HOW MOBILE GETS HOLIDAY RETAIL DOWN THE HOME STRETCH

Well it’s over.

As you are reading this, it’s no longer possible to order holiday presents online in time for a Christmas Eve delivery, unless of course you happen to live in one of the 13 same-day delivery cities in the U.S. that Amazon services. Or buy an eGift card.

For the majority of nation’s e-commerce enthusiasts, the holiday online shopping season is over. Mobile’s time to shine – by enabling payments from countless tablets and devices nationwide – is presumably over, too. The era of retiring to the living room and preparing for holiday shopping by perusing the digital discounts on one’s tablet while watching the TV season come to a close is over.

That can only mean one thing: The civility of organized e-commerce has overnight given way to the adrenaline rush that is live-action, brick-and-mortar shopping on the last big day of the season. Malls, neglected for the rest of the year, today on Christmas Eve, will be the battlefield where epic procrastinators and die-hard bargain seekers meet and fight for their share of the holiday lucre.

And, as recent data from eMarketer indicates, those last minute shoppers might not want to holster those smart devices just yet – as they still have an important role to play.

Mobile use has certainly seen an uptick during the 2014 retail season. PayPal reported total mobile volume was up 52 percent during the holiday shopping season’s “kick-off” weekend, with the biggest increase – 62 percent – seen on Black Friday (when curiously, shoppers also really got going with e-commerce at around 1 p.m. EST). The climb on Cyber-Monday was less steep but still notable at 39 percent.

PayPal’s experience was indicative of a generally positive trend for e-commerce during 2014. On the whole e-commerce figures have been strong this holiday season – sales online were up dramatically on Thanksgiving and Black Friday, Walmart set a record for page views (that was promptly smashed by its online activity Cyber Monday), over half of all e-commerce traffic on Thanksgiving came from mobile. The stats go on and on.

However, while mobile’s numbers are going up, far and away the vast majority of all commerce during the holiday season takes place where it takes place during the physical year – in a physical store. Mobile, however is changing how that real world shopping is happening.

“It was fascinating for me to see the photos of shoppers this year in the brick-and-mortar stores whose carts were filled,” PayPal’s Head of Global Consumer Initiatives, Pablo Rodriguez, told MPD CEO Karen Webster in a recent interview. Rodriguez was describing the mass media images of Black Friday he saw this year. “I think there’s still the importance of ‘the get’ for those who want to go out in stores and explore. But even those consumers are still using their mobile devices to compare prices and to even shop for items online while waiting in line to pay.”

And as it turns out, Rodriguez’s impressions are born out by the polling conducted earlier this month by Market Track. Price-checking in real-time while shopping is most prevalent among 21 to 29-year-olds, who say they do so a majority (53 percent) of the time. Almost as likely to price check are Gen Xers (48 percent), who interestingly are much more likely to use the smartphone/tablet to actually purchase something – 20 percent of 30-39 year-olds have used their smart devices to make a purchase, as opposed to only 11 percent of younger millennials. Somewhat older buyers, aged 40 to 49 use their devices to check prices a little under a quarter of the time, while shoppers age 50 to 59 use their devices only 12 percent of the time.

Additional data gathered in September 2014 study by the e-tailing group indicated that mobile devices were also often acting as a starting ground for purchases that were eventually completed in person.

According to the study, 78 percent of smart tech users looked up store information such as hours and location, while about three-quarters were looking for coupons and promotions and checking for sales and specials. Half reported an intention to purchase gifts through their phone.

A different September 2014 study, a poll by Deloitte, additionally found that 68 percent of U.S. Internet users had some plans to “webroom” this holiday season—or go online to research a product to be purchased in person. Retailers are in fact turning this consumer tendency to webroom and shop in person into an advantage in generating sales – with buy online, pick-up in-store models, consumers can get the best of both worlds with buying on the go, and immediate pick-up, while retailers get the benefits of the assured sale, and added foot traffic.

“I wanted to get boots to wear on Thanksgiving and I didn’t have 10 days for shipping,” one holiday shopper told The Boston Globe. “It’s also good to be mobile and get out into the stores.”

Consumers will likely shop till they drop, or the retail clerks servicing them drop – whichever comes first. Because some things about holiday retail never changes, and as surely as there will be stores open until 10 tonight on Christmas Eve, there will be consumers waiting in line finishing off their holiday shopping. But some things do change, and this year, it’s that last minute shoppers might be standing in line in one place, but still checking their phone to see if they could still get one more better deal somewhere else.

Source: http://www.pymnts.com/in-depth/2014/how-mobile-gets-holiday-retail-down-the-home-stretch/#.VJ_3FsAA

From Clicks to Bricks: How Ecommerce Companies Benefit From Physical Stores

A funny thing happened when e-tail menswear pioneer Bonobos tried to sell shirts on its website. The New York City-based brand, which shot to the forefront of the direct-to-consumer online trend in 2007 with its line of pants, believed its model heralded the future of retail and set out to prove it with its first collection of shirts in 2012. Problem was, nobody wanted to buy them.

