If you are a bKash app user you should know that bKash sent a new update notification this morning. If you pay attention to the update description that comes along with every app update notification, there are two from bKash this time: one bKash has made traveling easy, the company writes in its app update. Now you can buy bus, train, air, launch, movie tickets directly from bKash app. Two, there are as usual bug fixes.
This, however, is not an entirely new announcement from bKash. Earlier, the company integrated train ticketing in collaboration with Bangladesh Railway.
The important distinction, however, is that this time bKash has integrated another service provider bdtickets.com into its app. Now when you click on, say, for example, air ticket option, bKash app takes you to a separate window where there is bdtickets as a service provider and when you click on bdtickets, a separate window within bKash app opens bdtickets home page where you can make the purchase.
Again, the important aspect is that although bdtickets.com’s branding is there, all of this happens within the bKash app and the customer does not have to leave the bKash app for once. Bdtickets.com’s home page opens within the bKash app. Purchasing happens in the bKash app. Bdtickets.com is integrated into bKash in such a way that you will never have to leave the bKash app.
This is far more significant a move than integrating Bangladeshi Railway.
Bdtickets.com is an independent online ticketing company that came out of Robi Axiata Limited. The company has been trying to build an online ticketing business for a while now. Founded in 2015, Bdtickets.com remains a key player in Dhaka’s online ticketing space. While Shohoz, one of the earliest online ticketing platforms, expanded to other verticals such as ride and food, bdtickets.com continues to invest in the ticketing space.
bKash integrating bdtickets.com into its platform explains a major piece of bKash’s long-term strategy to become the super-app or a dominant digital services platform in Dhaka.
I have long anticipated that bKash will take this route for growth and for securing its future today or tomorrow. I wrote in bKash Adds Train Ticket, bKash And SuperApp:
“bKash has added a new service to its app – you can now directly buy a train ticket from the bKash app without leaving the app. A development with many meanings. The process is simple – download the bKash app, go to the ticket option, click on the icon, choose a train ticket, give your details, make the payment, you are done and ready to go wherever is your destination. This is an intriguing development that has indications for what bKash could pursue in the coming years. It is very well possible for bKash to bring all types of ticketing services on to its app and it could easily happen with many other services. In fact, at the risk of being a little speculative, the scale of bKash and its rapid rise in the digital payment space makes it the only viable candidate in Dhaka’s tech ecosystem to become a super app. bKash as a super app. If you pay attention, bKash has already done some work in this direction.
If you consider a Superapp, there are certain conditions that enable a digital platform to pursue such an ambition. One, a large enough user base that uses your product daily and you have a direct relationship with your users- demand aggregation. Two, an underlying infrastructure that connects one service with others – the necessary condition for selling one more service using the same infrastructure and at zero marginal cost. Three, decreasing acquisition cost and a multi-sided market with certain network effects and inherent incentives for every party who participates. bKash fulfills all these conditions.”
With the decision to integrate bdtickets.com into its app, bKash has made an important decision that it wants to open up its platform for other service providers.
Instead of launching each service by itself, which Shohoz, Pathao, Sheba, and others have done, bKash will work with other service providers such as bdtickets and integrate them into its platform. This is by far the easiest route to building a platform. Again from bKash Adds Train Ticket, bKash And SuperApp:
“There are many paths to a super app. bKash could simply host third-party apps on its platform which it has been doing in a way for a while now. In that way, people would not have to download any other app and can simply get everything done using bKash app. That’s more of a platform approach and the return bKash gets is eventual in nature and is unlikely to be greater than what other apps get in combined. However, it should make life easier for consumers and it is a fairly simple thing to do. It would not be a surprise if bKash moves into this direction in the short run as its clout in the payment market grows.
The second approach would be working with brands and independent sellers to offer storefront on bKash much like what it did with Bangladesh railway.”
bKash takes the first route. In that way, bdtickets does all the hard work of acquiring transportation service providers, a gargantuan amount of work in itself, and bKash just leverage its platform power and demand aggregation power to attract service providers like bdtickets.
The benefits for bdtickets here is that it gets a set ready users who are already using bKash. For bKash it goes beyond that, again from bKash Adds Train Ticket, bKash And SuperApp:
“The advantage of being a demand aggregator is that you don’t essentially need to spend much in acquiring customers for yet another new service. The cost is basically in adding the service and then building a bit of awareness. In fact, the opposite is true that once bKash adds one more service, its existing users have one more reason to use bKash app and new users who are not yet using bKash have one more reason to start using bKash.”
