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Once you've downloaded the APK file, click on the downloaded file, then hit the "Install" button.
Make sure you have downloaded the file correctly. The downloaded file extension must end with .apk file. If you face any package install error, redownloading the file may fix the issue.
To update APK without losing the data, you don't need to follow anything extra. Click on the downloaded APK file and click the "Install" button. The app will update automatically without loss of data.