Chinese tech giant Tencent continues its gradual push into e-commerce with new search and marketing features aimed at helping brands reach consumers on its giant messaging app, Wechat.

New Wechat features for marketers

Tencent is developing a new feature lineup to help narrow the distance between marketers and consumers, according to George Xie, head of consumer packaged goods planning for Tencent marketing solutions, at the Luxury Society Keynote Shanghai 2020 Summit on Thursday. Following Tencent’s acquisition of Chinese search engine Sougou, the search feature previously only accessible Wechat’s Discovery tab has been prominently placed within chat windows. In addition to in-app search, the firm released in mid-November a hashtag feature, which redirects users either from a chat window or a Wechat Moment post to the hashtagged topic for more information. Hashtags can refer to content in Wechat “Channels,” a short video feature that began testing livestream functions in October.

Wechat already offered a set of services for online marketing and sales. Wechat official accounts help brands push promotions and advertising campaigns while engaging with users. Mini programs allow content, often from official accounts, to link directly to a checkout page, and consumers can use Wechat Pay to make purchases without leaving the app.

Social DNA

Long seen a promising platform for e-commerce, Wechat’s massive monthly active user base of 1.2 billion has lured online marketers into using the app as a social touchpoint for advertising and promotions. Tencent is aiming to close the entire e-commerce loop on the app, to build out capabilities so it can offer brands a place to acquire, interact, and engage with users who then make purchases.

Wechat’s “social DNA” is a competitive edge for the company’s e-commerce push because “whenever there’s less re-direction [in the consumer purchasing process], there’s higher conversion,” Xie said.

Discovery and engagement is more natural when the user journey starts with content shared by friends or come from the brand’s officially registered Wechat mini-program stores, Xie added. References from friends or promotions from authorized stores are reassuring for Chinese consumers, who are very conscious of product quality and authenticity, he said.

READ MORE: Why Wechat mini-programs are the cutting edge of e-commerce

Tencent’s annual report showed that gross merchandise volume (GMV) booked through Wechat mini-programs surged to RMB 800 billion in 2019, making it the fourth largest online platform in terms of GMV, following Alibaba, Pinduoduo, and JD.com. GMV for sales placed through Wechat surged 210% year on year in the first eight months of this year, Xie said.

Retail sales via social commerce in China has significant growth potential, according to data from market intelligence firm Emarketer. Sales in the segment are expected to reach $242.41 billion this year and nearly double to $474.81 billion by 2023. Retail sales via social apps account for 11.6% of total commerce sales in 2020 and is expected to reach 14.2% by 2023.

The decade plan

Tencent, while a giant in the social and gaming sectors, has struggled to gain a foothold in e-commerce. Unsuccessful e-commerce ventures included Paipai and Yixun before the company retreated to merely holding equity in JD.com and Pinduoduo.

Wechat is spearheading Tencent’s e-commerce ambitions, but the company is wary of damaging user experience. Market watchers meanwhile have complained (in Chinese) about the company’s slow progress in e-commerce.

For Tencent’s e-commerce initiative to succeed requires a major change in consumer shopping habits. A majority of online shopping traffic still goes to platforms like Alibaba’s Tmall because “Chinese consumers have their habits to search and do their e-commerce purchases there,” Kim Leitzes, chief executive officer of marketing platform Parklu, told TechNode.

However, Wechat stores could work as an e-commerce option that provides a differentiated shopping experience or products for brands, she added.

Wechat Work for CRM

Enterprise communication app Wechat Work now has 250 million registered users as more and more brands use the app for customer relationship management (CRM), Xie said. Wechat Work allows brands and their sales associates to manage customer relationships in a decentralized fashion by creating and engaging with their private customer pool. At the same time, consumers using Wechat Work can be connected to the company’s CRM databases, allowing brands to retain a direct connection with customers without the need for a sales rep intermediary. The app also offers digital data analytics tools to help brands better allocate their resources.

READ MORE: WeChat Work will disrupt social selling

Emma Lee

Emma Lee (Li Xin) was TechNode's e-commerce and new retail reporter until June 2022, when she moved to Sixth Tone to cover technology and consumption. Get in touch with her via lixin@sixthtone.com or Twitter.