A smartphone with WeChat and other social media app icons seen on display on June 29, 2018 in Hong Kong, Hong Kong.
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Tencent has launched tools to help merchants build virtual stores on its popular WeChat messaging service in China, taking on the country’s leading online shopping giants Alibaba and JD.com.
Businesses and merchants will be allowed to sign up for a trial of the e-commerce product, known as WeChat Minishop.
WeChat is China’s most popular messaging app with over a billion users. It is a key part of life in the second largest economy in the world.
WeChat is often called a “super-app” because consumers can buy flights and use payments, all within the app.
Tencent has had so-called e-commerce “mini programs” or applications within its WeChat messaging service for a while.
But this new tool will allow a provider to create a mini e-commerce program within WeChat using the Tencent tool instead of relying on expensive developers. It won’t be a centralized system like Alibaba’s JD.com or Taobao, but it could help Tencent drive smaller companies away from these platforms.
The Chinese internet giant said that merchants will not be charged to open a virtual store and that there will be no service fees either, which could allow small businesses to create WeChat stores. Alibaba platforms charge various fees to merchants.
Tencent also said that WeStore will support live streaming, which has become a popular way for Chinese consumers to shop. This is a feature that competitors, such as Alibaba-owned Taobao, also support.
The Bishop will also provide merchants with order management, transaction, logistics, and after-sales assistance services.
Why minishops could attract merchants
Tencent’s advantages lie in its already massive user base plus its potential access to data, according to experts at CNBC.
WeChat Pay is used to pay for items on other websites. The messaging application also has a feature called “Moments” that allows users to post images, videos, and links to websites. These two features could also contribute to helping Tencent users.
“Tencent relies on a large amount of consumer data both online and offline,” Jacob Cooke, CEO of WPIC, an e-commerce marketing and technology company that helps foreign brands sell in China, told CNBC .
“For example, the platform could recommend e-commerce products similar to what they see in offline purchases that consumers make through WeChat Pay.”
That information could entice merchants to build Minishops on WeChat.
“Tencent could also understand what consumers of all Moments are talking about, etc. This will make the ‘recommendation’ much more useful on two occasions: 1 / More information on consumers to make a better range selection for WeStore; 2 / A truly personalized recommendation on products for individual long-term consumers, “Pedro Yip, partner and head of retail and consumer goods practice for Greater China at Oliver Wyman, told CNBC by email.
Despite its own strong brand, Tencent could face some challenges.
It will have to “have a clear proposal” for the Minister and “have strong quality control” to ensure that a large number of counterfeit products do not proliferate on the platform, according to Yip.
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