Jim Barksdale, once the CEO of Netscape, famously said that there were only two ways to make money he knew of: bundling and unbundling. And the Internet world seems to be coming a full circle on this count. The early years of the Internet and 2000s were the years of portals: bundled monoliths that became one-stop shops encompassing all needs. For example, Yahoo, Google, Craigslist, Justdial etc. bundled all major use-cases for consumers. Then with the launch of the iPhone in 2007, apps fundamentally changed this bundled world into one of unbundled experiences. You could now have an app for literally anything – each app handling a specific need.
And slowly, the wheel is turning again. From the world of unbundled apps, the next 4-5 years will be about bundling multiple use cases into one app / portal, until, I imagine, the next wave of unbundling comes across because of different form factors.
Let’s try to understand why bundling is happening: the Indian (and the Asian consumer) market is dominated by Android and for a lot of these users, their mobile phone is the first computing device for them. The current app paradigm requires these users to discover an app for every task/company, install a new app, which takes up space on their phones and costs them data when downloading and updating. This is asking for a lot. In addition, more apps end up ruining the user experience by slowing down their phones.
In addition to the inconvenience, there’s the problem of phone space – the average app fights against WhatsApp for space on the phone (even Facebook app loses against WhatsApp – only 68% of Indians keep the Facebook app, the rest use it through the browser). As a result, most app developers lose 60-70% of their app users within 90 days of the user installing the app.
Across Asia, bundled apps have picked up traction in the last 1-2 years. This bundling is happening around multiple different main needs e.g. cabs, wallet, shopping, news, chat etc. While WeChat in China is the most famous example of it, there are countless others: Baidu, Meituan, Tao Taio, GoJek etc. Each of these apps has achieved massive scale and serves multiple needs for their users.
However, bundling is not as simple as it looks. This round of bundling will present interesting challenges. The first and foremost challenge is to meet customer expectations: for example, how do you get the user to order food on a news app? If an app has very high traction for one use case, teaching and training the user to leave the main use case and think of using the app for other things is extremely difficult. In fact, one Chinese product manager I spoke to categorised all conversions from the app’s main use case as “leakage”. If your main pipe is huge, then the “leakage” can be millions of dollars. Otherwise, it’s just hope.
From a marketing perspective, it is important to pick a noun that users can understand easily (if a flight app starts selling hotels or trains, we don’t even think of it as bundling since it is seen as a natural part of “travel”). When you aim for being a broad use-case app, you need a way to be able to explain the app in a relatable way.
User interface and user experience (UI/UX) is extremely difficult to get right for a standalone app, and even more difficult for a bundled app. And customers get used to better UI / UX very quickly. Remember how a Flipkart delivery in 2009 used to feel like magic. Today we take it for granted. Similarly, the challenge of a bundled app is to create different UI for different use cases with about 90-100% fidelity to the UI/UX of standalone apps. It sounds easier than it is.
There are many superb entrepreneurs and product managers trying to solve for these challenges. Some challenges will be solved, and some may defeat founders and force them to accept that the consumer is king. The problem is knowing which ones are which.