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The app business is local business

That certain apps are globally accessible, creates the impression and expectation that a global business model should naturally follow. However, this is not the case, says the writer. Picture: MOHI SYED/Pexels

That certain apps are globally accessible, creates the impression and expectation that a global business model should naturally follow. However, this is not the case, says the writer. Picture: MOHI SYED/Pexels

Published May 6, 2022


Mzi Khumalo

I hate to officially burst our bubble, but the app business is local business. The above statement may bring disappointment to many, especially us who operate globally oriented apps like Facebook, Twitter and Open Letter App.

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That the apps are globally accessible, creates the impression and expectation that a global business model should naturally follow. However, this is not the case. Below are the five reasons for this.

The first is that that there are sometimes physical components to be used in conjunction with the app for its enjoyment. For the digital shooting range experience of the Aim Game, you need the digitally enhanced pistol, the rifle and the target. For Uber, you need the actual vehicles that do the picking up and dropping off of the app users. These physical components can only be arranged and co-ordinated locally.

The second is the legislative jurisdiction of the laws pertaining to the service. The laws relating to age restriction, advertising, safe use of the service, engagement with other users or consumer rights are locally determined. So while Facebook and Open Letter App provide a communication service whose user policy are based on global convention, it is the local law on slander and defamation that are more instructive on how we operate in a particular jurisdiction. Facebook has often had trouble with this, contending with local laws they had not considered fully.

The third reason is that issues and the hash tags that come from them are mostly local. Even though they will be discussed globally, their continued interest and resolution remain local issues / news. One need only see the decreasing interest in the war in Ukraine. Only areas that are impacted by the threat or taking in refugees are still engaged on the topic.

The fourth reason is that our networks are mostly local. One need only see how many mutual friends you will have with those geographically local. They decrease as you move away geographically, eventually reaching geographical areas where they use a different language. See a Facebook page / timeline of a friend in Taiwan and see how different it looks from what we are used to.

The fifth and last is that to deliver a satisfactory service as envisioned at head office, one must be close enough to fine tune the service for users. Services like translation and content moderation can be lost in translation when the local language and culture is not understood. Content moderators are too few and generalist to understand and manage the triggers of xenophobia and the misinformation that feeds it.

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Global companies have normally set up local offices to address the above challenges and improve their service. You will find local set ups like Meta (Facebook) South Africa or Netflix SA.

That itself is proof that the business is local. It is also not enough to have a local office that is not empowered to make decisions that allow it to be responsive to the local conditions. One can’t address issues like speed of delivery. My daughter loves to order from Shein, but hates the time she waits for her parcel. I often tell her if she determined the tastes of her friends she could pre order and sell locally more satisfactorily.

So, in order to operate the full offering, in line with the law, and for maximum customer satisfaction, one must understand and approach the app business as local business. Strategies not aligned to this reality are doomed to fail.

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I remember seeing Zulzi the grocery delivery app service, raise R30 million for its operation. I have also seen comments on social media where one would say, we like Zulzi and we can’t wait for them to come to our small town. The point is, even if Zulzi were to set up an operation in that small town, it will not do that more effectively than a local entrepreneur. Zulzi is also cleverly localising what Amazon does.

The e-hailing (Uber) drivers recently went on strike, complaining that the petrol increase has squeezed their room for profit and that there must be change in policy to address this. The matter had been reported to the local office and was still being escalated to the head office. In contrast, the local taxi industry was able to address this quickly to the satisfaction of their drivers. The reason is, the taxi industry is local.

Bonus material: The above is applicable in the following way. A local entrepreneur who subscribes to an on-line shop provider, rents a small delivery vehicle and concentrates locally, can set up a grocery delivery service that will be pretty impossible to beat. If they can be generous they can offer vouchers of R1000 to members of that geographic location, ideally the size of a suburb. For this voucher they must download and register on the app. Ideally 200. This is also a realistic number to serve satisfactorily for the start.

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Their search for the grocery items, the eventual shopping cart, and their delivery address are the ideal set of information for the entrepreneur to structure their business on. The entrepreneur can source, plan routes, and push promotions of the liked items to the relevant customers. This number of customers 150 or 200 will have also received a fridge magnet with the company branding and contacts, will refer the next group in that same community enabling organic growth for the entrepreneur.

* Khumalo is the director at Open Letter App Company.