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Mini Programs: The “Secret Weapon” of Tencent

May 21, 2018 by Yun Nie
Mini Programs: The “Secret Weapon” of Tencent

Chinese WeChat that boasts 1 billion loyal users saw great opportunities in its online and offline consumption contexts. By reinforcing certain contexts, WeChat mini programs can make a big crack in the Chinese market; it may even lead to upending pre-existing organization.

Last year, blockchain technology was the new kid on the block for Chinese start-ups and investors. However, investment markets this year appeared silent, but as Hop, Pinduoduo and other mobile applications, flourished in the digital market, mini programs connected to WeChat rode the wave.

Within a year of its debut in January 2017, the WeChat mini program has developed a complete business ecology, branching into online retailers, social media, content, transportation, services and other daily-life services. According to CAICT’s report of WeChat Social and Economical Influence of 2017, at the beginning of 2018, 95% online retailers had installed mini programs. Data analyzed by a third-party platform also suggested that among the top 200 mini programs, those that relied on retailer business accounted for 21%.

As new retailers brought hundreds of millions of potential customers to WeChat, the company focused on mini programs that automatically directed online users to real consuming places based on their requirements and, at the same time, helped offline retailers to win more customers.

Retailers’ customer traffic

Although Tencent gave up online retail services, its WeChat app was extremely popular among well-known retailers who utilized the app to attract customers.

As an Internet-based giant, Tencent should obey two principles to increase shareholders’ and investors’ interests: (1) branching into new services and (2) globalize pre-existing business.

However, Tencent was frustrated by obstacles in its overseas expansion path. One effective solution might be extending business to cover new services, while retailer would be the core. The company has been attempting to develop an ideal model to break into the field for a long time. Besides direct trading, mini programs could be the best tool through which Tencent expands its business edge to a broader scale.

Ambitious mini programs

In a conventional economic model, business relies on a centralization system in which all users orbit around the center. The majority of business models today are models such as manufacture, website, and so on. Centralization represents a traditional economic model while decentralization and distribution reflect a new blueprint that will be employed in the future.

In the new blueprint, Alibaba emphasized on user experience around which pan-retail will be driven by data, consumers-products reconstruction, digital customers, smart supply based on demands and ubiquitous consumption. In other words, the new retail blueprint was developed for adapting to the concept of “decentralization”.

Beginning with Costco, the retail industry has demonstrated an intensive trend of decentralization. Combining online with offline and utilizing big data to motivate new retail, this decentralized model will satisfy consumers and bring them optimum shopping experience.

Be it trade or life services, the core is still customers. For WeChat that has 1 billion users, it can break into a new field only by reinforcing mini programs in certain consumption scenes. Thanks to the “super application”, these 1 billion users will spend more time in the virtual world that was dominated by Tencent’s WeChat, and as mini programs increasingly gain popularity, WeChat will become more powerful in daily life.

Participants’ opportunities

Previous online retail was in the form of C2C. However, when cost was increased, it was difficult for individual retailers to establish their own online stores. They had to turn to WeChat to expand their business. According to statistics, for the first tier (top 10) brands, drainage cost accounted for 10%-20%; for the second tier brands, the cost increased to 20%-40% and for the third tier brands, it surpassed 40%.

Now, social-media-centric online retailers are approaching the mainstream that utilizes information flow, live streaming, short videos, and other interactive forms to win more users time. During this process, WeChat mini programs play an important role.

The future of mini programs still remains uncertain, but for start-ups, it might be a great opportunity, especially when mini programs endows them with multiple functions, such as tools, divine tests, games and online retail applications.

In terms of products and services, there are more refreshing forms that can be integrated by mini programs, like education, services, and merchandise. In addition, offline stores joining hands with online stores are able to meet complex demands of consumers. Low-frequency services that were not covered by WeChat, like house cleaning services for example, give the company a larger playing field. Finally, detailed tools including notifications, notes, photo galleries, calendars and tickets search can generate more forms of products and services.

In conclusion, when online sources were exhausted, mini programs created a sort of a lifeline for WeChat, connecting to offline combustion scenes. After all, only when offline consumption is available, can the company establish its business ecology.

Yun Nie

Yun Nie is a New York-based tech reporter. She focuses on India-China financial market, global IT giants and technology-centric market trends. She can be reached at Yunnie@thepassage.cc.

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