How to do business on Wechat
https://digit.hbs.org/submission/wechat-how-a-chinese-messaging-app-is-winning-the-internet/
Since its launch in 2011, the Chinese social media app Wechat has attracted more than 700 million monthly active users around the globe, mostly in China. What is more noteworthy than its huge user group is that it made a $1.8 billion mobile revenue, according to an article in The Economist. This astronomical number far dwarfs the mobile revenue of the popular social media competitors like WhatsApp and Facebook. And the key is that Wechat fully embraces e-commerce and integrates payment, sales and company publication with the basic functions of social media.
Many companies, including both established brands like BMW and Burberry and new startups, would register an official account on Wechat. Wechat users can subscribe the official accounts and receive the notification of new products, discounts and business news, and through links the users can directly buy the products with Wechat Wallet, a function within the app. Actually, the main functions of the Wechat official accounts consist of not only business, but also publication by media, organizations and individuals. But it is the online business connected to Wechat that makes the most revenue.
These articles all indicate that Wechat owes its business success to its integration of payment, purchase of products and services (including taxi-calling function similar to Uber) and publication. As a Wechat user, I would like to emphasize from the network perspectives on the publication on Wechat, which has some unique features that help generate network effects.
First, in every post on the official accounts, readers can see how many other users have read this post and how many have endorsed it. That gives readers a sense that how popular this post is, and furthermore, how popular this brand is to the public. In the theory of network effects, if one sees that more of her friends or acquaintance think the product is good than those who think it is bad, she will tend to believe that it is good. From the perspective of the public, even if not all the readers of this post are her friends or acquaintance, the number of readers and endorsements will give her a sense that this product is really good and thus encourage her to follow up buying the goods – just by clicking the button in Wechat without changing to another app.
Another feature for publication is the social media function of Wechat, called Moments. This is something similar to Facebook, but more concise and direct in transmitting information. When people are interested in a product, she can forward the post page to her Moments, which every of her friends can see. The post forwarded to the Moments is just shown as a succinct title, but when one sees that many of her friends forward the same post, she will feel persuaded to click on the post and read it. Facebook will similarly show the friends who forward the same post, but it doesn’t give such a direct visual effect on the reader as she sees the post – a button with the title – repeating on the screen.
What’s more, based on the large population of Wechat users in China – almost 65% of internet users, it is reasonable that if publication on Wechat has a network effect, it should be a huge effect involving a large number of users. And the fact that Chinese society is closely tied by the relationship of families, schoolmates, co-workers and so on will also help to create dense clusters on Wechat network, thus making the network effect more powerful.
So, in order to do business on Wechat, the runners of the official accounts should pay a lot of efforts to increase and maintain their subscribers who they consider as potential consumers. And with the features of Wechat mentioned above, these brands can enjoy the efficiency and effectiveness of publication on Wechat and thus make revenues through e-commerce.