On the 7th of April 2022, the TATAs officially launched the “TATA NEU Super App”. Ever since they made the announcement even before the launch it had been making headlines every single week. This super app market seems to be so lucrative that it’s not just the TATAs but even the Ambanis and Adanis are all set to enter this giant space. So practically 3 of India’s biggest business houses will be competing with each other, to become a market leader in yet another trillion-dollar market in India. In this article today let’s try to understand:
- What exactly is the TATA NEU super app all about?
- What is so special about the super app model is that these business houses are pouring in hundreds of crores for?
- What are the study materials that we need to study in order to understand the super app market?
Where and how did the super app model emerge & How did super apps actually become super powerful?
The super app saga has been going on since 2009 in China. This is when china was establishing something called the great firewall.
Using a great firewall China basically blocked American websites like Google, Facebook, and Twitter. Why did this happen because the government felt threatened by how much power these organizations can actually practice with the people of china by having their data? So they started nitpicking just to ban them one by one.
For example, Facebook is accused of facilitating communication between protesters during a deadly riot in western China. Whereas Google was banned due to sponsorship on search queries.
As you can imagine one fine day in china there was no Google and no Facebook and as a result of this three things happened in the Chinese market:
1. By the time this ban happened the Chinese people had already gotten habituated to the digital ecosystem. The number of smartphones produced in china had already skyrocketed, and millions of Chinese had already gotten used to these American websites.
2. Since the American websites were banned there was a big lack left in the market, because of which the Chinese market desperately needed replacements to fill in the gap of Facebook, Google, and Twitter.
3. Although the Chinese people needed replacements, the phone market of china was still in its baby stages. So most of the smartphones they had did not have a large amount of storage. This means that there was a huge gap left in the market and yet there was a big constraint on space.
This is what prompted the Chinese companies to set up and create services for China. But at the same time because of the space constraint, they had to actually club multiple services in a single app. This is where the concept of super apps was born. And the company that pioneered this wave was a company called Tencent and the app they launched was none other than Wechat.
If you look at how Wechat actually captured the Chinese market, you will very clearly be able to understand how these super apps actually emerge. In this case, it’s very very clear and strategic.
How WeChat Evolve as Super App in China
1. Created a product that gets deeply embedded in your life.
Just like Microsoft built an irreplaceable product with Windows operating system. Wechat deeply got embedded into the Chinese lifestyle as a messenger service. And just like WhatsApp did in India Wechat first became a leading messaging app with free calls, free messaging, and free video calling features.
2. They collect massive amounts of data.
In phase 2 they started introducing a feed like Facebook and evolved into a social media app. This way they could collect massive amounts of data about consumer preferences and they could also show ads. This is how the network effect was established in China.
3. Offered payment services to bridge the gap between two services
In phase 3 just like Whatsapp again Wechat introduced the payment feature that was a game-changing move in the Chinese market. Most people will ask why is a payment feature a game-changing. Well, that is because now Wechat can both act as an advertiser like Facebook with its feed, and a payment processor with its payment feature. This means that people could actually watch an ad for a handbag on WeChat and actually pay for that handbag using the exact same app. And if you’re a digital marketer you already know how valuable this reduction in friction for payment is. At the same time, you also know how big the impulse buying market is. Not so surprisingly the revenue shot up, conversion for ads shot up, and billions of dollars of revenue started flooding into Wechat.
4. Started integrating more and more services together which eventually turns that app into an irreplaceable product.
Wechat hit a home run by incorporating e-commerce into the exact same app. Using this feature not just sellers but even small businesses could actually open their accounts and collect payments from their customers. This insane level of tight and close-knit integration made Wechat such an integral part of Chinese life, that it almost started acting like an operating system in itself with social media, instant messenger, e-commerce, and payment network all of it integrated into a single freaking app. Today WeChat has achieved an extraordinary base of 1 billion monthly users.
Although this might look like random diversification to you. What is important to note over here is, that the bazooka that exploded Wechat in china is the seamless integration between payment features and social media. This is how the super apps actually evolve.
Are these super apps are going to be a massive hit in India also?
Not really. Because there’s a huge difference between the Chinese ecosystem and the Indian digital Ecosystem. Keeping all of this in mind let’s first try to understand exactly the difference between the Chinese digital ecosystem and the Indian digital ecosystem.
How Indian Digital Ecosystem is Different from the Chinese Ecosystem?
First of all, while Chinese people have proven to like generic products the Indian audience has always proven to prefer a specialized products.
For example, if you’re used to using Phonepay I’m sure many of you got a prompt to use Whatsapp Pay also. But my question to you is how many of you actually went through the friction of actually getting onboarded with Whatsapp Pay? Similarly, because China banned Facebook people had to shift to Wechat but here in India there are very less go for social media apps. In fact, in India, we are so specific that we use Snapchat, Whatsapp, and Instagram all three of them together for three different specialized purposes.
