Online shopping in China is a highly attractive market, in fact China is the 1st E-Commerce market in the world which directly influence online payments. Two major solutions system are operating in China Tencent’s WePay and Alibaba’s Alipay. But Alibaba has clearly taken over the market with its 50% market share! Why is this market so terrific? Simply because E-Commerce is a market with a strong lower margins culture whereas payments is a part of the business where margins are far less lowered. For instance Alipay’s margin is about 30%, higher than PayPal’s 24%.

The electronic payment market still need to grow and be improved and no doubt it will, while 2 international giants are fighting for their piece of the pie. Still with almost 50% of the total online payment market, Alibaba is the clear leader. What does Tencent do to finally improve its market share? Here are the several attempts of Tencent (more on social networks here) .

 

Attempt number 1: Alibaba’s group block

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Attempt number 2: WeChat groups

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WeChat groups are perfect for communication and creating a community. If you manage to keep a small community registering less than 100 people, inviting more people to the group will stay easy. But beyond 100, you won’t be able to join a group unless your bank card is linked to your WeChat account. It pushes users to go through the quick process: only a minute and you will then be able you to speak with your friends. Smart right?

Attempt number 3: WeChat City Services

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WeChat recently launched City Services which helps users to book doctor appointments, manage transportation bookings, get information about air quality and more options such as paying bills or fines and reporting incidents to the police, ALL OF THIS through WeChat! These options are bringing convenience to daily life’s procedures in China and a lot of users are integrating Wechat payment on a day to day basis.

Attempt number 4: The Red Envelopes campaign

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You might know that WeChat payment played a major role during the last Chinese New Year.The operation has been highly successful and registered  200 million bank cards linked going beyond expectations, 11 billion shakes (WeChat feature that detects the nearest users) recorded during the Chinese New Year Eve, and RMB 500 Million (USD 83 Million) worth of Lucky Money were distributed that night. WeChat Red Envelopes are so far one of the most important social phenomenon in China.

Attempt number 5: The WeChat Ecosystem

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Alibaba and Tencent have 2 different ways of working, while Alibaba relies mostly on its 2 platforms (Taobao&Tmall) in order to meet customers’ demands and even overseas, Tencent will work the other way around by encouraging other platforms to use its services. This ecosystem enable WeChat to touch all kind of markets including specific and niche ones. Tencent can therefore leverage the power of all the companies providing off-the-shelf services for its platform, thus improving the user experience. This ecosystem is way more limited for Alibaba and Alipay, and it is growing at a much slower rate.

Online payments will certainly become a key source of revenue for Tencent and for Alibaba in the years to come. But due to the nature of the market which strongly involves security, it will not leave space for several players as users will stick to one of them and stay loyal.So taking over the market is now a matter of life or death.

Further readings