Adani’s super-app will have to confront a bunch of challenges

The mobile app will connect passengers at Adani’s network of airports with other services offered by his group, FT said. That could be the easiest way to build up downloads. Adani runs seven airports and is building a new terminal and runway for Mumbai’s second facility. Overall, 20% of the nation’s aviation traffic goes through these. If Adani were to throw in a free ride home—he’s also investing in taxi fleets in these cities, according to media reports—he could get his app onto millions of phones.

That’s just the first battle. The second will be trickier—to make consumers come back for other things. Aggregating shopping, payments, entertainment, social media and finance in one place is the Chinese model. The likes of Alibaba, Tencent and Meituan perfected it before Beijing made them antitrust targets. Last year’s tech crackdown may be easing, but China’s covid policy is a drag on consumption: Alibaba recently posted a quarterly loss. In Southeast Asia, where the template was copied, investors are demanding profitability. Indonesia’s GoTo is cutting 12% of its workforce. Evidence from India isn’t very encouraging, either. E-commerce is a success, with Walmart’s Flipkart and Amazon controlling the bulk of a growing market—more than 60% of the billion-plus visits to the Flipkart site during its eight-day Big Billion Days festival last quarter came from Tier 2 and 3 cities. But some of the more niche categories that had gained popularity during the pandemic, like education and beauty and fashion, are either fizzling out or aren’t growing as strongly as before. Amazon is shutting down its test prep business in the country and exiting meal delivery. Paytm has seen its shares drop 75% in one year since its initial public offering, the worst first-year performance for a large IPO in a decade.

Online grocery shopping is ramping up, but Adani’s rivals—Tata Group’s Big Basket and Mukesh Ambani’s JioMart—have an early lead in what is seen as a hook to boost customer interactions. Pharmacies are growing fast, and here, too, Ambani’s Netmeds and Flipkart’s Health Plus are doing well. Adani’s consumer-facing web presence is limited. The Ahmedabad-based group picked up a significant minority stake a year ago in the Flipkart-owned travel booking site, Cleartrip. All the more reason to make transport the fulcrum of its super-app ambitions.

How fast can Adani hope to grow? With the exception of airports, power and city-gas distribution and edible oils, the rest of his empire has a strong focus on mining, logistics and infrastructure, which do not offer too many avenues to connect with consumers. Even for the Tata Group, which is into everything from salt and tea to cars and airlines, getting a lock on customers in the digital world is proving to be hard work. Tata Neu, its super-app around Big Basket, has been downloaded about 15 million times, according to Apptopia data. That’s a modest number in a country where there will be 1 billion smartphone users by 2026.

Tata Neu won’t be the only competition. Adani’s bigger rival will be Ambani, who built his digital moat during the pandemic when money was pouring into tech. Asia’s second-richest businessman has access to 428 million telecom users through his Jio mobile network. Ambani is also India’s top retailer and is expanding into financial services. Credit is the glue that holds a super-app together, going by the experience elsewhere in Asia. However, making money off it is hard. Grab Holdings’ financial services division got revenues of just $20 million last quarter from $3.8 billion in payments volumes. That translated into a $104 million Ebitda loss, compared with a profit from delivery and ride-hailing, the other two units of this Singapore-based super-app.

Adani Enterprises Ltd, the group’s flagship, is seeking to raise ₹200 billion in equity. This may come in handy for the fledgling super-app. Media reports suggest that Adani may butt heads with Ambani as India’s bankruptcy court looks for a new owner for Future Retail. Such bolt-on acquisitions may make more sense than trying to build new businesses from scratch. As long as investors and bankers remain sanguine about Adani’s finances, a worsening squeeze on global tech funding may even work in the billionaire’s favour. Whether India will ever be a market dominated by a couple of all-purpose mobile applications remains an open question.