book, we refer to the “envelopment through increased value” strategy to explain the super-app phenomenon (see Case 6.9, p. 231, about the super-app Meituan). The idea is that a platform will leverage its existing operations to facilitate entry into the new market by providing more value to users. We argue that by combining several products and services into a single bundle, those platforms often gain a competitive advantage over single-service platforms or pure players. Hence, the super-app exploits the surplus of perceived value by users, generated thanks to one-stop shopping and convenience.
We can reasonably ask what threat this poses to single-service platforms. Should they fear the deployment of such super-apps, which have decided to venture down the path of multi-product strategy, in the manner of large conglomerates?
First of all, it must be said that the number of super-apps is relatively limited. If we refer to the Asian model described above, there are currently no equivalent examples in the West. Many companies advertise themselves as such (Revolut, Bolt, Uber, etc.), but in reality, diversification is nowhere near as far-reaching. Indeed, it rarely goes beyond the initial sectoral boundaries and commercial success remains highly uncertain for the time being. This explains why it is dangerous to draw conclusions about the competitive threat based on the Chinese model alone. In fact, the situation is skewed by local legislation, which prohibits the use of Western applications (lack of competition) and has favored the emergence of local tech giants.
Nevertheless, it is clear that the threat is credible. Even if the future in the West does not lie in super-apps, the risk of users leaving for a solution offering the same service and more, is real. So what to do? The answer probably lies in one word: complementor.
Looking for complementors
Most of the time, super-apps are built little by little, starting from a core business. The platform starts with ride-hailing and then moves on to meal delivery or bike rental, for example. Rather than diversifying arbitrarily, the platform tends to seek out complementary offers to its core business. A concept we develop in the chapter on competitive analysis. Complementors are players that make it easier for the platform to attract and retain users by offering services that go particularly well with its own service. For instance, an online marketplace can significantly increase its number of users if it adopts a popular payment module, such as PayPal. Welcoming complementors expands network effects because complementors allow the platform to connect with a broader range of potential users. And by enhancing network effects, complementors also contribute to keeping new entrants – like super-apps – at bay. In Chapter 3, we tell you more about the benefits of opening your platform to complementors, but also how to turn potential competitors into complementors.