Date
18 December 2017
Tencent aims to throw a challenge to Alibaba in the e-commerce space. Photo: Bloomberg
Tencent aims to throw a challenge to Alibaba in the e-commerce space. Photo: Bloomberg

Tencent walks its own e-commerce path with Weixin Shops

There is no dearth of inspiring stories of startups making it big by setting up shop on Alibaba’s e-commerce platform. Now, internet giant Tencent Holdings (00700.HK) is promising the same kind of opportunities on its Weixin social platform. Only time will tell how far it will succeed in its bid, as industry veterans find that the channel offered by Tencent is very different from that of its rival.

Li Zhongwei {李鐘偉}, director of a well-known third-party e-commerce software service provider ShopEx {商派}, has used a vivid example to explain the difference between Alibaba’s Taobao online marketplace and Tencent’s Weixin Shops {微信商城} platform.

“We could see Taobao as a mall; it offers online retailers shops and anything they basically need at the beginning. But Tencent provides nothing more than a point of sale (POS),” Li told the 21st Century Business Herald.

In other words, Weixin Shops platform provides a cashier and very limited additional functions; the vendors have to build the rest by themselves.

Right now, Weixin offers two types of public accounts: free “subscription accounts” and paid “service accounts”. According to Tencent, the subscription accounts are mainly meant for promoting and attracting followers. If the seller wants to access advanced functions like organizing members’ information or handling purchasing orders, it must have to pay and upgrade itself into a service account.

The good thing about Weixin is that retailers have lot of freedom in designing their own cyber storefronts; it enables more distinct personality for the shops to stand out. The followers and members model also means stronger consumer stickiness to Weixin Shops.

In Taobao’s case, e-tailers have to choose from a series of templates within Taobao platform, and the format and layout of different stores is more or less the same. For shops selling similar products, the main difference is probably the price. Taobao naturally attracts bargain hunters for the most part.

But on the plus side, anyone can go to Taobao and search for what they want, generating huge traffic for the site. Weixin is less open — users have to take the initiative to follow a Weixin shop or join as a member. After that, the shop can send notifications to the followers or interact with them, meaning that traffic could be less but more specific.

Security is another major difference. Taobao acts as the middleman in its e-commerce platform at present. If anything goes wrong within the deal, it steps up and settles the trade dispute. This gives a sense of security for both buyers and the sellers.

However, Weixin’s role is much smaller in this area. Currently, sellers have to pay a deposit of 20,000 yuan to Weixin once they’ve plugged the Weixin Payment system into their stores, and Weixin will compensate for the consumers if the deal turns sour.

Sellers could still set up shops through Weixin platform even if their stores don’t support Weixin Payment, but the latter won’t bear any responsibility in those cases.

It’s too early to say if Weixin will take business away from Taobao, or whether Weixin will further open up the e-commerce market with its unique features and social platform nature.

– Contact the writer at [email protected]

RC

EJ Insight writer

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