Not so long ago, people in China had to visit a classy, stylish mall for luxury shopping. This is changing rapidly as high-end brands are struggling to gain acceptance of digital channels. These are not just the obvious options for ecommerce platforms or branded websites. In China, Louis Vuitton, Cartier, Bulgari and other luxury brands connect and sell millions of customers through WeChat .
Many know WeChat as China's largest messaging app and may know how it has transformed over time into an all-in-one ecosystem that lets you chat, run errands, rent services and search for an infinite list to look for things. The variety of products offered on WeChat could now cost over $ 1
According to Pablo Mauron, Partner and Managing Director for China at Digital Luxury Group, a luxury marketing agency, the trend reflects Wechat's tremendous potential for an app tailored to transactions and services.
"I think WeChat will finally become what it is for luxury brands, which is not just a social media app," said Mauron TechCrunch in a telephone interview. "One [function] could be for customers to buy the product. Another possibility is that brands build a loyalty program. Customers can pre-order a product or make an appointment with the store [offline]. "
According to a recent report by market research firm Gartner L2, 60% of the luxury fashion brands surveyed had at least one increase. The WeChat store grew by only 36% in 2018.
Like Facebook, businesses can use WeChat to set up their online stores. The Chinese app now has more than 1 billion users per month, but these people are not readily available as customers. WeChat, unlike Alibaba, is not a marketplace and does not have a central search engine that indexes all merchants sold through its platform.
A WeChat store is therefore more akin to a site store – but it does exist in the online universe, requiring a lot of marketing before consumers come across it. People can discover Wechat stores by scanning a QR code at a brick-and-mortar retail outlet, clicking on an ad embedded in an online article, or through a variety of other creative methods that merchants develop.
Despite what Mauron says, WeChat stores are attractive to brands as they provide a great toolbox to increase customer loyalty.
Buyers, for example, can talk to shop assistants through WeChat or check their membership status with just a few taps on the screen. It's the social strength of WeChat that sets it apart from established ecommerce candidates like Alibaba and JD.com who are more focused on transactions. In a sense, WeChat does not directly take over Alibaba, but plays a complementary role in providing Customer Relationship Management (CRM) functionality.
A Many of these service-oriented features are supported by so-called "mini-programs", which are essentially stripped-down versions native apps that run in a super app like WeChat. As the Gartner L2 report indicates, the increase in acceptance of WeChat businesses is linked to the increasing use of mini-programs by luxury brands.
A total of 69% of the luxury brands in the sample group have at least one mini-program. The rate of acceptance for fashion-related luxury brands rose from 40% in 2018 to 70% in 2019, while the watch and jewelry category increased from 36% to 62% over the same period.
"WeChat is becoming an increasingly attractive option for brands looking to think about CRM, e-commerce or other value-added services without relying on outside partners," Mauron suggested, citing Alibaba, JD, and others traditionally the most popular choice for digital sales. 19659008] From Social Media to Shopping
While WeChat imposes certain rules on sellers, it is laissez-fairer compared to traditional e-commerce companies. For one, WeChat does not (yet) accept commissions on e-commerce transactions, as is usually the case with online marketplaces. As Mauron noted, Tencent's business model is not so much about making money from mini-program transactions.
On the other hand, WeChat's e-wallet WeChat Pay benefits from processing transactions in the chat app where Alibaba's Alipay is unavailable.
This is a crucial development as WeChat Pay has been largely associated with micro-payments. This is thanks to a series of early campaigns in which people were encouraged to send digital parcels with cash, deeply rooted in the culture of bartering during the holidays.
Alipay, in contrast, is increasingly being used for online shopping due to its ties to Alibaba.
With the advent of e-commerce with mini app, however, this will also be the case beginning to use WeChat Pay even for purchases of large items.
"In this way, WeChat can take market share in online payments. This is the other big battle between Alipay and WeChat Pay.
As of January, Alipay had at least 1 billion active users per month through its own App and Mobile Wallet partners around the world. WeChat does not provide the user ID for its e-wallet, but said that its daily transaction volume in 2018 exceeded 1 billion.