The time has come to ditch your good old Fossil leather wallet because China is showing us why we do not need redundant billfolds or plastic cards anymore to pay for our daily dose of Starbucks coffee. The new form of payment is the groundbreaking messaging app WeChat, which is turning mobile commerce into an integral part of people’s shopping habits, starting off in China.
WeChat – China’s Largest Messaging App
Founded by the Chinese Tech Company Tencent in 2011, WeChat has emerged as theworld’s largest standalone messaging app with over 600 million monthly active users. Starting as a simple web-enabled messaging tool, WeChat rose to success by providing users a free-of-cost messaging alternative and soon became China’s most important social network and payment method. WeChat has 1.1 billion registered accounts with 60 percent of active users opening the app 10 times a day.
But how did WeChat achieve to establish mobile payment in China, when successful western companies like Apple and Facebook are still having trouble pushing mobile commerce into mainstream?
Seamless Shopping Within a Single App
WeChat’s success reached a new peak when Tencent made possible what Facebook Messenger and others are still struggling with today: building a mobile commerce platform within a single app. WeChat is much more than just a messaging app – it is a mobile marketplace for retail and service companies, enabling brands to build their own online storefront. Users can browse retailers’ offerings and with WeChat Wallet, the app’s digital wallet, users can link their credit card to their WeChat account and purchase directly from brands’ mobile stores without having to leave the app or being redirected. The entire shopping experience takes place inside a single app.
- More than 50% of WeChat users have already linked their bank cards to the app
- More than 200 million consumers use WeChat Payments turning the app into China’s major facilitator for m-commerce transactions
- According to eMarketer, mobile commerce transactions in China are expected to reach 71.5 percent of all online retail in 2019
The main advantage that WeChat has over its western competitors is the seamless integration of the payment process; to purchase a product or book a service one simply scans a QR code. Consumers can order food, book flight tickets, hail a cab, and even make doctors’ appointments.
The Pocket-Sized Personal Assistant
Bot-powered smart messengers will become the predominant way we will interact with the Web in the future. The peak of app usage has already passed and we will soon be regularly interacting with bots – not only in China. Messaging apps like WeChat are becoming the preferred personal shopping assistant, because they provide on demand support regardless of time and location.
WeChat has developed two different kinds of chat bots that are used to manage the communication between consumers and business accounts (also called “official accounts”): subscription accounts and service accounts. The subscription account is a publishing tool that allows content creators and advertisers to update subscribers about new articles, which are directly accessible within WeChat. The service account allows for human customer service, as each account is connected to designated human user accounts that respond to consumers’ inquiries.
- Live chat has a 73% customer satisfaction rate, the highest rated even compared to traditional channels like email (61%) and phone (44%)
What’s The Benefit for Companies?
The fusion of m-commerce and social networking has made mobile payment in China more attractive than ever. Companies are now building their services within WeChat instead of creating standalone apps or even websites. The latest feature, “Mini-Program”(officially released on January 9 2017, the 10-year debut of Apple’s iPhone), offers a development kit for retailers to easily create miniature apps within WeChat itself, making original apps (almost) obsolete. Businesses can profit from WeChat functions like location-based services, user profiles information, and WeChat payments without having to program these services from scratch.
The benefit? Unimpeded access to a massive pool of potential new customers and the ability to identify and focus on key target groups. And because WeChat is a social network, users share content, influence each other’s purchasing decision, and accelerate m-commerce spending even further.
Data and Analytics
Users provide personal information on the network, including gender, location, pages visited, search history and purchased products, thereby turning WeChat into a central CRM platform for retail businesses. The accumulated data enables brands to manage their digital stores based on customer behavior insights and to optimize traffic and conversion.
However, this is not the exclusive benefit of digital retailing anymore: smart brick and mortar businesses are adapting a data-driven approach by implementing retail analytics technologies inside their physical stores. MiNODES-sensors for example track the traffic patterns of consumer segments by analyzing the location data of their smartphone signals, thereby giving valuable insights into shopper traffic, dwell time, and loyalty, among others.
The WeChat data gem has enabled brands to create data-driven ad campaigns and marketing activities, allowing for a substantial reduction of customer acquisition coststhat would normally need to be incurred.The insights enable online retailers to re-engage their customers with tailored retargeting campaigns that are based on purchase and search history.
Retargeting possibilities have now opened up to brick and mortar retailers, too. By using the data collected from MiNODES-sensors, offline stores can now retarget retail shoppers as well as pedestrians the same way online retailers do, converting more leads to local store or website visitors.
