WeChat, a Chinese-developed mobile device app, is signaling the future of electronic commerce (e-commerce) that might rely more on the subtle use of social media to drive sales instead of high-impact advertising campaigns.
The app by Tencent — available for a wide range of devices — provides several services including text messaging, video messaging, and chats. It also has the ability for users to provide bank details in order to pay for certain items through the app, including bills and when shopping for goods and services. With more than 760 million people now using the app worldwide, that’s a huge potential business market that companies are closely watching.
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However, e-commerce on WeChat is not as simple as companies such as Amazon or H&M launching a massive advertising campaign to try and build brand loyalty or push sales toward its online stores. Instead, major companies are learning that they will have to use more subtle approaches to make money through the app.
According to a recent article in Advertising Age, Amazon was aware of the unique way business is done on WeChat. It simply placed a video ad on the app in order to drive business to its online store. H&M put a video game on the app that gave discounts to winners, sending them to the company’s e-commerce store. These and other examples show how businesses are adapting to new methods of how to best sell their products on WeChat.
WeChat features a “Wallet” that collects users’ bank information and provides seamless connections to businesses in order to complete purchases. This approach is the envy of U.S. technology developers because it means that WeChat users can buy products and services without ever having to leave the app.
To compare this to the example of Facebook — another highly popular social media app — WeChat is attractive to businesses because it streamlines and simplifies e-commerce. In contrast, if an iPhone user on Facebook sees an ad for a product they like, they would click the link and likely be taken either to the company’s website or to the Apple Store where they would then be prompted to download a company-specific app. This process can be frustrating to customers and potentially lead to lost sales if they do not visit the site or download the extra app. WeChat removes all of these extra steps, allowing easy connection between the app and companies looking to do business. These developments have positioned the Chinese market as a world leader in digital e-commerce.
That makes WeChat attractive to both the user and e-commerce companies, because it simplifies the user’s experience and maintains their enjoyment of the app, and helps companies increase sales.
Companies that sign up with WeChat’s parent company Tencent to be part of the Wallet within the app get an instant boost in the marketplace by having immediate access to hundreds of millions of potential customers. In addition, WeChat works with some companies to accept payments from the app on their websites.
William Bao Bean, managing director of Chinese startup accelerator Chinaccelerator, summed up the importance of WeChat on the future of e-commerce in a November 2015 interview with TechInAsia. He said that the seamless way WeChat allows for purchases within the app is the future of doing business on mobile devices. Bean added that U.S. customers would similarly make such purchases if they had the app with which to do it.
“It’s not that Americans haven’t been willing to press ‘buy’ — they haven’t been given the opportunity. It doesn’t exist,” he said. His comments underscore that businesses in China and elsewhere are already aware of the changes WeChat is making to e-commerce, and that other countries are bound to follow soon.