Tencent makes its move in China’s e-commerce arena

Every merchant with a business licence can open a 'small store' on the popular platform

Tencent makes its move in China’s e-commerce arena
WeChat says it is gradually opening up individual online 'stores'. It is free to start-up and transaction costs are low, but competition is high. Photo: AFP.

(ATF) Tencent announced this week that WeChat has made its big move into China’s e-commerce field with its small store concept. Just as every user can open a public account on WeChat, every merchant with a business license can open a store on the popular platform.

WeChat said it is gradually opening up individual “stores”, and then to individual users. It is free to start-up and transaction costs are low, but competition is high. Taobao, JD.com, Meituan and Pinduoduo firmly occupy the space in their respective fields.

The WeChat small store was developed by the WeChat small program team, which can help merchants create small sales programs at zero cost.The WeChat small store team will be responsible for technology and service processes such as product release, order management, transaction settlement, logistics after-sales, and live streaming.

At present, the small store contains basic functional modules for e-commerce operations such as commodity information, payments, order and logistics management, marketing, fund settlement, customer service and after-sales service.

The small store also has its own live broadcast capability. Merchants can achieve live broadcast delivery to drum up trade in small stores.

In terms of opening conditions, WeChat small shops support three types of entities, enterprises, individual industrial and commercial households, and individuals.

However, at present, it is only open to internal testing applications for businesses with two qualifications, including enterprises and individual industrial and commercial households. Individual stores will gradually be opened later.

During the internal testing period, under the same subject, enterprises can support up to 50 small shops, and individual industrial and commercial households can open up to 5. One WeChat account can only support registration once.

At this stage, WeChat small shops support the sale of more than 1,500 product categories, mainly including household appliances, mobile communications, digital, computers, office equipment, and clothing, which will be expanded.

In order to regulate the use of small store brands and trademarks, merchants need to open corresponding brand use rights according to brand opening rules. At present, small shops can open their own brands, agency brands or go unbranded.

A look back

Looking back at Tencent's history, Tencent has actually dabbled in several major forms of e-commerce.

For example, the Paipai.com launched in 2005 was an important representative of early C2C. The QQ rebates and QQ member official stores launched in 2009 and were very similar to the Taobao mall at that time; as for the later version QQ online shopping, it is a very mature comprehensive e-commerce platform.

All these attempts are backed by solid infrastructure, sufficient funding, and huge traffic. However, all these attempts failed without exception.

WeChat small stores has entered late, but in recent years Tencent's e-commerce territory has been expanding. Tencent is a shareholder of Meituan, Pinduoduo and JD.com. In April of this year, Tencent increased its holdings of Pinduoduo with US$50 million, increasing its holdings of Pinduoduo shares to 790 million shares, accounting for 29.2% of all shares, and becoming Pinduoduo’s second largest shareholder.

At the beginning of May, WeChat launched the “small goose spelling applet,” focusing on group buying. Not long ago, WeChat also launched a small express delivery program.

Quan Xiaodian

Recently, WeChat has launched a new function called "Quan Xiaodian", which focuses on the new shopping methods of "sharing" and "promotion". WeChat’s launch of the “Quan Xiaodian” function is a new channel that Tencent provides for WeChat group shopping.

According to Tencent's first-quarter financial report, the WeChat applet has 400 million daily users and has created a cumulative 800 billion yuan in transaction value in the "2019 Social E-commerce Development Trend Report," China Economic Voice reported.

Compared with other e-commerce platforms, WeChat small stores put more emphasis on quick store opening and zero cost, which shows that their target merchants are more focused on the small store format and form that differentiates from the competition with integrated e-commerce platforms.

Internet analyst Ding Daoshi said: “WeChat launched its small store to ensure the link and promotion of related products in the WeChat ecosystem. And the products developed by WeChat personally means a better understanding of supply and demand. More importantly, this small program greatly reduces the threshold requirements. Therefore, it has great advantages. WeChat will definitely provide more funds and push support for its own products, which is different from third-party service providers.”