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is tencent’s new hope for e-commerce in wechat?

on august 25, according to the previously released "announcement on upgrading video account stores to wechat stores", tencent required merchants to upgrade their video account stores to wechat stores. for video account stores that fail to upgrade in time, their newly added products will be affected.

in general, this upgrade has two important messages:

first, from the perspective of access scenarios, wechat stores support the circulation of stores and products in multiple scenarios within the wechat ecosystem, including public accounts (subscription accounts, service accounts), video accounts (live broadcasts, short videos), mini-programs, and sousou, etc. in the future, it is expected that they will also be accessed through apps and web pages outside of wechat. in other words, wechat stores will fully access the global traffic of the wechat ecosystem.

second, the entry threshold for merchants has been further lowered. as long as they are individual businesses, they can directly open a wechat store, and even support merchants who meet certain conditions to test run with a zero-yuan deposit. tencent also provides a convenient channel for store upgrades. merchants can use their previous qualifications to quickly upgrade their video store to a wechat store. in addition, the video store service will stop accepting new applications starting august 25.

this is like opening the floodgates, providing great convenience for small and medium-sized businesses that have not yet entered the video account market, or have weak video account operation capabilities, but want to get a piece of the wechat e-commerce pie.

previously, there was a metaphor in the industry about the traffic characteristics of wechat e-commerce: doing business on wechat is equivalent to drilling wells in a large oil field, with public accounts, mini-programs, communities, and video accounts all drilling wells. the oil field is large, and wells can be connected by pipelines, but the flow is not smooth.

with the launch of wechat stores, the e-commerce traffic scattered in various scenarios within the wechat ecosystem will be connected. the connection between wells will inevitably bring about a qualitative improvement in the liquidity and efficiency of the entire oil field. in simple terms,the information flow and product flow within the wechat ecosystem form a closed loop within wechat stores.

in tang chen's view, this is equivalent to tencent's re-entering the e-commerce business. wechat's move clearly conveys two messages:

first, the connection capability of the video account is stronger, and wechat stores penetrate the wechat ecosystem and become a pass for merchants.

second, the status of e-commerce in wechat has been further enhanced, becoming tencent’s new expectation for e-commerce business, but tencent is not just doing e-commerce.

at present, tencent still wants to make money from e-commerce

according to sources, the wechat e-commerce ecological strategy based on wechat stores is led by zhang xiaolong, the "father of wechat". "wechat stores" was also the first name zhang xiaolong gave to wechat e-commerce 10 years ago.

at that time, tencent injected its e-commerce businesses such as yixun.com and paipai.com into jd.com, and launched "wechat stores" on wechat official accounts, but the effect was not obvious. in 2020, wechat stores were taken offline and replaced by the mini program "wechat mini store", which provides functions such as product sales, order logistics, customer service, and mini program live broadcast.

in fact, this is just one example of tencent's vacillation in the e-commerce business. as early as 2005, tencent entered the e-commerce field and launched paipai.com, just two years later than taobao. jd.com was still in the accumulation period and its name was just "jd multimedia". since then, tencent has been making continuous moves in the e-commerce business, and it has also been "fighting again and again despite repeated failures".

public data shows that in the past four years alone, tencent has tried multiple e-commerce projects such as "xiaoe pinpin", "tencent huiju", and "cloud shopping global". among them, in the qq system similar to the wechat ecosystem, tencent has launched its own e-commerce platform "eman upin" and the mini program "qq store", but the final result is either to stop operating or announce transformation. for example, qq store announced that it would stop operating in 2023 before the trademark was approved.

tencent has social traffic that its competitors envy, but over the years, it has not been able to successfully implement its business model. this twist has also been ridiculed by the industry as having no e-commerce genes and "tencent cannot learn e-commerce."

