• Ker Zheng

WeChat Mini-Programs Open Up New Possibilities for China E-Commerce

Updated: May 10, 2019

In the competitive world of China e-commerce, WeChat mini-programs are drawing more and more attention for their multi-functional capabilities, ease of use, and access to WeChat’s billion-plus user base. According to data provider ALDZS, there are 230 million daily active users (DAUs) accessing one of WeChat’s 2.3 million mini-programs every day.

E-commerce comprises the largest category – approximately 18% of the mini-programs on the market are dedicated to e-commerce. 5.6 billion RMB in funding has been raised for e-commerce mini-programs since they were released in early 2017.

We explain why mini-programs could be the next big thing for China e-commerce and why brands are so excited about them.

WeChat Gives Brands Independence from E-Commerce Platforms

While Tmall and JD.com are popular amongst brands for their large organic user traffic, they come with a number of drawbacks, leading brands to look for alternative sales channels. We explain more below:

Limited space and time to interact with the customer. On a Tmall or JD.com platform where there are tens of thousands of merchants, each merchant has limited website space and time to communicate its unique brand value. Each customer is likely to only spend a few seconds on each brand or product page before jumping to another page.

Intensive price competition. Price competition is much more intense on a centralized platform, where it’s easy for customers to compare prices. This is especially the case for Singles Day, where brands are often forced to discount their goods by >50% to drive sales.

Ad costs driven up by competitors. On Tmall or JD.com, customers are likely to have a stronger idea of what they’re looking for when they log onto the site. They input certain keywords or brands, and merchants bid for those keywords, driving up advertising costs and making it difficult for smaller players to compete. Some estimate that the customer acquisition costs on these platforms have risen to 200-300 RMB per person.

In short, brands selling on a platform run the risk of becoming a commodity.

Brands should try to drive more and more customers to official brand channels to mitigate this risk.

WeChat is one of these options. As an app within an app, a mini-program is limited in size, built on top of WeChat’s existing IT infrastructure, and can be developed within a relatively short amount of time, at a fraction of the cost of a normal app.

On a WeChat mini-program store, brands can choose to place videos, banners, and interactive GIFs and engage customers in many different ways. Last year French cosmetics brand L’Oreal used a mini-program to livestream Chinese celebrities and promote products during the Cannes Film Festival.

Brands can also use WeChat as a customer relationship system, as users can log in automatically with their WeChat user IDs. Brands have more access to customer data and can develop loyalty programs to keep customers coming back for more.

WeChat Lets Customers Discover and Buy New Products All in One Platform

On a mini-program store, the user journey is much more different than on an e-commerce platform. In WeChat, users likely do not have an existing intent to buy something, and are not inputting keywords into a search engine to find a product. They are either messaging friends or browsing content posted by friends or official accounts they follow.

Oftentimes a user discovers a new brand or product through this content – whether it’s through the brand’s official account or shared by friends and family. In fact, sharing accounts for 35% of e-commerce mini-program access points, whereas official accounts account for 14%, according to data from ALDZS.

When the user journey starts with content and is shared by friends, the discovery and engagement process is much more natural. This is important because trust is a big issue in China e-commerce and it takes time to build that trust. Customers need to digest a lot more content about a product to make a decision – that is why product pages are 3-4x longer than ones in the West.

While the customer may not make a purchase right away, on WeChat brands can push content to followers over the long run. Now brands can set up e-commerce stores on WeChat and link them directly to this content, so that customers can make a purchase when they are ready. WeChat Pay makes it possible for customers to make a purchase without ever leaving WeChat.

This closed-loop transaction process within WeChat makes it much easier for brands to engage, cultivate, and sell to customers over the long run.

Driving Traffic on WeChat Remains a Challenge

And yet driving traffic to a WeChat store remains a challenge for all brands, big and small.

  • WeChat is still a relatively closed network in that users cannot interact with strangers they are not connected with nor view content posted by non-friend users.

  • WeChat ads have notoriously poor ROI, given their weak targeting and customer segmentation technology

  • Many brands use KOLs/influencers to drive traffic, but these costs are becoming increasingly expensive

Because of these reasons, brands have to get more creative and make their mini-program stores so compelling that customers will be inclined to share with their friends.

In the second part of this article, we discuss different case studies and study how brands are customizing their own mini-program stores to engage customers in different ways.

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Agency partnership: ker.zheng@azoyagroup.com

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