The data insights give retail brands the opportunity to increase customer satisfaction and loyalty by connecting with consumers on a more personal level. Retailers are able to offer more personalized products and services that are aligned with the customers’ individual needs. Brands like Nike, Burberry, Starbucks, McDonald’s, and Coca-Cola have already jumped on the bandwagon and joined WeChat’s marketplace, by offering individual products and communication. Nike for example allows users to customize their sneakersand Starbucks lets customers send pick-up orders to the nearest coffee shop.
Beacon solutions allow physical retailers to create and maintain a similar level of entertainment and customization: the app-based push messages enable retailers to engage customers in-store and at the point of interest. Plus, the effectiveness of beacon-powered mobile marketing campaigns is directly measurable.
Is China More Open to Trying Out New Technologies?
Three years ago, only few consumers were using WeChat as a shopping tool. Today, roughly a third of its users are regularly making purchases through the app. The foundation for this enormous breakthrough in cashless payment was built on Tencent’s smooth and hassle-free integration of trusted online shops into their app with identity and password authentication that made it easy and safe for people to switch to WeChat as their new favorite shopping place. But also social factors are the reason for the rise of the platform. A key feature of WeChat is its user community, which is an essential part of the Chinese culture. Another cultural element is the important of social status, which accelerates the adaption of “showing-off” platforms like WeChat.
Facebook Messenger – A Western WeChat Replica?
China might not be on the same level as we are in a lot of different areas, but it is definitely ahead in social-driven mobile commerce. Companies like Facebook are eagerly trying to copy WeChat’s in-app m-commerce platform by linking their messaging apps to shopping services. In fact, Uber is already collaborating with Facebook Messenger – you can order your Uber ride through Facebook Messenger by simply clicking on an address (US only).
Facebook Messenger has been working on developing a shopping platform that is fully integrated in the app by adding features like payments, voice and video calls. And with Messenger’s new Artificial Intelligence assistant called M, Facebook wants to take advantage of the information and content users share on the network to better serve their needs.
Why Mobile Commerce Has Yet to Reach The Status Quo In The West
There are two main problems which have held back mobile commerce from entering mainstream.
- The diversity of separately owned payment operators like Paypal, Apple and Android Pay, as well as Facebook Messenger, making it harder to establish a single-app ecosystem.
- The long and laborious purchasing process. Users are still being redirected from apps like Facebook Messenger to a separate website or app where they have to finish the purchase, making it impossible to shop without having multiple tabs or apps open.
ApplePay is the closest answer to WeChat Wallet to date. In June 2016 it was reported that only 33 percent of iPhone 6 users were using ApplePay at checkout, falling from 48 percent in March, according to a survey by Pymnts.
- By 2019, eMarketer predicts the percentage of mobile sales will increase to 28 percent, growing much slower than expected
- Over 70 percent of Chinese mobile internet users have used m-commercecompared to about 31 percent in the USA
- China’s mobile sales outnumber the U.S.’s by 450 percent
- Germany: only 4% of consumers want to pay via smartphone, putting the nation at the very end of the list of European countries
The Switch to Mobile Commerce Needs To Be An Effortless Process
To establish m-commerce in the west, we need to build well-rounded apps that smoothly integrate a safe marketplace that is easy to navigate. Retailers need to make the switch to mobile commerce for customers as seamless and effortless as possible.
Is M-Commerce Only Relevant For Online Retailers?
While m-commerce will slowly but surely position itself in western mainstream, we ask ourselves: will this trend only be relevant for online retailers? Clearly, the answer is no.Offline retailers need to pay attention to this development as much as online-only retailers do in order to keep attracting customers in the long run. Modern retailing requires brands to fuse offline and online. Retailers need to communicate, market and sell across every channel to remain relevant.
M-commerce is not only a great channel to reach new (and younger) consumer audiences, but connecting the data points collected across all channels will ultimately give companies the necessary insights to understand and satisfy the demanding needs of the modern day consumer – and this will not only be the case in China.
Omnichannel retailing is the way to go and with modern retail analytics technologies, businesses can now connect data from online, mobile, as well as physical retail channels to create seamless cross-channel experiences.
Wi-Fi tracking is one way to create a seamless cross-channel experience by tying consumers’ mobile profiles back to their in-store footprints. Sensor-based analyticsenable retailers to optimize the in-store experience, and to boost store productivity as well as marketing efficiency simply by revealing the offline customer journey.
The underlying advantage of MiNODES’ Wi-Fi analytics is however about creating retargeting and attribution possibilities for brick and mortar stores, enabling retailers to re-engage consumers through online and mobile channels – just the same way WeChat retailers can retarget their m-store visitors.
By closing the loop between offline and online in a single app, WeChat has become one of the most important enabler of omnichannel retailing and will continue to set the bar high: offering consumers a personalized shopping experience within a single platform on which they can interact with retail businesses across channels, whenever and wherever they want.