when wechat opened its doors to jd.com, pinduoduo, and meituan, tencent also became an operator and served as a traffic conduit. although this made ma huateng feel a little uncomfortable, objectively, tencent, like an operator, had new possibilities for wechat e-commerce under the dependence and flushing of traffic.

it is not difficult to find that tencent’s layout around e-commerce in recent years has focused more on wechat, with the first one being video account e-commerce. since the beginning of this year, the video account e-commerce business has been active, such as implementing the "butterfly plan", grading influencers, and encouraging merchants, influencers and brands to settle in and start live streaming with goods;

in may, wechat adjusted its internal organizational structure and merged the wechat video account live e-commerce team into the wechat open platform (mini programs, official accounts, etc.) team, which was directly responsible for the wechat open platform. this resolved the conflict of interests within the wechat e-commerce ecosystem and further promoted the integration of the video account live e-commerce business into the wechat ecosystem, forming a closer linkage with mini programs, official accounts and other scenarios.

tencent has also mobilized resources across business groups to support the video account e-commerce business. in july this year, tencent cdg (corporate development group) optimized and adjusted some functional sections of its ams (advertising marketing services), mainly involving teams engaged in product delivery operations and business governance. after the adjustment, the work of the ams business line not only provides merchants with traffic and digital marketing services, but also includes some support and service work for video account transactions.

until the launch of wechat stores, tencent’s strategy changed.we hope that by changing the design ideas of e-commerce products, we can drive the upgrading of the entire wechat e-commerce logic: from a scattered point-based e-commerce layout to integrating various e-commerce projects within the wechat ecosystem through the top-level design of wechat stores to form a synergy.

from tencent's perspective, the upgrade of wechat stores is very necessary at the moment. ma huateng cannot help but be tempted by the growth and money-making ability of video accounts.after years of failures in e-commerce business, i still have a strong desire to make money from e-commerce. this is like raising fish for many years, and when the pond is visibly fertile, i start fishing by blocking the dam.

at the 2024 wechat open class at the beginning of the year, tencent disclosed that in 2023, the gmv (gross merchandise volume) of live streaming sales on video accounts increased nearly three times, the number of orders on video accounts surged by more than 244%, and the gpm (average total order amount per thousand viewers) reached more than 900 yuan.

latepost predicts that the gmv of video account e-commerce will be 100 billion in 2023. however, during the same period, the number of monthly active users and daily active users of video account has exceeded that of kuaishou, and the monthly active users are even close to douyin.

the latest financial report shows that in the second quarter of this year, the total user time of video accounts increased by more than 20% year-on-year. video accounts have contributed to tencent's growth in e-commerce, online advertising, financial technology and enterprise services. for example, the online advertising business had revenue of 29.871 billion yuan in the quarter, a year-on-year increase of 19%, mainly driven by the growth of video accounts and long videos.

industry professionals have also estimated that the current video account advertising loading rate is about 5%, and other platforms are 15-20%. according to kas data, in 2023, the loading rate of douyin's commercial content (including advertising, e-commerce, life services, etc.) has reached its upper limit (15%). at some important nodes, especially double eleven, douyin's commercial content filling rate can reach 30%.

according to tencent president martin lau's explanation in the second quarter earnings call this year, the growth of live e-commerce in this quarter is still very robust, and tencent has not seen a slowdown in the growth of total merchandise transaction volume compared to other short video platforms. the main reason is that compared with its competitors, tencent's e-commerce transaction volume is actually very small and there is still a lot of room for growth.

if we take douyin e-commerce and kuaishou e-commerce as similar references, the growth space is around 1 trillion yuan. this time, tencent repositioned the video account and elevated the video account e-commerce to the level of wechat ecosystem in order to share the cake.

but this may also be a "quick money" that tencent has made in e-commerce, because the space is relative to the size of tencent's e-commerce itself. looking at the entire e-commerce industry, the growth rates of douyin, kuaishou, and even taobao and jd.com have slowed down significantly, and the basic growth of the e-commerce industry has been divided up.

