The new gold diggers behind WeChat ecosystem

Just when we thought China e-commerce is going to be forever dominated by Alibaba and JD, the meteoric rise of social e-commerce Pingduoduo, accumulating over 300 million registered users within 2 years, shocked the industry.  Many Investors suddenly started their new-found interests in this sector. Though several factors have contributed its success, even including its controversial strategy in selling almost free yet fake products, WeChat and the hottest of all hot features in Wechat for now, its mini-program are the key engines that catapulted Pingduoduo into the stratosphere.

 

It is estimated that

-WeChat has around 1 billion MAU (monthly active users); in comparison, Taobao’s MAU is 530 million; there is clearly 500 million gap between the two. 

-Currently, the total number Wechat mini-programs in the market already reached 580,000; Mini-programs DAU (daily active users) is hitting about 170 million.

 

Then on top of this pile of huge traffics, WeChat payment is the icing on the cake to complete the ecosystem; it is a fertile soil for the blossom of social e-commerce. Or some simply believe they are sitting on a goldmine to dig into or perhaps already struck gold.

 

One type of gold digger is offering the solution for enterprises to conveniently launch and manage Wechat store or WeChat mini program store (let’s call it Wechat mini-store), along with selling those starry-eyed WeChat marketing tools. Below are some prominent local startups in this category. These service providers usually boast that they require zero effort from the client, and all you need is just one click in few minutes. 

 

The second type, they are the hidden social e-commerce platform behind those KOL WeChat accounts. Here comes their mechanism. They usually do not show the direct Wechat mini-store front to the general public. They handle brand cooperation, product selection, AI-powered customer support, payment, inventory, logistic, delivery, basically every step in the whole e-commerce supply chain except marketing&distribution. For this missing link, they actually try to convert every KOL WeChat account into playing this role. They hope to let their potential customers find the mini-store entry through the interface of these KOL Wechat accounts. 

 

We listed out few major players here. One of them, SeeApp already received millions funding from Tencent in its Series C. It is said 90% of the traffics to SeeApp product page is the result of the promotions done by KOL WeChat accounts. A major KOL WeChat account in China usually has over 10,000 followers. Today this startup claims to partner with 4000 KOL accounts in Chia, targeting at their 40 million followers as potential buyers. 

 

Let us see an example below. In this local fashion KOL Wechat account, it operates two store front: one is Wechat store done by Youzan (we mentioned this company in type I category), and the other is Wechat mini-store powered by SeeApp.

 

The third type, they were actually born due to the intense rivalry between Tencent and Wechat.  In China, it is estimated there should be 1.2 million individual agents helping Alibaba’s Taobao vendors to promote their products online. In 2017 Alimama, Alibaba’s leading marketing platform had to pay RMB 20 billion commission fees for these individual agents. In the past, WeChat is one powerful channel to direct lion’s share of the GMV to Taobao. However Tencent wants to build its own e-commerce ecosystem, and since the second half of 2017, more stringent rules and severe penalties have been imposed to eradicate any possibility of Taobao purchase link pushing into Wechat.

 

But these Taobao individual agents are still motivated to make the same money they used to get, so creative gold diggers are trying to outwit Tecent. For instance, Peanut Diary is one startup in this area.

They come up this indirect method by creating a shopping guide App embedded with millions of hidden Taobao coupons inside. Let us have a glimpse of how it works. 

So individual agents are basically spreading coupon image and message into their Wechat channel, not direct Taobao purchase link, a way to circumvent Tencent’s scrutiny and work under the radar. We are not sure whether these startups will be just a fad in the long run, but in the short term, they are seriously making some fast money. Peanut Diary is said to attract millions of users within 3 months.

 

Wechat mini-program will be the mother of all marketing trends in 2018. Alibaba is also reportedly going to launch its own Taobao mini-program very soon. The birth of new tool will spark new enthusiasm, then new momentum and eventually new ecosystem. Following these leads, perhaps gold diggers always know how to profit from these opportunities.

 

By: Cecilia Wu