WeChat launches market in hopes of luring shoppers

Chinese consumers are still fairly lukewarm toward making online purchases via WeChat, even though its developer Tencent Holdings has stepped up efforts in developing an e-commerce business on the country's most popular instant messaging application.

Tencent launched last Thursday a service dubbed "Weixin Xiaodian," (meaning WeChat small store in Chinese) allowing registered micro- and small-sized retailers to open online stores on WeChat, according to a press release obtained by the Global Times Tuesday. On May 27, the company, a shareholder of JD.com Inc (JD), also rolled out a shopping channel on WeChat, enabling users to buy goods offered by the second-largest online retailer in China by sales volumes.

Despite the increasingly diversified goods categories, consumers still seem to be largely unenthusiastic about WeChat's e-commerce service.

"I have no reason to turn to WeChat, as I can find everything on established companies such as Alibaba and JD. I think Alibaba's third-party payment service Alipay is safer than WeChat's," Li Qian, a 28-year-old resident in North China's Hebei Province, told the Global Times Tuesday.

Li's opinion was echoed by Yang Mu, a Beijing-based white-collar worker.

WeChat's payment services is more like a copycat of Alipay and doesn't seem to be reliable, Yang told the Global Times.

According to a poll on 150 consumers issued by Luoyang Business Daily in late April, over 70 percent of participants would stick to current online shopping platforms and mortar-and-brick shops instead of shopping via WeChat.

Analysts said that many Chinese consumers have the same attitude as Li and Yang, because WeChat is still widely regarded as a social networking platform.

WeChat, launched in 2011, has amassed 396 million monthly active users in the first quarter of 2014, a surge of 87 percent year-on-year, according to the financial report issued by Hong Kong-listed Tencent on May 14.

The company said in the report that it has already conducted a significant subsidy program, notably for taxi-hailing users, during the period so as to expand the user base of WeChat's payment service.

Tencent needs to devote more efforts and longer time to persuading users to buy goods or services via WeChat, said Zhang Yi, CEO of Shenzhen-based market research company iiMedia Research.

A PR representative from JD.com Inc told the Global Times Tuesday that the company has begun from Friday to send online vouchers worth 1 billion yuan ($160.1 million) in total to users of WeChat and JD's mobile app through a promotion, which analysts said is an attempt to try to get users to use WeChat's payment services.

"WeChat should also improve its user experience for online shopping. For instance, shoppers can quickly find what they need and who is selling it on Alibaba's e-commerce platforms taobao.com and tmall.com, but they can hardly do so via WeChat," Zhang told the Global Times Tuesday.

Currently, users can only easily find goods sold by JD via the shopping channel, but when it comes to small retailers, users are unable to know what they are selling unless they follow the retailers on WeChat.

Although WeChat's e-commerce business faces several problems, Zhang said that many off-line retailers and those unable to have online stores on Alibaba's platforms are willing to open stores on WeChat due to lower entry barriers.

Tencent said that no fees or commissions are charged to vendors to run stores on WeChat, while taobao.com reportedly charges retailers for promotion and technological services. Zhang noted that sooner or later WeChat will also collect promotion fees from retailers.

A survey of more than 2,000 medium- and small-sized shops in China by iiMedia in April shows that 53.5 percent of the participants intend to carry out business on WeChat, believing they can run effective online promotions through taking advantage of the mobile app's large and active user base.

Some off-line retailers will embrace WeChat, but this is unlikely to give Tencent a chance to challenge Alibaba's predominant position in the e-commerce sector on the mobile front, said Wang Tingting, an industry analyst with Beijing-based market research company iResearch.

Alibaba led the mobile shopping market by sales volumes in the first quarter of 2014 with 76.4 percent, while JD.com Inc ranked second with 6.9 percent and Tencent was in seventh position with 0.4 percent, read a iResearch report.

However, Wang said that WeChat's Weixin Xiaodian should not just be aimed at selling goods online, but focus on integrating an online user base with off-line services including restaurant and cinema bookings.

"The online to off-line is a promising and emerging segment, with Tencent and Alibaba both standing at the same starting line. And it is hard to tell who will be the final winner," he noted.