What WeChat Teaches About the Future of Social Commerce

What WeChat Teaches About the Future of Social Commerce

by Angela Doland

5 minute read

Amazon is a minor player in China, with about 1% of the local e-commerce market. To drum up interest in its products imported from the U.S., Amazon just put a video ad on WeChat, the all-purpose mobile app, with a link guiding people to its online shop.

H&M sent its followers a pinball-like mobile game to win discounts; once finished, the game deposited players inside the brand’s e-store. Even Dior has used WeChat to push sales: In August, it hosted a WeChat flash sale for a customizable limited-edition powder-pink Dior handbag selling for $4,130.

WeChat, the mobile app that Silicon Valley scrutinizes for what the future might hold, hosts many experiments in social shopping. To drive sales, brands are trying ads, coupons, flash sales, and games sent out to their WeChat followers – all with the hope people will share them with friends. A lot of it feels like a test to see what works.

WeChat, launched by internet giant Tencent in 2011, now has 806 million monthly active users. It has transformed China’s digital habits; the average user there spends 70 minutes a day on the app, according to a report by KPCB analyst Mary Meeker. It blends aspects of Facebook, WhatsApp and Instagram. It also has an integrated payment system, and people use it to book taxis, order takeout, settle electric bills, and pay the cashier at shops from KFC to the Gap.

Increasingly, it’s also a place where retailers, brands and ordinary people sell things online, either inside WeChat or by moving people seamlessly to outside shopping platforms. In a report in April, McKinsey said about 31% of users initiated purchases on WeChat, twice as many as a year ago.

Not Quite a Shopping Mall

If WeChat shopping has exciting potential, there’s also room for growth. “People buy everything on WeChat – but usually, they don’t spend big money,” said Alexis Bonhomme, general manager and co-founder of CuriosityChina, a company focused on social customer relationship management and Chinese digital platforms.

WeChat still plays a small role in e-commerce in China compared to Alibaba Group, whose annual shopping festival just moved $17.8 billion in merchandise in 24 hours. People tend to use Alibaba’s payment service, Alipay, for bigger purchases.

Chen Yiting, a 21-year-old studying communications, said she prefers shopping on Alibaba’s eBay-like platform Taobao. She uses WeChat’s wallet to pay for small-ticket items like takeout, movie tickets, and her phone bill; the only other purchases she could recall there were a magazine and a phone cover bearing quotations from former president Jiang Zemin.

If WeChat doesn’t always seem like a natural place to shop, that’s partly because WeChat has proceeded carefully with monetization, limiting how brands can reach out to people and cracking down on super-viral marketing tactics. It’s generally a place where users connect with people and brands they already know.

Jane Lin-Baden, Asia-Pacific CEO of Isobar, compares Alibaba platform Tmall to a shopping center in a busy area, where people window-shop for something new. WeChat, on the other hand, “is not designed as a walk-in store,” she said. “It’s a private lunch, it’s a VIP room, it’s a community for club members.”

Ms. Lin-Baden argues that brands shouldn’t try to use WeChat to get reach. She believes it has interesting potential for driving purchases with existing customers, and for mining its big data for hypertargeting. Isobar experimented with precision targeting in a campaign for Unilever’s Knorr during Chinese New Year. Knorr, a b-to-b brand in China, aimed its message at chefs who had to work through the festivities, and the campaign let chefs share recipes and greetings in their local dialects. Knorr expanded its WeChat followers 25% to over 1 million; a quarter of chefs who saw the campaign video on WeChat reposted it, and sales rose 21%.

How to Sell?

Many major brands don’t sell directly on WeChat, but use it to smoothly guide people onto their own online shopping platform, as Amazon and H&M do. Others lead users to their shop on e-commerce platform JD.com, Alibaba’s main challenger in the e-commerce space in China. WeChat parent Tencent invested in JD.com to build out its commerce capabilities. In a sign of the rivalry between China’s two biggest internet giants, WeChat does not allow brands to link to Alibaba sales platforms.

Meanwhile, some brands or e-tailers have shops integrated into WeChat with help from third-party providers, a solution often tapped by foreign brands testing the Chinese market and by local startups.

Compared with Alibaba’s eBay-like platform Taobao, the entry costs are lower, and it’s easier to grow by online word of mouth, said Ying Mu, a former staffer at branding consultancy Labbrand and at Edelman who is now helping a friend launch a WeChat-based flower delivery startup called Huaseven.

There are many localized services, including caterers, on WeChat, as well as niche retailers of beauty or baby products. Ms. Mu points to interesting Chinese experiments in content marketing, like Yitiao, which feels like an online magazine about stylish lifestyle products. It’s actually an elaborate WeChat shop with venture capital backing, where you can buy a $58 handcrafted wooden footstool or a high-tech $117 teakettle.

Bessie Lee, CEO of WPP in China, mentions a company called Bird’s Nest Princess as an example of a local brand doing interesting things on WeChat. It offers edible birds’ nests – prized by Chinese women for their effect on the skin – purchased wholesale and packaged into small jars, some for an affordable $15. The company did limited advertising and had no physical stores, but it became a hit as women shared it among friends.

Selling on WeChat can be a different experience than marketers are used to, Ms. Lee said.

“It’s not like your traditional mass media campaign where you throw the money out, and boom, then you can see that huge jump (in sales), but then it actually dies down quite quickly,” she said. “WeChat marketing is completely different. It’s almost like a long tail, if you like…It’s a test of your patience and your faith as well. You need to allow it to burn, to travel. Then it will take off.”


From AdAge.com, 11-18-2016, copyright Crain Communications Inc. 2013

This article was written by Angela Doland from Ad Age and was legally licensed through the NewsCred publisher network.