How South-east Asia's super apps are adapting to Covid-19

After years of exponential growth, South-east Asia’s super apps were forced to reassess their business models due to measures to contain Covid-19, with many refocusing their priorities as they plan for the post-pandemic world. In recent years super apps – online or mobile platforms that combine multiple services into one portal – have sought to expand their offerings. While many started with one core business such as online messaging, ride-hailing or digital payments, they have since expanded into increasingly diverse services.

Big Names

The rise of super apps has been more prominent in Asia than elsewhere in the world. Among the largest are Chinese platforms WeChat and Alipay, Indonesia’s Gojek and Singaporean Grab. Gojek and Grab play a particularly significant role in South-east Asia. Starting off as a motorcycle ride-hailing service in Jakarta in 2010, Gojek launched its app in 2015 and has since expanded into a multipurpose platform offering 18 services, including food delivery, finance, telehealth consultations and video streaming. The company, Indonesia’s first unicorn, is valued at $10bn.

Similarly, Grab was formed in 2012 in Malaysia as a taxi-booking mobile app, but has since moved its headquarters to Singapore and expanded into food delivery, financial services and hotel reservations, among other offerings. It is valued at $14bn and operates in eight countries across the region.

Consolidation

Despite this growth, the economic fallout from the pandemic forced super apps to reconsider plans for expansion, with many instead looking to consolidate. For Gojek and Grab, this meant a reorganisation and closure of low-profit services, along with those that did not align with social distancing measures. Firms may also look to reduce spending or disband operations in the hotel booking and ticketing segments if sustained economic pressure continues, according to a June 2020 report from ratings agency Fitch.

Food Delivery

While super apps are cutting back on some segments, Fitch expects they will concentrate on three core businesses: ride hailing, food and grocery delivery, and payments. Food and grocery delivery services proved to be particularly successful during the pandemic, with demand growing as consumers sought to adhere to social-distancing guidelines.

On the back of rising food delivery orders and a fall in ride-hailing demand, Grab’s two-year-old food delivery platform overtook its established transport service in 2020 as its main business line. While this meant that some taxi drivers lost their jobs, according to the company 150,000 switched over to delivery.

Gojek also refocused its efforts on certain delivery services. “Many industries were directly affected by the Covid-19 pandemic. Notably, ride-hailing apps witnessed a decline in use as Indonesians began to self-isolate,” Kevin Aluwi, co-CEO of Gojek, told OBG. “However, the isolation period has simultaneously enabled expansion in other areas of business, such as food, grocery and package deliveries, as people turned to mobile and online purchasing options.”

Still, despite the recent fall in demand, transport services are expected to remain a crucial aspect of super apps once the pandemic subsides, as they have traditionally been the companies’ largest earners.

Financial Services

In addition to food delivery, financial services are expected to play an increasingly important role in the plans of super apps moving forwards. After introducing GoPay and GrabPay to process payments for ride-hailing bookings, both Gojek and Grab have rapidly expanded their financial services into point-of-sale and online payments, ride insurance for its riders and drivers, travel insurance, and loans for small and medium-sized enterprises. “Access to services including affordable health care, insurance, smart mobility and financial services remains a key barrier [to growth] in the region,” Ming Maa, president of Grab, told OBG. “These are issues that multi-service tech platforms must address as they expand their offerings to give users greater convenience and choice.”