Not long ago, people in China would have to visit a posh and elegant shopping mall for luxury shopping. This is changing rapidly as high-end brands make their way through digital channels, which are not just the obvious choices of e-commerce platforms or brand sites. In China, Louis Vuitton, Cartier, Bulgari and other luxury brands are connecting and selling to millions of customers through WeChat. .
Many know WeChat as the largest messaging app in China, and perhaps how it has morphed over time into an all-in-one ecosystem that allows you to chat, run errands, hire services, and buy an endless list of things. Now the flurry of different products people find on WeChat can include a bag worth over $ 10,000.
The trend, according to Pablo Mauron, partner and managing director for China at Digital Luxury Group, a luxury marketing agency, reflects WeChat’s enormous potential as an application tailored to transactions and services.
“I think WeChat is finally becoming what it is supposed to be for luxury brands, which is not just a social media app,” Mauron told TechCrunch in a phone interview. “One [function] It could be for customers to buy the product. Another could be for brands to build a loyalty program. Customers can pre-order a product or make an appointment with the [offline] to stock.”
In fact, according to a new report from consulting firm Gartner, 60% of the luxury fashion brands they surveyed have at least one WeChat store, up from 36% in 2018.
Like Facebook, WeChat allows businesses to create their online stores. The Chinese app now has more than a billion monthly users, but these people are not easily exploitable as customers. WeChat, unlike Alibaba, is not a marketplace and does not have a central search engine that indexes all the merchants selling on its platform.
So a WeChat store is more comparable to a site store – it exists in the online universe, but it requires a lot of marketing before consumers find it. People can discover Wechat stores by scanning a QR code at a brick and mortar store, clicking on an ad embedded in an online item, or through a host of other creative ways merchants devise.
Despite the challenges in driving traffic, WeChat stores have great appeal for brands as they offer a great toolbox for increasing customer loyalty, Mauron noted.
Buyers can, for example, speak with shopping assistants via WeChat or check their membership status with just a few taps on the screen. It’s WeChat’s social prowess that sets it apart from entrenched ecommerce candidates like Alibaba and JD.com, who are more focused on transactions. In a way, WeChat is not taking over Alibaba directly, but is playing a complementary role by providing customer relationship management (CRM) capabilities.
Many of these service-oriented features are powered by so-called “mini-programs,” which are essentially simplified versions of native apps that run inside a super app like WeChat. As the Gartner report points out, the increase in WeChat store adoption is linked to the increased use of mini-programs by luxury brands.
A total of 69% of the luxury brands in the Gartner sample group have at least one mini program. The adoption rate among fashion-focused luxury brands increased from 40% in 2018 to 70% in 2019, while the watches and jewelry category rose from 36% to 62% in the same period.
“WeChat is becoming the most attractive option for brands that want to think about CRM, e-commerce strategies or simply other value-added services without having to rely on external partners,” suggested Mauron, referring to Alibaba, JD and others. which are traditionally more popular options for digital sales.
From social to shopping
While WeChat imposes certain rules on sellers, it has built a reputation for being more laissez-faire compared to conventional e-commerce companies. For one thing, WeChat doesn’t (yet) receive commissions from ecommerce transactions like online marketplaces typically do. As Mauron pointed out, “Tencent’s business model is not so much about making money from mini-program transactions.”
On the other hand, the WeChat WeChat Pay e-wallet benefits from the processing of transactions that occur within the chat application where Alipay from Alibaba not available.
That’s a crucial development because WeChat Pay has for the most part been associated with micropayments, thanks to a series of initial campaigns that encouraged people to send cash-filled digital packages to each other, a tradition deeply rooted in a culture of sharing. of cash during vacations.
Alipay, on the other hand, is more widely used for online shopping due to its ties to Alibaba.
However, with the rise of mini-app-enabled e-commerce, people are also starting to use WeChat Pay for large item purchases.
“This allows WeChat to take market share in online payments. That’s the other big battle, which is between Alipay and WeChat Pay, “said Mauron.
As of January, Alipay had at least 1 billion monthly active users through its own app and mobile wallet partners around the world. WeChat does not break down the user number of its e-wallet, but said the daily transaction volume surpassed 1 billion in 2018.