However, this approach comes with its own challenges and questions. There are questions for both bKash and bdtickets aka participating service providers.
Again from bKash Adds Train Ticket, bKash And SuperApp:
“bKash becoming an everything app has its own challenges. While bKash can very much become an everything app, as you may understand, this article is partly intellectual speculation. Because it is hard to predict accurately whether bKash would move into other areas of the digital economy using the power of payment. That being said, I would redundantly predict that it is very much feasible for bKash and is very likely to happen.
In the case bKash takes on the opportunity, the immediate challenges are three: 1) how bKash convinces other apps and marketplaces to join its platform and design incentives for them to join bKash 2) if bKash follows path two, in that case, it puts bKash in competition with all other digital marketplaces where bKash is a payment processor. How bKash reconciles with these dichotomies is going to be important. 3) Then there are likely to be regulatory challenges where an essentially financial services company playing an increasingly important role in commerce. bKash could either build a separate business for the bKash platform where it would explore digital services or it could merely host apps with a view to making life easier for consumers.”
One thing has changed between the time I wrote about bKash becoming a super-app and bKash integrating bdtickets into its platform, my speculation has come true that bKash wants to be a super-app, which is the only logical move for bKash in the existing regulatory environment for digital businesses. However, I’m not sure how far bKash will push this move in the coming years.
Digital services providers have many reasons to join bKash platform, one being the users. For now, my hunch is that bKash will not take any commission on sales of the digital service providers. Instead, bKash will be happy to make the cut for the payment processing for now, which it does everywhere else, and eventually, when it firmly establishes itself as a platform for a digital platform, the company will think about how to go about the relationship with the service providers outside of the payment.
If bKash does not act as a marketplace and does not charge commission, at least in the short-term, it solves two short term challenges: 1) incentive problem for the service providers because service providers have nothing to lose by joining bKash platform rather it can gain a huge customer base 2) and regulatory challenges for bKash since it will simply be working as a financial service company regardless of form it operates. There is enough room for regulatory maneuvering if bKash maintains this approach.
For bKash the new questions will be: 1) will bKash only have one service provider in each category such as in ticketing there will be only bdtickets.com or there will be multiple service providers and as an open platform bKash will allow anyone to participate?
From the customers’ perspective, a single service provider, no matter how curated the service is, does not make sense. If bKash offers exclusivity to the service providers, it does not make sense as a powerful enough platform. Similarly, if it allows more than one service provider, it creates conflict. bKash will have to do some navigating here.
2) how does bKash ensure service quality for third party providers? bKash can well ensure quality for bKash payment service but for bdtickets.com how bKash is going to ensure the customer experience is going to be an important aspect.
Questions for the participating service providers such as bdtickets.com, however, are much more pressing.
Digital platforms are largely aggregators. While what we see is that companies like bdtickets aggregate services, in bdtickets case, ticketing. In reality, the most important aggregation they do it demand - they aggregate demand and control it making the original service providers such as bus owners come to the platform.
To explain, if bdtickets effectively establishes itself as the most trusted platform for ticketing then most customers will go to bdtickets platform to buy tickets online instead of going to the bus counters forcing bus owners to sell their tickets on bdtickets website and enabling bdtickets to collect rent from the bus owners. This is the exact scenario that applies to bdtickets and bKash relationships as well.
People will eventually go to bKash for bus tickets instead of bdtickets website or app forcing bdtickets to comply with bKash. While this relationship is not this black and white, it is not much different either.
Demand is the ultimate power in the digital market. If you can control demand, you can control supply. This poses a challenge for both the service providers - how they deal with bKash, and as well for bKash - how it builds a platform that maximizes value for everyone participating in it while conserving its own value. Because platforms only win when participants in the platform win as well.
Dhaka’s digital ecosystem is entering a new phase. There is a stealth race going on for becoming the ultimate platform for digital services. Among the contenders: Shohoz, Pathao, Sheba and a few others are there. With the integration of bdtickets into bKash app, bKash takes the first step ahead of everyone else in that direction. And it is quite different from what everyone else has so far been trying to do.