From now on, life goes on online. Will there be a new WeChat in the West?

In China, WeChat is much more than a mobile app. Calling it just a messaging app would also be too much of a simplification. With WeChat you can do literally everything - pay for lunch, call your grandmother, organize a teleconference and even send a virtual envelope with (real) money to your friend for his birthday. During the global coronavirus pandemic, such applications are the future.

WeChat is owned by Chinese technology giant Tencent. The company invested in 2010 in a new application in response to the popular WhatsApp. At that time nobody suspected that this inconspicuous messaging app will soon turn into one of the most popular applications in the world (1.2 billion users in 2020!). What is WeChat today and how can you use it in business?

WeChat is a breakthrough in e-commerce

The launch of WeChat Pay in 2014 was a milestone in transforming the application from messenger to an offline and online payment tool (and a big player in the e-commerce market). Initially, WeChat Pay focused on peer-to-peer and in-app transactions within WeChat, but moved to an offline world with the ability to pay in stores using QR codes. This trend gained in popularity in 2016.

Adding the payment function to the application (WeChat Pay has 800 million active users each month) allowed WeChat to go beyond the border of the communication tool and become a trading platform for purchasing products through the application.

But the real game-changers turned out to be mini-programs. 

Mini-programs are "sub-applications" in the WeChat ecosystem. Thanks to them companies can offer their users many new functionalities in the area of e-commerce, task management or entertainment.


Tesla mini-program allowing users to locate the nearest charging station

The official launch of mini-programs took place in January 2017, along with the growing popularity of business accounts in WeChat. The mini-program allows users to access additional functionalities such as special promotions, loyalty programs or exclusive content. From a user's perspective, mini-programs offer the same features as a native application, without the need to download another app. So they can browse and buy products, saving time and data space on mobiles. According to WeChat data as of October 2019, there are already over one million mini-programs from 200 industries.

Example: With the Uniqlo mini-program, users can buy online with a pick-up request in the store within one hour. If a product is missing in a particular Uniqlo location, customer can still scan the product's QR code to order home delivery.

The popularity of mini-programs along with the powerful WeChat Pay features allows users to shop even faster and easier. In addition to a perfect fit with omnichannel reality, the WeChat ecosystem also shows how a model social selling should look like - with just a few clicks you can buy a specific product. Additionally, if a user persuades a sufficiently large group of other users (via social network on WeChat) to buy in a given store - the whole group will receive products at significantly reduced prices. 

Fast shopping with the Uniqlo mini-program

Mini-programs are a bridge between the online and offline worlds. With Scan & Go features, buyers can use the mini-program to scan products and make payments without having to wait in line. Walmart in China has shared data showing that more than 30% of landline transactions are made using Scan & Go (data as of December 2018). 

Unmanned shops are still a novelty in Poland - both for consumers and traders. There is still a lack of infrastructure and technological facilities to make transactions in such places seamless. This is everyday life in China. Customers scan the QR code and enter the store, shop, and receive a bill to their WeChat account. Each product in such a shop has an RFID (radio-frequency identification) tag, which is scanned when the buyer leaves the shop. Payment is made by means of WeChat Pay. 

Everyone who has visited China at least once in the last five years has certainly noticed that mobile phone payments are everywhere - from restaurants, through the post office to the vegetable booth. This form of payment has become so widespread in China that WeChat Pay and AliPay are ⅔ for all payments in general. Traditional cash turnover is only 10% today.

mobile payment

The application for the digital transition

Today, offline reality is intertwined with online, and both these worlds are treated equally. The appearance of the coronavirus pandemic has redefined these two orders even more strongly. In the #stayhome times it is online that is gaining strength and companies are forced to transfer as many aspects of their business to the Internet as possible at an express pace. Tools for remote work, electronic document management, chatbots or payment applications will certainly become more and more popular. 

WeChat has set the bar very high - one can say that today, in order to leave home, a Chinese person needs only clothes and phone with one application (with which he can get e.g. credit and a tourist visa). In WeChat you can also have a digital version of your ID card - everything indicates that this feature has a chance to become the first national, official electronic identification system in China created by a technology company.  

From innovation in business, through public services and cross-border trade, to technologically advanced mini-programs - WeChat is constantly looking for space for development, adapting to market trends and digital reality. 

So the question arises - does one of the most popular applications in the West have a chance to become a new WeChat and enable the user to do most of the day-to-day stuff from the phone? So far there is no sign of that. How big is market need for this type of tool is clearly visible in the last days, when coronavirus hit Europe and the United States hard.

What will the coronavirus change in e-commerce?

The appearance of the virus - first in China, then all over the world - has turned upside down all areas of life. Many industries have experienced huge falls, many companies have plunged into crisis - many will not survive until the pandemic is over. As a digital society, we are faced with an even greater need to adapt to the new reality - where the main role will be played online. 

While tourism, transport, and gastronomy have been hit hardest, commerce has also been affected. With the closure of shopping malls and stores, the revenues of many companies fell practically to zero, and within days. Consumers, worried about their future - health or work - are reluctant to shop. Such drastically reduced demand is a recurring scenario in many countries facing an epidemic. 

Although it is still too early to draw far-reaching conclusions, there are two ways to deal with the crisis. The first is to increase the e-commerce budget to shift the focus from traditional trade to online, and the second is a strategy based on cutting the costs of the company - lowering the salary of employees, giving up the services of subcontractors, putting your company into a state of hibernation - to wait for the hardest period with less money, thus avoiding mass redundancies or business closures. 

A domino effect is inevitable in this situation - entrepreneurs lose, companies lose, contractors lose. In the long run, consumers may gain (although it will be a mock profit), when e.g. clothing stores will be forced to empty their warehouses and start selling their goods on the verge of profitability. But for the time being, the consumer is also at a loss - prices of food or hygiene products are being raised, and only those who are financially secure can afford to buy other products, not to mention luxury goods. Economic growth has slowed down, economists estimate that Poland's GDP will fall by 3% compared to the previous year (which - in a black scenario - will involve the loss of jobs for as many as half a million people). 

How can retailers take advantage of this difficult time? The answer is: by pushing their business even harder towards digital. Today a well-functioning online store is just the beginning. It is necessary to make it easier for users to deliver as efficiently and quickly as possible (with due caution, e.g. contactless), expand the possibilities of online payments, or create Chatbots to serve customers. In other words, entrepreneurs should follow the same path as Tencent in 2010 - creating an application perfectly suited to both the offline and digital worlds.

Changes are inevitable

Entrepreneurs should count on their creativity, market knowledge, resourcefulness and readiness to act. The announced government support is unlikely to ensure long-term survival of the business without radical changes within the organization. 

It should also be remembered that the recession is a fact, and the crisis will last longer - even after the coronavirus curve is flattened and the virus is silenced.
The Chinese example shows that returning to normality is a long-term process. The mere fact that the epidemic is over does not mean that borders are immediately opened, production starts with 100% power, and trade returns to "before" state. 

Therefore, it is worth analysing your business in terms of its adaptation to digital reality. And you have to act quickly - the time for change is slowly coming to an end. 

Don't you know how to start the digital transformation? Are you taking your first steps in e-commerce and looking for a trustworthy partner? Get in touch with us!

Let's work together!

Paul Cunnington

Business Unit Manager UK & Ireland
+44 780 323 86 01
paul.cunnington@strix.net