A version of this article first appeared on Azoya’s WeChat blog. Azoya helps global brands and retailers access the China e-commerce market through WeChat and other channels.
The biggest brands in China are trying to reduce reliance on shopping mega-platforms like JD and Tmall, channeling consumers to branded mini-programs on the all-in-one messaging app Wechat. According to data provider ALDZS, 230 million daily active users access one of Wechat’s 2.3 million mini-programs every day. E-commerce comprises the largest category—approximately 18% of the mini-programs on the market are dedicated to e-commerce.
For most brands, mini-programs are supplements, not substitutes, to large shopping platforms. Some use them as a secondary sales channel, listing only hot items on it because they sell quickly through group buying or flash sales promotions. Others use them more as a branding tool. In this article, we’ll explain why mini-programs are becoming a key tool in a China brand strategy. In a follow-up, we’ll offer how-to tips based on our research into mini-program e-commerce.
WeChat gives brands independence from e-commerce platforms
While leading e-commerce platforms Tmall and JD.com offer brands large organic user traffic, they come with a number of drawbacks, leading brands to look for alternative sales channels:
- Tmall or JD.com each host tens of thousands of merchants, giving each one limited website space and time to communicate unique brand value. Each customer is likely to only spend a few seconds on one brand or product page before jumping to another page.
- Price competition is much more intense on a centralized platform, where it’s easy for customers to compare prices. This is especially the case for Singles Day, where brands are often forced to discount their goods by >50% to drive sales.
- Competition also drives up ad costs. On Tmall or JD.com, customers are likely to log onto the site with certain keywords or brands in mind; merchants bid for those keywords, driving up advertising costs and making it difficult for smaller players to compete. Some estimate that the customer acquisition costs on these platforms have risen to 200-300 RMB (about $30-45) per person.
In short, brands selling on a platform run the risk of becoming a commodity.
Driving customers to official brand channels mitigates this risk. WeChat is one of these options. As an app within an app, a mini-program is limited in size, built on top of WeChat’s existing IT infrastructure, and can be developed within a relatively short amount of time and at a fraction of the cost of a normal app.
Mini-programs stores are generally used as a supplement to a brand website or Tmall store. They usually don’t carry a brand’s entire product line, often only a handful of products such as a new limited edition collection of sneakers, a fall fashion line or a new collection co-branded with a celebrity. They often focus on special, exclusive or flash sales—the goal isn’t necessarily selling products, but engaging with customers to make them feel special.
Brands also use WeChat as a customer relationship system, as users can log in automatically with their WeChat user IDs. Brands have more access to customer data and can develop loyalty programs to keep customers coming back for more.
WeChat lets customers discover and buy new products all in one platform
WeChat’s closed-loop transaction process makes it much easier for brands to engage, cultivate and sell to customers over the long run.
On a mini-program store, the user journey is very different to an e-commerce platform. Users likely do not start out planning to buy something, and are not inputting keywords into a search engine to find a product. They begin either by messaging friends or browsing content posted by friends and official accounts.
Often, users discover new brands or products through the brand’s official account or friends and family. Sharing accounts for 35% of e-commerce mini-program access points, whereas official accounts account for 14%, according to ALDZS data.
When the user journey starts with content and is shared by friends, discovery and engagement is much more natural. This is important because trust is a big issue in China e-commerce: customers need to digest a lot more information about a product to make a decision than Western peers—that is why product pages are three to four times longer in China.
While the customer may not make a purchase right away on WeChat, brands can push content to followers over the long run. Mini-programs allow content to link directly to a checkout page; WeChat Pay makes it possible for customers to make a purchase without ever leaving the app.
Driving traffic on WeChat remains a challenge
And yet driving traffic to WeChat stores remains a challenge for all brands, big and small.
- WeChat is still a relatively closed network; users cannot interact with strangers they are not connected with nor view content posted by non-friend users.
- WeChat ads have notoriously poor ROI, owing to weak targeting and customer segmentation technology
- Many brands use key online influencers to drive traffic, but KOI promotion is becoming increasingly expensive
Bigger brands may be able to drive traffic from other channels, whether it be their official site, KOIs and celebrities, offline retail stores or popup stores. Last year French cosmetics brand L’Oreal used a mini-program to livestream Chinese celebrities and promote products during the Cannes Film Festival. Brands with existing WeChat fans may be best advised to target these loyal customers instead of trying to start from scratch with new ones.
Small brands starting from scratch generally have to spend on KOIs because WeChat’s ad options for smaller companies are so limited; nonetheless, it is a good option for new brands that can’t get on major platforms like Tmall and JD—far easier than driving traffic to a brand website.
Brands have to get more creative and make their mini-program stores so compelling that they inspire customers to share content with their friends.