NEWS ANALYSIS

Pure-play startups on the menu for Super Apps

Singapore

WHEN you're a standalone app offering a single service - and bleeding, the digital great white sharks can smell the blood from far away.

Such apex predators, or Super Apps, are multi-purpose mobile apps that offer multiple features - ridehailing, chat, social media, payments, games and so on - each of which would typically be available only through a standalone app.

What whets their appetite in startups such as Ninja Van, Honestbee, Burpple and MoneySmart are the latter's regional presence, with the challenges from their silo existence making them vulnerable.

The most recent example of such a deal is ridehailing giant Uber's ongoing talks to acquire London-headquartered Deliveroo for more than US$2 billion, in a major attempt to dominate the food delivery business in Europe.

Uber is the epitome of a Super App, having originated as a ridehailing platform and then diversifying into pet transport, short-haul flights, water taxis, bike-sharing and much more. Deliveroo, on the other hand, is what is known as a standalone app, or a pure play, which has a singular focus (food delivery) and offers only one type of product or service (again, food delivery).

Should the so-called "Uberoo" materialise, it will mark Uber's seventh known acquisition of a startup, according to Crunchbase.

Since 2015, Uber has snagged six startups, including electric bike-sharing service JUMP Bikes, geospatial software platform deCarta, and self-driving truck firm Otto. The six, like Deliveroo, are all pure plays.

What do these acquisitions do for Uber? They allow Uber to expand its offerings - notably, all in transport - and have full ownership of its ecosystem, including its various moving parts (pun intended).

They also allow Uber to undertake new business models, and access complementary technologies, user bases and markets it did not previously own.

In Singapore, startups that could interest Uber are delivery services Ninja Van and CarPal, whose businesses are riding on e-commerce growth in the region.

Acquiring Ninja Van will be a quick way for Uber to capture a good part of South-east Asia's delivery market. The startup operates in Singapore, the Philippines, Malaysia and Vietnam.

With over 100,000 merchant partners and 20,000 riders across eight Asian countries, homegrown Honestbee is another likely candidate. The startup, which offers grocery as well as food delivery services, recorded S$1.5 million in revenue in 2015, up from S$2,970 in 2014.

Great content is also increasingly important to have in pure plays for Super Apps. It attracts users and compels them to spend more time on the app, contributing to a sexy new metric known as "engagement minutes".

Thus, local food guide Burpple - which features food reviews and trending restaurants - and personal finance portal MoneySmart - which evaluates credit cards, loans and insurance - could be attractive.

For a pure play, being bought out by a Super App could end an unsustainable and costly rivalry with the better-financed Super App. It doesn't help that most single-service apps are unprofitable.

Even those with the largest market share or funding war chest remain challenged by their dependence on a singular business model, which these days, may be disrupted in a flash.

Uber's buyout of Deliveroo will fortify Uber's food delivery business, which is currently led by its food delivery arm, Uber Eats, a Deliveroo rival.

The merged entity will enjoy the logistics and data analytics expertise of Uber Eats, and the networks of Deliveroo, which operates in over 500 cities and towns in 13 markets.

While Deliveroo will strengthen the Uber empire - reportedly worth over US$70 billion today - it will by no means complete it.

Of course, Uber is not the only Super App around and not all Super Apps are on a one-way transport route. There are the likes of WeChat (some call it the pioneer of Super Apps), DiDi, Go-Jek and Grab. These are in the market for pure plays that will augment their offerings and must, above all else, already have a sizeable user base.

Globally, Uber is already synonymous with "transport". But it has yet to realise its grand plan of being "the ultimate transport app" before its public listing next year.

With the clock ticking on its listing ambitions, Uber faces more urgency than other Super Apps in growing their empires via acquisitions.

Uber has done well in the difficult markets of South-east Asia and China, where it appears to have ceded leadership to its enemies (Grab and DiDi), but has in fact kept them close as partners by owning stakes in them.

For the consumer, Super Apps are convenient and efficient. The day may soon come where just five - or even fewer - of them on our smartphones are all that's needed to function in today's lifestyle.