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Finding New Growth in Tencent's Financial Report: WeChat Mini Stores Lack Major Breakthroughs, Only Small Steps Forward
Many friends may have a natural filter regarding Tencent. $TENCENT (00700.HK)$ As a result, more and more people are starting to purchase items from WeChat Stores, with some even becoming heavy users, buying items worth tens of thousands in WeChat Stores.
So how did WeChat Stores perform in this financial report? I can only say that, although there were no significant breakthroughs, progress is being made steadily.
Let's first look at what WeChat Stores accomplished this quarter:
1. Interoperability of membership systems, allowing users to join brand mini-program memberships from WeChat Stores and utilize mini-program membership benefits while shopping;
2. Allowing brands and merchants to transfer their product libraries (SKU libraries) from mini-programs to WeChat Stores;
3. Continuously exploring social innovation features, extending the 'gift' function to platforms such as video accounts, public accounts, and mini-programs.
4. The "Shop with Friends" feature has been launched, allowing users to share their favorite products or stores through chat and Moments, and participate together in group purchase discounts.
Of course, I also personally experienced both the merchant and user sides of WeChat Mini Stores. Coupled with the statements from Tencent executives, I can only say that a new form of e-commerce is slowly developing within WeChat.
Merchant Side: Ensure product quality and guarantee user experience.
In fact, regardless of the type of e-commerce model, merchants are fundamental. From my experience, to operate a WeChat Mini Store, one must have a source of goods. Moreover, it is essential to have qualifications as well.
To register a WeChat Mini Store as a business entity, it is necessary to provide a business license and the identity information of the legal representative in order to open a store.
Of course, if registering as an individual business owner, a business license is also required to open a store.
However, it is not possible to open a store solely with a personal identification card.
Furthermore, a WeChat account can only apply for one WeChat Store, and one business license can support up to 30 stores.
What should one do if there is no source of goods? One can choose to act as an influencer or link accounts to bring products for other merchants.
The above summarizes the basic situation for merchants on the WeChat Store platform.
So, is the threshold for opening a store on WeChat Store high? Let's compare it with other e-commerce platforms.
In China, whether it is Taobao, JD.com, or Douyin, the requirements for opening a store are somewhat lower; individuals can open a store using just their ID card. In contrast, the requirements for third-party sellers on Amazon abroad are similar to those of WeChat Store, as they must have a business license and other information.
Therefore, overall, there is indeed a certain threshold for merchants wanting to join WeChat Store.
On the other hand, WeChat Store also provides many support policies and incentives for brand merchants that join. For instance, in March of this year, it introduced twelve brand merchant rights at once, mainly including reduced technical service fees, cost reductions, growth incentives for joining, precise recommendations, growth promotion, and matchmaking with product promotion agencies.
One aspect that impressed me the most is that WeChat Store specifically provides support for combating counterfeit goods, offering complaint channels and assisting merchants in handling cases of intellectual property infringement.
Therefore, WeChat's small store ensures that product quality and user experience are maintained at a relatively high level, while also providing various discounts and support policies to brand merchants in order to build a high-quality product supply ecosystem. Ultimately, this allows the entire WeChat small store to be in a positive and virtuous cycle of development.
User side: Products are a form of information that flows naturally within WeChat.
After merchants settle in WeChat, they can immediately list products in their stores and operate across multiple WeChat scenarios, including public accounts, video accounts, mini-programs, and search.
Based on my experience on the user side, the experience in WeChat's small store is very natural; it feels as if these products are simply information circulating within WeChat.
For example, while browsing video accounts, if I come across a product that interests me, I can either buy it for myself or send it to a friend. It’s a very natural usage scenario.
Additionally, when I order milk tea through the mini-program, I can enjoy it with friends.
Correspondingly, my friends will also receive a notification.
After the experience, I can only say that the shopping experience within WeChat is completely different from that on platforms like Taobao, JD.com, and it is also significantly different from live e-commerce on Douyin and Kuaishou.
Just like that little blue bag, there's no need for me to elaborate on how popular it was during the Spring Festival, right? And after the Spring Festival, the little blue bag continues to refine its gifting options. I recently saw online that the Smile Package has even been turned into a creative contest by netizens, similar to posting emojis.
Image source: from the internet
Therefore, in my view, WeChat treats products merely as a form of information; products, like articles from official accounts and content from video accounts, are all classified as 'information' within the WeChat ecosystem.
By considering products as a category of information, WeChat seamlessly integrates products into the entire WeChat ecosystem, embedding them into various aspects of users' daily lives in a very natural manner.
WeChat e-commerce cannot be rushed.
Although in March of this year, Tencent revealed that the Gross Merchandise Volume (GMV) of WeChat Shops increased by 1.92 times in 2024, with a year-round order volume growth of 125%.
But to be frank, WeChat e-commerce is still in a very early stage. Some may ask why WeChat does not accelerate its e-commerce initiatives.
Just look at Taobao and JD.com to understand; they burned through hundreds of billions to increase traffic, staging a 'three kingdoms kill' in the takeaway sector. Therefore, the traditional e-commerce shelf model is clearly not the path that WeChat e-commerce intends to take.
In my opinion, the key for WeChat lies in how to activate the 'transaction ecosystem' based on its already highly active WeChat ecosystem.
Moreover, if one truly focuses on WeChat's actions in e-commerce, one will find that many seemingly 'insignificant' small initiatives are actually laying the foundation for establishing an active transaction ecosystem.
For example, as I mentioned at the beginning, in the second quarter, WeChat expanded the 'gift' feature from small shops to mini-programs, video accounts, and official accounts; it also launched the 'Shop with Friends' feature, allowing users to share their favorite products or shops through chat and Moments, and participate together in group buying discounts.
It can be seen that WeChat is continuously iterating on some small functionalities to bridge many potential connection points, which is precisely the unique approach of 'WeChat e-commerce.'
In this way, leveraging the social attributes of the WeChat ecosystem, users can access products through multiple dimensions such as social relationship chains, Moments, search, and official accounts. Furthermore, once Tencent establishes the foundation for WeChat e-commerce, it will likely experience significant long-term growth in the future.
For this reason, WeChat cannot rush in the e-commerce sector; higher growth can only be achieved on the premise of ensuring user experience.
Of course, Tencent is indeed undertaking such initiatives. Liu Chiping stated in May this year:
"Regarding our e-commerce strategy, we do not operate the business by setting directive KPIs; this is a long-term project with substantial development potential. We frequently mention the long-term development potential because we believe that ensuring sustainable long-term growth is far more important than making a sudden sprint to achieve a specific KPI. In terms of building a long-term development foundation, we are advancing multiple initiatives."
In conclusion, I believe that domestic e-commerce is undergoing another period of transformation. The food delivery battle may merely be a warm-up match. It is still too early to determine what role WeChat Mini Stores will play in the future landscape of e-commerce. As an investor, I have been closely monitoring WeChat Mini Stores.
"Convenient, interesting, and full of imagination"—this is my current impression of WeChat Mini Stores. I also welcome other friends to share your experiences using it; let us explore it together and witness its growth.
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
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