Lastly we Indians have often proven to move away from the app if it turns generalized. For example, Facebook has a marketplace integrated within itself and yet hardly any of us use it. Instead, we have specialized apps like Meesho, OLX, and Amazon which are literally three different sub-types of marketplaces. Therefore disrupting the existing leaders in their category in India is going to be very very challenging. Because the obstacle to acquiring users in India is reluctance. A fun fact is that other than in China not a single company in the world has been able to develop a fully operational and successful super app model. A classy example in India is Paytm. Which actually tried to become a super app but ended up eroding its existing customer base instead. So now the question is when the stats indicate failure.
Why is Reliance or the TATA so keen on getting into this model?
That is because both the TATAs and Reliance are not starting a super app from scratch. Instead, they are bringing in all the specialists and market leaders under one roof to create an ecosystem of offerings. This is where their acquisition strategy and conglomerate factor come into play.
In the case of the TATAs, we saw that in the form of the TATA NEU super app. This is because TATA already has companies in dozen industries including hospitality, jewelry, fashion, and airlines. Apart from that, they have Big-Basket in which last year TATA digital acquired a majority stake, and then we’ve got the retail chain Croma, entertainment services like TATA Play, the TATA Cliq app, IHCL TATA hotels, and then We’ve got Starbucks that is a joint venture with the TATAs in India. Apart from that, we’ve got Curefit coming up where TATAs are to invest 75 million dollars, and then we have 1mg. Now the question is as we saw most of us didn’t use Whatsapp in spite of it offering us payment features, and we didn’t use Facebook in spite of it offering e-commerce and marketplace features, then what is so special about TATA NEU that people will actually use it?
What is So Special About TATA NEU App?
The answer to this question lies in the book called “hooked”. If you remember from our Pubg video we spoke about users getting rewarded for the action that results in an investment. In this case, the catch over here is something called “NEUCOINS”. Where one NEUCOIN is equivalent to one Rupee.
Here’s an oversimplified model of how it will work out. This is a theoretical model in practice this might be executed differently. It will also evolve with time differently. But at the end of the day, the skeleton of this is going to remain the same. So let’s try to understand this.
Discounts & Cashback
Foremost TATA NEU will give out unbelievable discounts and cashback to make you download the app. If you buy 2500 rupees worth of products from BigBasket you might get 125 rupees worth of NEU coins. Then using these NEU coins you can get a 125 rupees discount at 1mg when you buy medicines.
Past Purchase Data
Apart from that once you integrate your accounts with TATA NEU, it will start pulling out the data from all of your past purchases then give you NEU coins for your past purchases and give you a discount now for your present purchase.
Integrated Discounts from Multiple Companies
In fact, as per a test user, while she was buying a TV from the TATA NEU App, the app actually pulled up rewards from a Taj stays, her BigBasket buys, her TATA Cliq purchases, and all of it put together gave her a discount of 10000 rupees instantly. If you see closely this is the advantage that only the TATAs and Reliance have. Others cannot even think about building from scratch.
4 Incredible Superpowers if TATA NEU Becomes Successful
If this goes well there are four incredible superpowers that TATAs will have, once TATA NEU goes mainstream. And applies also to the Ambanis and the Adanis.
1. Upsell & Cross-sell
From the business standpoint, they have a wealth of user data that helps them upsell and cross-sell multiple products to the same customer and eventually earn more.
2. Commissions can be earned
This opens up a huge avenue for digital revenues eventually they can learn from advertisers, from partner brands, and even can earn commissions just like amazon does.
3. TATA can acquire new companies and integrate with NEU App
Tomorrow if the TATAs acquire another company or a brand they will seamlessly be able to integrate the company within the TATA NEU App.
4. Highest Customer Lifetime Value
If the super app is successful it will have one of the highest customer lifetime value in the entire e-commerce space which means that once the customer gets associated with the company they might end up spending a lacks rupees during the usage of the TATA NEU app.
Benefits of Using NEU Super App from a Customer Standpoint
- With TATA NEU we could actually be rewarded for our loyalty
- The customers will actually save a ton of phone space and internet usage could become simpler.
Study Material
Whether this is going to be super successful or if it’s going to flunk like Paytm. Only time will tell. Study materials will help you understand the super apps market both in India and China.
1. The evolution of super apps in china and for this, I am attaching an HBR article on WeChat that will help you understand why it actually became successful.
2. How AliPay intends to become the next big super app? When you read both these cases try to spot the difference in their approach and more importantly see how the trajectory of the TATAs and reliance is actually different from their Chinese counterparts.
3. I am attaching an INC article that will actually give you an overview of two upcoming super apps from the Adanis and Ambanis.
So go through them and do let me know what you think about them in the comments section.
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