“Customers kept asking if there was any place they could try them on, though, so we built a couple of fitting rooms in the office’s lobby,” says founder and CEO Andy Dunn. “We didn’t tell many people about it, but it took off through word-of-mouth. Next thing I knew, we were on track to do $1 million in sales—out of our lobby.”

That experience changed Bonobos’ model forever. Today the company has 10 U.S. shops and plans to add 30 more in the next three years. And it’s not just Bonobos that’s changing its tune regarding brick-and-mortar: In October Amazon announced it will open a store in Manhattan, as well as pop-up shops in California. Women’s clothiers Nasty Gal and Rent the Runway are opening storefronts, as are subscription services and e-tailers Birchbox (beauty, grooming and lifestyle) and JustFab (shoes, clothing and accessories). Even Inspirato, a private vacation club, has come to appreciate the power of a physical consumer-facing presence.

Fueling this trend are venture capitalists who finally understand that physical retail isn’t a bad thing. “Back in 2010, holding inventory in a store wasn’t cool,” says Birchbox co-founder and co-CEO Katia Beauchamp, who concedes that she probably wouldn’t have attracted funding at the time if her business plan had included a rollout of retail stores. “But now investors see how the store can add legitimacy to an established online brand.”

At Denver-based Inspirato, a critical part of its latest $20 million funding round, led by tech-savvy firms W Capital Partners, Institutional Venture Partners and Millennium Technology Value Partners, was its plan to open five “experience centers” in upscale U.S. malls.

“An Inspirato membership is one of the only considered purchases where the buyer has no idea how he or she would use it,” admits founder and CEO Brent Handler. “The centers help prospective members understand how they can, and it brings that membership to life.”

None of this surprises Paul Becker, a senior consultant at Short Hills, N.J.-based FitForCommerce and a veteran of developing sales and marketing strategies for multi-channel retail businesses, including Hasbro and Ancestry.com. “E-commerce may be up by double digits, but brick-and-mortar retail is still responsible for more than 90 percent of sales in the country,” he says. “Expanding to retail stores is just another way for these pure-play e-tailers to capture some of that market share.”

Nor should it surprise established e-tailers that their retail stores do so well right out of the gate. Brooks Bell—who has an eponymous e-commerce optimization firm in Raleigh, N.C., that has worked with American Eagle Outfitters and Brooks Brothers to scale their online operations—says that by the time online brands open their first store, they’ve already figured out the hardest parts of the operation: warehousing, inventory management and logistics. “E-tail is driven by tech people, not creative types,” Bell says, “and as a result they usually have their back end already set up by the time they think of opening a store. It should be a piece of cake.”

Perhaps, but e-commerce companies still have much to learn about face-to-face interactions with customers. “Our biggest insight,” says Dunn of Bonobos, “was that customers didn’t have to walk out of our store with a purchase to be happy with their experience.” In other words, a positive in-store interaction can translate into more online sales down the line.

Similarly, Birchbox had to learn quickly how to maximize the sensory appeal of its store in New York’s SoHo district. “We spent—and still spend—so much time on the store’s look and feel, whether it has too much or too little merchandise, even its smell,” Beauchamp says. “And we’re shocked at how much our customers buy in the store.”

At Inspirato, Handler says he’s most surprised that acquiring a new customer through his experience centers costs the same as it would through the company’s traditional direct marketing. “The cost of rent and staff is equal to what we’re paying the likes of Google for digital advertising and producing direct-mail promotions,” he points out.

Call it a win for the power of old-school customer service and immediate gratification, the kind that drove more than $1.2 trillion in sales during the second quarter of 2014, according to the U.S. Department of Commerce.

Source: http://www.entrepreneur.com/article/239690

Air Asia flight missing – reports

An Air Asia flight from the Indonesia city of Surabaya to Singapore has lost contact with air traffic control, reports say.

Indonesian media say 162 people were on board.

The aircraft, flight number QZ8501, lost contact with Jakarta air traffic control just after 06:15am local time, a transport official told local media.

The official, Hadi Mustofa, said the plane had asked for an unusual route before losing contact.

Source: http://www.bbc.com/news/world-asia-30614627

Top 6 eCommerce Trends That Will Dominate 2015

‘As the present year is on the verge of ending, new aspects, new transformations, and new creations are ready in action. Here are top 6 eCommerce trends that will dominate 2015.’

Top 6 eCommerce Trends That Will Dominate 2015

There is nothing, in the present era, that changes like the digital world, and if you have a business, which completely relies on the eCommerce and technology, you might be well-aware with its lightening fast pace with which the trends change every month. If you are determined on remaining in this dynamic  and erratic world, then you must adopt things that can keep you ahead in the market and these changes, and if not ahead, at least in  balance.

