WeChat and Its Mobile Commerce Potential

November 22nd, 2014

Tencent-owned WeChat has passed over display advertising to focus on integrating e-commerce solutions. Consider these examples.

WeChat has enjoyed explosive growth over the last few years and has de-throned Weibo as the go-to social medium in China. In this first wave of growth, it has been the networking and communications functions thathave been most notable. The comparisons to Weibo during this first wave have been easy to make. WeChat and Weibo both allow for audiences to group friends together, share information, and stories. But WeChat is different in a couple of critical areas: first, the connections between friends are much tighter, and second, WeChat is a native mobile application and takes advantage of this with unique offerings – including e-commerce and mobile payments.

As a user, Weibo is about slotting yourself into the social hierarchy and following a stream of people and news. WeChat is built on much closer connections between real friends (at least for now). While this hurts WeChat as an advertising platform (marketers cannot easily seed a viral message and get millions of forwards/re-posts in an open, measurable environment), it offers hope for direct e-commerce sales through friend referrals (WOM – user-gets-user – sales). WeChat has recognized this opportunity and has largely passed over display advertising and, instead, focused on integrating e-commerce solutions.

On the Web, consumers can, within a dozen or so clicks, complete a purchase and navigate from Weibo to Baidu, from a rating/review site, to Taobao, Tmall, JD.com or a few other big e-commerce sites. And, provided they have already set up a payment account, the final purchase of a product is relatively painless. If a user already knows exactly what they want, it’s a quick path to purchase. If, however, the user is a bit unclear of what they want, the journey is likely to be much more complex and (for marketers) more difficult to track.

WeChat by contrast is an incredibly tight ecosystem where social (recommendations/validation), merchants (e-commerce shops and malls) and payment systems (bank cards, credit cards, and Tenpay) are all built in. A quick referral of a product from a friend can be a completed purchase in a matter of moments and the user may never have to leave the WeChat application on their mobile phone.

A large part of the social-to-sales infrastructure in WeChat has been built up by both Tencent and third parties. But it is still very early days for e-commerce in WeChat. Brands can use WeChat in a few ways to support sales growth, including setting up their own brand shops (as service accounts), working with malls (WeChat operates a couple of their own), using direct sales platforms for user-generated sales (like Weidian that has payments linked to WeChat), and using loyalty cards for location-based promotions and member offers (managed by WeChat inside the app under “QQ iCard”).

Smart marketers in China are already testing and learning about how to make e-commerce work for them in WeChat. Chinese brands like Xiaomi are moving most quickly and have been incredibly successful in building both social and sales inside of WeChat. Xiaomi, with nine social managers, are supporting a fan base of more than 1 million and late last year were successful in using that fan base to sell 150,000 phones in nine minutes.

As published in ClickZ

Posted in WeChat