More than Messaging: Is WeChat Leading the Push to an E-Commerce Ecosystem?

What began as a simple messaging app launched by Chinese ecommerce giant Tencent has become a way of life for many users—texting, splitting the bill, ordering a coffee, booking a cab, and much more.

As WeChat and its 650 million monthly active users celebrate the platform’s five-year anniversary in January 2016, the messaging app has evolved beyond messaging and is driving change both among users and competitors.

An Ever-Expanding Ecosystem

According to a recent article by Wall Street Journal, once-simple messaging applications like WeChat and competitors WhatsApp, GChat, and Facebook Messenger have become hubs for mobile users, and continue to become an even more important piece of a mobile user’s everyday life.

“It’s an ecosystem,” said Yichi Zhang, a Chinese native and co-founder of the agency McGann-Zhang, which has offices in both Beijing and L.A., in an interview with Digiday. “In China, you have to use it.”

Whether it’s a replacement for business cards, the option to hail a ride, or even a mobile payments platform, the all-encompassing use of WeChat in China meets the needs of the mobile-first consumer and is sending experts in Silicon Valley scrambling:

“There is no other technology that is more closely examined and discussed in Silicon Valley than messaging,” says Jenny Lee, a managing partner at GGV Capital.

What makes WeChat so popular? Could the idea of the ecosystem be emulated in the United States or Europe? Let’s take a look how messaging apps can evolve and are evolving.

How WeChat Fits into the Everyday Life of Chinese Consumers

WeChat, with over a billion accounts, 650 million active monthly users, and 70 million of these accounts outside of China, has been the first to adopt many innovative concepts due to the sheer amount of mobile-first consumers throughout the country—and the lack of credit cards.

Related: An Introduction to Direct Carrier Billing

Payments without Credit Cards: A Clashing of Titans

The adoption of mobility and lack of credit cards means that Tencent, WeChat, and its mobile payments platform WeChat Wallet is in constant competition with Alibaba’s Alipay for the everyday transactions of the Chinese consumer.

“There’s a battle between Alibaba and WeChat to make the easiest, most integrated payment system in the world,” said Brian Buchwald, CEO of consumer intelligence firm Bomoda. “Alibaba’s advantage is being the world’s largest marketplace. It was around before WeChat, but it’s a desktop-first product. WeChat was built with a mobile-first mentality.”

Mobile First

An underlying factor behind the mobile-first mentality of the Chinese consumer is the late adoption of ecommerce. Alibaba launched its first ecommerce platform, Taobao, in the mid-2000s, and mobile commerce grew alongside ecommerce as opposed to that of the US, in which desktop purchases were made for nearly a decade before the heyday of the mobile device.

“They’re doing things we’re simply not doing in the U.S.,” said Buchwald. “Imagine if you were going to start a city from scratch. Rather than having to deal with all the infrastructure created 200 years ago, you could hit the ground running on the latest technology. That’s what China’s doing — they’re accessing markets for the first time through mobile apps and payments.”

Noting this, according to an eMarketer study done in July, mobile spending in China is expected to hit a global record high in 2015 of 49.7 percent of all e-commerce in the country, with projections for 2019 setting the percentage of mobile commerce transactions at 71.5 percent of all online retail.

All-in-One

Adopting a QR-based payment system, WeChat fits the needs and allows purchases to be made without ever leaving the application.

“The payment process is seamless. It takes 30 seconds, and you don’t get out of the app at any point,” said Zhang, who pointed out the laborious steps that could rack up precious minutes spent on mobile in America — searching online, opening a mobile Web browser, entering credit card information or heading to PayPal, all the while bouncing between apps and tabs.

Related: A Quick Scan of QR Codes and Payments

Can Facebook Messenger Compete?

While few competitors have entered the fray with such a complete ecosystem, Facebook, along with its Facebook Messenger application, could be the answer. After requiring users to download Messenger in order to use the basic messaging functionality on mobile, Facebook has made some steps to provide the ecosystem available to WeChat users in China.

Related: Barriers to use of Mobile Payments

Expanding its Reach, Building Relationships

In March, Facebook unveiled about 40 photo- and video-editing apps tailored for Messenger. Today, more than 700 apps are plugged into Messenger, although only about 70 are featured in the app and visible to users.

From here, Facebook hired a former PayPal executive to manage Messenger, leading to the rise of peer-to-peer payments, highlighted here.

Related: Pin, Plan, Buy: How Pinterest is Grabbing a Piece of Social Commerce

David Marcus, the former PayPal executive in charge of Facebook Messenger, is searching for a way to allow companies to keep in touch with customers over chat without being intrusive. Learning from WeChat, Messenger has released some functionality for customer service, booking, and more.

Book Uber (soon Lyft) from Messenger
Unleashing the ‘Transportation’ tab in Messenger, users are now able to book a ride using Uber and soon Lyft, emulating WeChat’s relationship with Chinese ridesharing app Didi.

Call Housekeeping at Hyatt
Hyatt Hotels Group guests can ask for fresh towels or housekeeping over Messenger. But some curious users test the feature by sending messages that simply read “Hi,” says Dan Moriarty, Hyatt’s director of digital strategy and activation.

Ecommerce Customer Service
Zulily and Everlane now connect to the Messenger platform, allowing Messenger Users to message customer service directly from the app.

Boarding Pass
In early 2016, Dutch airline KLM plans to offer booking confirmations and boarding passes over the app.

The Evolving Messaging Platform: What’s Next?

Comparatively, applications like messenger app Kik have brought in gaming, photo-sharing, and more, but users and developers alike feel there was less interest in downloading these applications than initially perceived.

Will Facebook Messenger become the Ecosystem globally that WeChat is in China? With 700 million users and a somewhat captive test audience, the idea of the ecosystem is not completely out of the question, but the adoption of additional applications within Messenger will be an uphill battle.

Will consumers globally take on the same mobile ecosystem within a messaging platform as Chinese Consumers? If so, it will all begin with the next generation.

In the Digiday interview with Buchwald, his answer highlights where the mobile-first generation domestically will become the perfect testing ground for this. Says Buchwald:

“I have a daughter who’s 17 months old, and I watch her on the iPhone,” said Buchwald. “She’s much more in tune on it than I am, and when she’s 10 years old, she’ll never know anything other than electronic and mobile payments. That’s where the Chinese consumer is now.”

Time will tell how and where mobile payments are heading, but to keep up with all the latest in the payments industry, sign up for the WEX email list and follow @WEXIncNews on Twitter.

Further Reading

See the following resources to learn more about the evolution of social media, messaging, and consumer payments:

• Searching For A Customer Experience in the Payments Industry
• “Xbox, Tell Me How I Look”: The Digital Dressing Room
• Social Commerce: Mobile Shopping Made Easy
• The Millennial Generation is Shaping the Future of Payments
• The Who, What, and Where of Ecommerce
• Tweet Your Support for a Candidate—In More Ways than One