The proliferation of smart phones and tablets has let a large number of users to shop, converse and perform several things via the small screen. The significant change in social media and the evolution of eCommerce has made online marketing tactics more considerable and dramatically changing. The coming year will also see various alterations and creations in the eCommerce trends. Have a look at top eCommerce trends that will dominate 2015.

Omni-Channel Commerce Will Take The Lead

The users do not stick  to one device at a time. They don’t live in one channel, and flipping between tablet, mobile phone, laptop, PC, etc., is the part of the shopping experience that the users enjoy today, and will persist to enjoy in 2015 as well. Mobile commerce was considered an add-on in the year 2012, but it is actually the way things are going to take place in 2015. The hybrid shopping or the integration between online, mCommerce, brick and mortar, and other platforms will be widespread as a norm in 2015. Keeping in mind the outlook of the customers,  the merchants are also making a number of strategies to capture more sales and optimizing various channels on various platforms.

The Consumers Will Go Global

Next year may also witness local consumers from all over the world to go global in a major way. As they say that the world is shrinking, the local consumers will also spend a large portion of their online budget on non-local online retailers. This is because of the fact the outlook of the consumers, is changing with time, and they want to explore more. This can pose a serious threat to the local merchants, but will also pave way for them to expand their business in other parts of the world as well.

Content Marketing Will Significantly Increase

In order to make the most of sales and profit margins along with customer satisfaction, presenting yourself in a correct manner in front of the customer is very important. For this reason, 2015 will see online shops, websites,  e-mails, newsletters and other kinds of digital marketing becoming a target.

By consistently creating something of value, and conveying it to the customers through various channels, the companies can largely build trust in the customers. This typically includes giving the audience an entertaining and informative platform, where you publish case studies, blogs, newsletters, press releases, business’s website, videos, and various other things. This helps the company to build a strong rapport amongst the audience.

Fast And Same Day Shipping

Till now, the physical stores were on an upper hand at this point of immediate fulfillment after purchase, but with the “same day shipping” policy of Google and Amazon in a few places, this discrimination has also been eliminated by the eCommerce experts. The year 2015 will see more specific, accurate and narrow delivery options at a lightening fast pace, if you order for the product early enough in the day.

Payment Options Will Be Made Easier

With the launch of brightly shining and hyped Apple pay, the payment security and safety is one thing that will not scare the customers anymore. The threat of identity theft and financial frauds will be kept in check, with authorized payment gateways, like PayPal, Apple Pay, Google Wallets, etc.

Wearables Will Also Play A Vital Role

Wearables have already started to become popular, and they will hit the market more with a bang in the coming year. With smart gears, like iWatch by Apple, Pebble, Samsung Galaxy smart gear customers will be more conveniently accessing internet anywhere, in milliseconds. Wearables will play a vital role in 2015 because whatever rapid changes in the promotional schemes, prices of the product, and incentive schemes will take place in the eCommerce or physical shop, will be informed to the customers timely. By determining the real-time location of the customers, the customer can get the location based deals from renowned shops and cafes as well.

2015 will be a great year for the eCommerce trends, and it would be really attention-grabbing to see the divergence between the brick and mortar and the eCommerce platforms. Konstant Infosolutions is also ready to pace up itself with the changing trends in eCommerce. We have an efficient team of developers and designers, which are skilled in developing excellent eCommerce websites and mCommerce application on various platforms.

Source: http://www.konstantinfo.com/blog/top-ecommerce-trends-2015/

Nielsen eCommerce Report: Evolution or Revolution in the FMCG World?

The latest Nielsen Global Survey of eCommerce reveals that whilst non-consumable categories continue to be the most popular eCommerce categories, the online market for groceries and other consumable products is fast gaining momentum.

Conducted between February and March 2014, Nielsen surveyed 30,000 online consumers across 60 countries to reveal the most popular product categories for buying versus browsing – and where purchase propensity is leading and lagging.

With eMarketer reporting that global eCommerce sales are set to reach $1.5 trillion in 2014, these new figures show that online purchase intention rates have doubled in three years for more than half of the categories measured between 2011 and 2014.

Despite not quite seeing the same growth as categories such as event tickets and hotel reservations, online purchase intent for buying groceries and baby supplies online is certainly seeing strong momentum – with growth rates of 5% and 12% respectively.

However, what’s most interesting from the survey is that whilst consumable products have lower online browse/buy intention rates than non-consumable products, they boast just as strong browse-to-buy correlations.

For example, one-third of global respondents say they browse and buy personal care products (31% browse/29% buy) – nearly a one-to-one correlation – with groceries almost showing the same correlation (30% browse/27% buy).

