TCEHY - WeChat Ecosystem Paid Content Outperforming Ecommerce
Selling goods through Tencent Holdings Ltd.’s WeChat platforms and ecosystem is still a new area of exploration for most ecommerce sources in 2018. Most sources have been attracted to the great potential from WeChat’s huge traffic base, yet still have found converting traffic into sales effectively to be a big challenge.
The percentage of sources’ sales through WeChat and the platforms that rely on WeChat (including Zhejiang Ji Shang Internet Technology Co. Ltd.’s Yun Ji and Pin Duo Duo.com) was very small compared with traditional ecommerce platforms, such as Alibaba Holdings Ltd. and JD.com, Inc. Four ecommerce sources that also sell on Alibaba platforms and JD.com said WeChat represents only 2%-6% of their total ecommerce sales. Three sources that launched their online businesses through WeChat or their own apps (and do not sell on Alibaba or JD.com) said 60%-90% of their sales come from WeChat platforms, with very small sales volumes.
Sales through the WeChat ecosystem have fallen below expectations for five of seven ecommerce sources, mainly because of low conversion rates. Sources acknowledged that traffic was good, however, said they were still exploring how to better utilize all the data and tools within WeChat.
The current cost of selling through the WeChat public account and the mini program is low; costs comprise an annual fee of few hundred yuan for a corporate public account, an annual fee of a few thousand yuan for mini program service support, and a 0.6% commission for using WeChat payment. Selling though other platforms, such as Yun Ji and Pin Duo Duo, also costs no more than 6% of sales, significantly lower than selling through Alibaba and JD.
Five of seven ecommerce sources said they plan to increase their marketing spending on the WeChat system throughout the rest of 2018, mainly on mini programs and the public account to increase the number of fans or followers, and to continue to evaluate how to improve conversion rate by using Tencent’s data analysis tools and other data service providers.
Five sources expect their mix of sales through the WeChat system to grow by the end of 2018, but four do not expect WeChat sales to surpass 10% of their total online sales. “We expect 5% of our sales to come from the WeChat system as we are simplifying our mini program — trying to make it easier for users and increase the conversion rate. Meanwhile, we are planning on spending more on ads to attract more traffic. After all, we believe WeChat has the biggest user base compared to Alibaba and JD, or any other ecommerce platform. It's just a matter of how to turn the regular users into our customers — to take advantage of WeChat's user base,” one said.
WeChat Paid-Content and Online Booking
(Paid-content includes online training, audio books, short video or other audio or video or articles that consumers have to pay to get access to.)
Two of three sources who sell content through the WeChat public account and mini program said sales during 2018 to date exceeded their expectations and the other met. One online book-reading service provider said, “We have had our own app selling our product content for three years. This year, we tried to sell content through the mini program and WeChat Subscription. The feedback is exceeding our expectations greatly. We plan to push sales through the WeChat system and hope that 80% to 90% of our sales are through the WeChat system in the next two years.”
Sources said they found WeChat’s strong social function perfect for marketing online content. “WeChat's market share in our business will increase further,” one said. “WeChat's instant communication and friend circle can help spread a new brand very fast, and mini programs save the trouble of downloading apps, which promotes business growth even faster.”
The cost of selling paid-content through the WeChat mini program was negligible for all three sources; the major cost was limited to port access and H5 link. “The cost is very limited. In fact, many of them are free to our business so far because WeChat is attracting more users to its mini program and platform,” one said. All three sources planned to increase marketing spending through the public account and mini program during the rest of 2018.
Two sources who use the mini program for online bookings (one for online athletic race registrations and the other for doctor appointments) also found WeChat’s expansive user base and communication functions helpful for gaining a large volume of new users in a short time and said users were willing to pay for the online booking. “We cooperated with race organizers and their members share our public account articles to their WeChat Moments. Our sales for registration increased more than 400% yy,” said one. The other said, “I am very optimistic about the combination of the mini program, WeChat public account, WeChat Group, and WeChat Moments. Our team is very familiar with all of the rules and tools in WeChat. For users, booking visits directly through WeChat is also more convenient than downloading a new app. As the function of the mini program becomes more complete, I believe there will be more and more users that choose mini programs.”
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