looking ahead, tencent’s ambitions extend beyond e-commerce

regarding the actions of wechat stores, gong haihan, founder and ceo of video account service provider baizhun, commented that this time wechat has thought clearly from top to bottom about what kind of e-commerce form is more suitable for the wechat ecosystem.

but wechat has a lot to learn from “thinking things through” to practice and then to the success of its e-commerce business. tencent’s past failed attempts in e-commerce have also made many businesses and industry insiders wait and see:can the video account that carries "the hope of the whole village" succeed in e-commerce?

when video account started to promote live streaming in 2023, the market generally believed that "video account was crossing the river by feeling its way through douyin." in fact, wechat e-commerce at that time already included various forms such as social e-commerce, content e-commerce, and private domain e-commerce. its "algorithm + social" traffic distribution mechanism based on acquaintance relationships made it impossible for video account e-commerce to achieve the extreme commercialization of douyin. this also determined that wechat e-commerce must attach more importance to user experience than other platforms.the lesson we learned from qq’s failed attempt at e-commerce business is that even if you have traffic, you cannot “do whatever you want”.

at present, wechat has been extremely restrained, maintaining the balance between e-commerce efficiency and user experience to the greatest extent possible. that is, wechat e-commerce will follow the example of douyin and jd.com, butit will not repeat the old path of "selling traffic".wechat hopes that businesses or brands can operate for a long time, and that creators can continuously produce high-quality content to better meet users' content consumption needs. this also explains why there has not been a super head anchor like li jiaqi or crazy xiao yangge on video accounts.

a person close to tencent told the media that "overall, the traffic distribution mechanism of video account will be fairer and more inclusive, and will distribute traffic based on content quality. it will not tilt traffic in order to attract big anchors." whether from the perspective of investment or long-term operation, investing in traffic may not be a suitable approach for small and medium-sized businesses.

today, the commercialization of video accounts is returning to wechat’s foothold - "even the smallest individual has his own brand." this return can also be understood as tencent's positioning of video account taking a step back and returning to the short video content platform. in this context, e-commerce is one of the ways to monetize video account traffic.

but in the wechat ecosystem, e-commerce has made a big step forward. this step forward and back is ma huateng's move to a bigger game. he also made it clear at the annual meeting at the beginning of the year that the most important thing for tencent is not to follow others in doing the same thing, but to combine its own characteristics to make short videos for social interaction among acquaintances.

ma huateng’s greater ambition is to build a new business foundation by upgrading video account e-commerce and create an “e-commerce ecosystem” for wechat.his confidence comes from the basic data of wechat. data released by tencent show that wechat's monthly active users reached 1.371 billion, the total turnover of mini-games increased by more than 30% year-on-year, and the total user usage time of mini-programs increased by more than 20% year-on-year.

in the second quarter earnings call, liu chih-ping said,repositioned the live streaming e-commerce business, "making it more like wechat e-commerce."in this system, wechat not only builds an ecosystem based on video accounts or live broadcasts, but also "builds the e-commerce ecosystem within wechat and connects it with the entire wechat ecosystem. this will obviously still gain more support from official accounts and live broadcasts."

he also explained that this is somewhat similar to the mini-programs built by tencent. "for many years, the mini-program ecosystem did not seem to generate much revenue, but when it really released its energy, a large number of users participated and created huge value for online and offline merchants and content providers, and became an important source of income for many different fields (including mini-games, etc.). this will also be tencent's model for developing wechat e-commerce."

it seems that tencent is trying to find a way forward by engaging in short video e-commerce. however, strengthening the wechat ecosystem and building an "e-commerce ecosystem" is the path that ma huateng would like to take. this is a more meaningful challenge for tencent and the entire chinese internet.

references:

narrow broadcast, "wechat stores are online, it's time to re-understand wechat e-commerce"

e-commerce online, "can niu hulu wechat store support ma huateng's e-commerce dream?"