Tencent’s WeCommerce comes of age

WeCommerce comes of age

By Zhang Wen (Global Times)    13:55, October 18, 2013Feeling bored by the first year of his job as a consultant at a Beijing education agency, GaoMing decided to go home to Hohhot and open a restaurant on the campus of his almamater, Inner Mongolia University.

“I saw that people around me were all enthusiastic about using [mobile text and voicemessaging service] WeChat. I wanted to take advantage of this popular platform. As acomputer networking major, I also felt passionate about starting a business,” said Gao, 27.
His restaurant is a hole-in-the-wall venue able to accommodate no more than 10 diners,but he receives around 150 orders daily, accounting for a monthly turnover of about150,000 yuan ($24,579).
“I aimed to take delivery orders through WeChat from the start. When we distributed ourmenus with quick response (QR) codes to dorms, students would immediately scan them.They just love doing it,” Gao said, crediting the matrix barcodes for making his business”cool.”
With a total of 800 subscribers following the restaurant’s official account, Gao sends photosand descriptions of new dishes as well as advertisements to recruit part-time employees.
These posts appear under the “official accounts” tab on customers’ WeChat menu, which isseparate from the “discover” tab as it’s known in English that is for friends only.
“People who actually order dishes through WeChat account for 20 percent of totalcustomers. After all, ordering over the phone is quicker and more direct. But [WeChat] is agood platform for us to showcase our dishes, share information and interact with students,”Gao said.

Business at customers’ fingertips
The number of WeChat users in China surpassed 400 million in the first half of this year,the People’s Daily reported in July. This huge user base has encouraged a growing numberof people to do business under official accounts on the platform.
Fu Liang, an independent telecommunication media and technology analyst, sees greatpotential for WeChat to become a more important business tool due to its uniqueadvantages.
“Unlike [online retail platform] Taobao or [microblogging service] Weibo, which are open toall people, WeChat offers a more enclosed circle that attracts a relatively smaller crowd.However, the crowd it attracts is more targeted and more likely to purchase particulargoods or services,” said Fu. “Additionally, it is a relatively trustworthy platform becausepeople register with their real identity.”
Fu also noted that the intimacy of WeChat means businesses can develop a friend-likerelationship with customers, rather than a strictly commercial one. Users who receivemessages sent by businesses are more likely to be treated with respect as customers,limiting the flow of junk mail or spam that can cause users to delete or block businesses.
“When you select the right posts and send them at the right time to foster a loyal customerbase, these efforts eventually pay off. People are more likely to trust you as a business andcontinue following you,” Fu said.
Discovering new potential 
As an avid WeChat user who follows several businesses’ official accounts, Liu Jianfengrealized the service’s commercial opportunities for himself in April.
Liu, who works as a programmer, said the convenience and popularity of WeChat alongwith his dissatisfaction at ordering products as an office worker, had inspired him todevelop ordering software compatible with the app.
“I often feel that takeaway restaurants aren’t very user-friendly. Every time we callrestaurants, we have to explain our address every time. They don’t have a record of ourdetails at their restaurant,” Liu said. “Since prices are always rising, menus have to bechanged sporadically. If we can just change it online, it would be more convenient and savelots of paper for menus.”
Liu spent 5,000 yuan and worked for two months with four other programmers on theirsoftware, Wode Mengxiangxiu (My Dream Show). Now, it is used by more than 200restaurants and retailers, with each on average receiving around 30 orders daily through iton WeChat.
The software costs 1,888 yuan for the first year, with businesses required to pay 800 yuanthe second year to upgrade it.
The software is selling well, although many businesses are still trying it for free.
“I feel there is great potential to develop in the future because nearly everyone hasWeChat on their smartphone. Most white-collar workers prefer ordering online,” Liu said.
Liu admitted that competition is fierce in his field, with similar software already developedby more than 10 competitors in China. He plans in future to release customized versions ofhis software to cater more specifically to the needs of businesses.
Pros and cons
Zhang Xiaochen, 24, runs a four-square-meter cosmetics store at Dongfang Tianzuo,Haidian district. She never considered giving her business a presence on WeChat untilregular customers encouraged her to do so to more effectively stay in touch.
“Some of my customers went back to their home provinces or moved to other places inBeijing, but they still wanted to keep buying things from me. They advised me to open aWeChat account, so we could still stay in touch,” Zhang said.
Her business soon connected on WeChat with more than 1,000 people, including thoserecommended by loyal customers. Zhang now sells about half a million yuan worth of goodsevery month, with 40 percent of orders made through WeChat. From 7 am to 2 pm, herWeChat buzzes virtually non-stop with notifications from customers consulting with her onskincare products and prices.
Despite all the extra work, Zhang said she enjoys doing business in this new e-commerceera.
“Not everyone can visit your shop every day. WeChat can help customers get the thingsthey want more conveniently. I also post recommendations and photos several times aweek to maintain people’s interest,” she said.
“WeChat is a more convenient, pure environment for business. If you communicate withcustomers online through a website that anyone can view, you risk attracting unwantedattention from people, such as rival sellers, who might bid lower than your set prices orleave annoying comments. But this rarely happens on WeChat.”
Zhang said WeChat was more about quality than quantity. Customers more likely to dobusiness prefer to connect via WeChat, she said.
“People who add me trust me. If you add 10 people [on WeChat], six of them might dobusiness with you. On Weibo or Taobao, you might have 10,000 followers or visitors, yetonly a small proportion will actually buy anything,” Zhang said.
But there are some drawbacks for businesses using WeChat, too.
Chen Haining, an Internet technology columnist, said that compared with Taobao andWeibo, it can initially be harder to build a customer base on WeChat.
“It would be very difficult to run a business on WeChat if you’re starting from the scratch.But if you have been in business for some time with an established customer base, it can beprofitable,” said Chen, citing payment as another stumbling block for WeChat.
“There is no third-party supervisor of payment process, like Alipay, for WeChat, socredibility is another problem.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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