WeChat’s new mini-program logistics linkup raises e-commerce stakes
Mar 28, 2019
On Monday, Tencent’s WeChat app launched a logistics interface for its popular mini-program feature that it says could save time and money for online retailers.
Given its competition with established e-commerce titan Alibaba, which has spent years strengthening its own logistics network, Tencent’s update may appear to be too little, too late. Outside of strategic investments in platforms such as Pinduoduo and JD.com, its homegrown businesses have largely failed to rival those of Alibaba.
However, according to at least one expert we spoke with, WeChat’s goal isn’t necessarily to surpass Taobao. Instead, the social platform is pushing forward innovation more in line with its strengths, which include a 1 million-strong ecosystem of mini-apps, lightweight programs that run within WeChat.
Lowering the barrier
With the new add-on, WeChat mini-program developers can directly connect to logistics companies such as SF, ZTO Express, and YTO Express. In addition, customers who purchase items will be able to receive notifications and track their packages directly through a centralized “WeChat logistics assistant.” Previously, users had to enter the mini-program for each online store to check on their shipments.
The process of linking a mini-program to the logistics option requires developers one week on average, according to WeChat (in Chinese). In its official release it cites two major sellers, including American skincare brand Kiehl’s, who have saved on costs and improved customer experience using the new feature.
However, one marketing professional expressed doubt that the change will help all retailers equally. The update could lead to a marked improvement for “really well-developed companies” with an established customer base, says Jason Blondeau, Marketing and Sales Manager at Shanghai-based web agency QPSOFTWARE. Relative newcomers to mini-program e-commerce, however, may not benefit much from a logistics upgrade until sales pick up.
Still, Blondeau told TechNode, mini-programs in general can be “very useful” for brands when combined with a “proper marketing plan.”
In addition, the latest update seems to fit with Tencent’s aim to make mini-programs easy to use. It’s “very much in line with what they said they would do,” says Matthew Brennan, co-founder of China Channel.
“The whole mini-program initiative is about helping startups, helping more businesses,” Brennan told TechNode. That applies to e-commerce as well. Just a few years ago, WeChat “wasn’t a very natural environment” for online shoppers, said Brennan. Now the whole in-app retail experience has become much smoother thanks to pushes from Tencent.
Brennan doesn’t see the company’s e-commerce initiative as a direct competitor to Alibaba. Instead, like the “runaway hit” platform Pinduoduo, WeChat is finding new models “to let social e-commerce flourish.”
And fast-growing mini-programs, launched in January 2017, happen to be a convenient tool for alternative means for growth. As of the second quarter of 2018, Tencent reported that WeChat hosted over 1 million mini-programs on its platform, a 72% jump from the same period in 2017. Total users reached 600 million, with close to one half accessing them four to six times a day.
In its fourth quarter report for 2018, Tencent said that mini-program user daily visits have grown 54% year-on-year. Daily active users have also increased “rapidly,” although the company did not release a specific figure.
Their popularity has caused such ripple effects as small food and drink sellers using mini-programs to improve in-store experiences, rather than remain in an increasingly crowded online food delivery market. The feature’s success has also led multiple other companies, from Baidu to Bytedance, to emulate Tencent’s formula of driving in-app “stickiness.”
While WeChat may be taking a different tack towards e-commerce, recent years have seen Tencent and online retail titan Alibaba expand aggressively into each other’s home turf. The Chinese social and gaming giant saw some progress with investments in Alibaba competitors like Pinduoduo, Vipshop, and JD.com, of which Tencent is the largest shareholder. However, its own e-commerce businesses, including the likes of C2C marketplace Paipai or Yixun, have achieved little success in a crowded market.
As a result logistics, a primary driver for the e-commerce boom in China, has never been a key focus for Tencent as it has been for Alibaba or JD.com.
Alibaba began tapping into the sector as early as 2013 with the establishment of Cainiao Logistics, which has pledged to support same-day delivery in China and 72-hour delivery around the world. Cainiao now stands at the heart of a broader logistics network that leverages the capacities and capabilities of several large, high-profile partners. The e-commerce giant already holds minority stakes in three of the country’s top logistics companies: ZTO Express, YTO Express, and STO Express.
In comparison, Tencent’s integration of logistics features into its WeChat mini-program ecosystem might be viewed as a necessity in a world where online shoppers are accustomed to same-day—or in some cities, 30 minute—deliveries.
In addition, while the field of e-commerce is already highly developed, it’s still expanding. China’s express delivery market has recorded sharp growth over the past few years, handling 50 billion parcels in 2018, up 26% year-on-year, according to data from the State Post Bureau.
With additional reporting by Emma Lee.