INSUBCONTINENT EXCLUSIVE:
Thiago Paiva
Contributor
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Thiago Paiva is a fintech entrepreneur, writer
He is the co-founder of Liquia Digital Assets, an investment platform for international investments using blockchain technology.
The
super apps WeChat and Alipay became an integral part of the Chinese mobile ecosystem, growing to more than 1 billion monthly active users
(MAU) and 1 billion annual active users (AAU), respectively
They both offer services from food delivery and bike sharing to a full suite of financial services such as payment, insurance and
investments.
Now, companies from around the world are trying to replicate the successful Chinese model in their region
And Latin America is an especially compelling region for the emergence of super apps, due to its vast population, almost 650 million,
distributed in more or less similar countries regarding language, culture and religion
It also has a mobile-first population with 62% of smartphone penetration, according toGSMA data.
The expansion of the super apps model
After
the incredible success of WeChat and Alipay, many companies around the world decided to replicate their model in different regions
Due to the proximity to China and its influence and money, Southeast Asia was one of the first regions in which super apps started to appear
The Singaporean ride-hailing Grab and the Indonesian Go-Jek both raised billions of dollars to not only successfully block the expansion of
Uber in the region but also to expand their portfolio of services provided beyond ride-hailing to food delivery, payments and other
services.
Note that not all super apps are the same.
In India, payTM is expanding beyond its core service and positioning
itself to be the leading player in the country, especially after Tapzo was acquired by Amazon last year and closed.
It is interesting to
note that not all super apps are the same
Alipay came from the e-commerce Alibaba and is more focused on financial services, while WeChat started as a messenger app, expanding not
only to financial services but also to daily services such as e-commerce, gaming, travel and many others
In Southeast Asia, Go-Jek and Grab started as ride-hailing, expanding to delivery before going to financial services, and payTM started as a
prepaid recharge mobile platform and then moved to offer a range of financial and daily services.
So, what to expect in Latin America?
Latin
American super apps should develop themselves in their own particular way, as the environment in the region is quite different from the one
in China.
The internet ecosystem in the region is highly influenced by European and American tech companies that dominate segments such as
communication, music, search and many others
It is quite hard for a local startup to compete in those markets
However, there are a few battlegrounds that are not as easy to dominate from abroad, such as ride-hailing, food delivery and finance
Those are on-the-ground or highly regulated industries that are very hard to scale, especially across different countries
Those are precisely the industries in which we have seen the emergence of some super apps candidates, fueled by an unprecedented amount of
venture capital investment in the region.
The most prominent candidate to super app in the region is the Colombian on-demand delivery Rappi
It is one of the most funded startups in Latin America, backed by titans such as Sequoia, Andreessen Horowitz and SoftBank, which have
poured US$ 1.4 billion in investments so far
Although it started offering just food delivery, it now provides services such as e-scooter, payments, P2P transfer, movie theater tickets
It also operates in the most relevant countries in the region: Brazil, Mexico, Colombia, Argentina, Chile, Uruguay and Peru.
Another strong
candidate is the financial side of the e-commerce behemoth Mercado Libre (MELI),Mercado Pago
It started as a way to enable payment between users in the marketplace; however, it grew to offer a diverse portfolio of financial services
such as online and offline payment, bill payments and, more recently, investment (through itsMercado Fondo)
Thanks to its parent company, it pretty much all over Latin America, and processes around 400 million transactions annually.
The Brazilian
Movile is also positioning itself as a strong competitor
The company already has a diverse portfolio of services, from delivery food to event tickets, courier and even a kids Netflix, operating in
Brazil, Mexico, Colombia and Argentina
Not only did it raise a total of US$395 million investment, but also one of its companies, iFood, raised a total of US$592
million.
Latin America is an especially compelling region for the emergence of super apps.
The Spanish Cabify is another
company trying to position itself as a super app
It recently started to offer e-scooters and bike service, as well as financial services through its own fintech company, Lana
Even though it raised US$477 million in funding, it will be hard for Cabify to become a super app, as the ride-hailing competition is
getting quite intense in the region
Its competitors Uber and Didi are also adding more services and trying to position themselves.
An interesting potential competitor would be
Nubank, the Brazilian decacorn (private companies with more than US$10 billion of valuation)
It already has more than 8 million customers in Brazil and is starting to expand in the region to Mexico, Argentina and Colombia
Although Nubank still only offers traditional financial services, it has Tencent as a significant investor and has raised US$1.1 billion, so
Therefore, it would be no surprise if it decides to follow a similar path as WeChat.
Also, in Brazil, Banco Inter (BIDI11) recentlylaunched
a marketplace to expand the offer to its customers beyond financial services to e-commerce, travel and more
The challenger bank is already a public company with around US$7 billion valuation, but it is now backed by SoftBank after its latest share
offer.
Those are the most well-positioned candidates to be super apps in Latin America
Even so, other players could surprise, such as Magazine Luiza, leading retail and e-commerce in Brazil
Its CEO is transforming the company from a brick-and-mortar retail to a technology company and already showed its ambition to transform
MagaLu (its app) into a super app offering many other services
Although it could compete in the Brazilian market, it would be doubtful that it becomes a regional player, as its primary business operates
only in Brazil.
Super apps in Latin America will not be the same as in China
We are starting to see the rise of the super apps in Latin
America, but they will not follow the Chinese path as the markets are very different
A better comparison could be with the Southeast Asian players as the markets are more similar; however, Latin American super apps will
probably be the result of the unique environment in the region.
As more companies are looking into the Chinese success stories, we will
probably see even more players competing to become the Latin American super app
The venture capitalists are already placing their bets on who will become the leading players in Latin America
One thing is certain: It will be exhilarating to see how the market unfolds in the region — the customers will be the true winners in this
