Messaging apps are increasingly becoming mobile Internet portals for users to also shop, pay utilities bills, find news, invest their money and play games. One feature built intoTencent Holdings Ltd.’s0700.HK -1.45% WeChat messaging app is an entry point that enables users to browse merchandise offered by Chinese e-commerce company JD.comInc.JD -2.14% while staying in the chat app.
Shen Haoyu, chief executive officer of JD Mall, the e-commerce company’s shopping site, said that the portal has become a channel through which the platform gets new users. During this year’s Nov. 11 (2015) online shopping festival in China known as Singles Day, more than half of JD.com’s first-time users came from WeChat and another of Tencent’s mobile chat apps, QQ.
The following are edited excerpts from an interview with Mr. Shen, who says the two companies work closely to integrate the commercial elements of shopping on JD.com with the core social functions of the app so as not to hurt the user experience. Tencent invested in JD.com in 2014.
WSJ: How did JD.com come to first consider using WeChat as a channel on which to sell, and why?
Mr.Shen: This came as part of the deal with Tencent struck last year (March 10 2014). I think even back then, Weixin (Chinese name for WeChat) had already become a sort of mobile Internet gateway or portal for Chinese consumers. We even called it a national app. It’s not purely for communication purposes. It’s a gateway to many things: to entertainment, to other information, through the public accounts. Back then, commerce was not big yet on WeChat but we thought that there was an opportunity for us to build upon the vast user base of WeChat and on top of that, maybe we can have a lot of social components can help drive more commerce volume.
WSJ: How do you leverage the social aspect of the platform?
Mr.Shen: If you bought something through JD’s entry-point on WeChat you can post comments on it and your WeChat friends, if they come in through this entry-point, they will see it. It will have a little red dot on the tab. So the sharing and commenting on each other’s shopping makes it more interesting.
WSJ: Some people are skeptical of using messaging apps for shopping. What do you think?
Mr.Shen: I think we shouldn’t define WeChat as a messaging app any more. It’s really a gateway, a portal to the mobile Internet world. The numbers don’t lie, we’ve seen steady progress in the performance of that channel. It contributes not only to our GMV, also in a major way contributes to new user acquisition for us. In the past double eleven campaign, on that day, 52% of the first-time customers are actually from mobile QQ and Weixin.
WSJ: How do you see the balance that needs to be struck between commerce and the user experience?
Mr.Shen: One reason WeChat has been able to maintain its leadership position and been so successful and so well-liked by the users is it really values its customers’ experience. Commerce is usually considered an interference, as well as ads. So there’s definitely debate and discussions going on between our team and the wechat team but I think all of that is healthy. I go to meet WeChat senior people once every two months or so and we talk about these issues openly.
WSJ: Can you share any interesting color from your WeChat entry way users, their behavior, demographics?
Mr.Shen: One thing that surprised me was that so much of our new users are coming from that channel. 52% for Nov. 11 that surprised me. Although on a normal date on an average day it’s not that high. The other thing that we talk about which is a little surprising is that it really helps with our lower-tier city penetration push because it’s a national app now. A few years ago it was a metropolitan market phenomenon. Now it’s a national phenomenon. It really helps us alot with the lower-tier market side.
WSJ: What do companies looking at WeChat need to know about what makes it different?
Mr.Shen: The reason WeChat is able to build this ecosystem and turn itself into this gateway is, it really offers a lot of things. If there’s a messaging app and it doesn’t do anything else but puts a shopping gateway on it, that’s not going to work. Because WeChat has everything. It has information, entertainment, local services, payments. Payment is another big reason why this works, because it’s so closely linked with transactions. It has to be a total solution, can’t just be it’s a pure messaging app and suddenly adding commerce to it.
Text: WSJ China Real Time 06-01-2016