According to John Burbank, President of Strategic Initiatives at Nielsen: “Strong online browse-to-buy correlation rates for fast-moving consumer goods translates to loyal repeat customers for these categories. While these categories are still in the early stages of online adoption, these correlations signal great news for retailers. Now is the time to create omnichannel experiences for consumers who are actively using both digital and physical platforms to research and purchase, as increasingly, they don’t make a distinction between the two.”

Whilst the online market for buying groceries and other consumable products is comparatively smaller than some of the more mature eCommerce categories, Nielsen believes it is one of the categories that has the greatest potential due to the frequency of purchase. And aside from online purchasing, digital is an increasingly important research and engagement platform.

“The lightning-fast pace of change in the digital landscape has ushered in a consumer mindset that is both adventurous and exploratory when it comes to online shopping,” said Burbank. “Consumers everywhere want a good product at a good price, and the seemingly limitless options available in a virtual environment provide new opportunities for both merchants and consumers. The market for fast-moving consumer goods is no exception.”

Profitero’s View

There are two key implications to Nielsen’s data:

The addressable markets for many categories online are still considerably under-developed, especially grocery and many consumables; and
Once shoppers become aware and engaged online, their browse-to-buy intentions are strongly correlated

The relatively modest growth in “online purchase intentions” for grocery products (from 22% in 2011 to 27% in 2014) in Nielsen’s data suggests that the massive growth in online grocery and CPG in many markets is being driven more by increasing spend per household than by customer acquisition.

While some online grocers are reluctant to invest aggressively in marketing to new customers (fearing cannibalization of their brick-and-mortar business, for example), the rapid expansion of Instacart, AmazonFresh, Ocado, and others in markets like the US and UK is likely to grow the population of online grocery and CPG shoppers considerably.

And as that population grows, the data suggests that online will quickly increase its share of those households’ total spend. While self-reported browse-to-buy intentions don’t tell the whole story, the implication is that households that browse consumables online also tend to buy online.

Perhaps even more importantly, those that browse online tend to make buying choices even if they ultimately buy in-store, underlining the importance of high-quality product content and customer ratings and reviews from a brand management perspective.

Source: http://blog.profitero.com/nielsen-e-commerce-report-evolution-or-revolution-in-the-fmcg-world

Smartphone, Tablet Sales Still Booming

Consumer demand  for mobile devices continues to grow, according to preliminary data out from tech research firm International Data Corporation.

Worldwide smartphone shipments from manufacturers during the third quarter this year increased 25.2 percent over the same period a year ago and totaled 327.6 million phones, according to IDC.

And despite a drop in shipments from Cupertino-based Apple, tablet shipments for the quarter grew 11.5 percent, totaling 53.8 million.

“Despite rumors of a slowing market, smartphone shipments continue to see record-setting volumes,” said IDC official Ryan Reith in a press release. “We’ve finally reached a point where most developed markets are experiencing single-digit growth, while emerging markets are still growing at more than 30 percent collectively.”

However, with the average price of phones dropping in many areas, more sales don’t necessarily mean more profits.

“The challenge has now become how to make money on devices that are quickly becoming commodity products,” Reith noted. “Outside of Apple, many are struggling to do this.”

Source: http://www.siliconbeat.com/2014/10/30/smartphone-tablet-sales-still-booming/

Plant Monitoring Devices: The Internet of Plants?

It started with the Internet of computers and now, as the development of the Internet of Things is accelerating, products are appearing on the market for plant sensing devices. Is the Internet of Plants next?

Plants have amazing and significant sensing abilities – each single root apex can simultaneously and continuously monitor many chemical and physical parameters. And just like humans, plants give off electrical signals when they move. By analysing and defining these signals, it’s possible to understand the stimuli causing them. Once we can read the signals accurately and tell them apart, we can begin to use plants as biosensors. Trees, plants and shrubs can become part of a network that observes and reacts to its environment.

Already researchers have worked with crops to gradually build up data which with time they will develop algorithms for devices that can be attached to plants. The ability to have devices monitoring vast crops, and ultimately the wider natural environment, opens up a huge range of possibilities. The use of trees and other plants in environmental monitoring could have a huge positive impact on improving the quality of food and reducing pollution, as well as enabling the collection of data that may one day provide solutions to climate change.

Although most of the devices currently on the market are small consumer products for monitoring when you need to water your plants, the possibilities for using these technologies on a larger scale are huge. A connected network of plants and trees, sensing and monitoring their environment and providing feedback data could be revolutionary for environmental monitoring and positively disruptive to many other industries.

Using plants in this way on a wider scale might be a while away yet, but there’s no doubt they would make cheap and practical environmental biosensors. In addition to their use in agriculture and personal gardening, there may be many useful future applications in monitoring the effects of acid rain, detecting air and water pollution, to even being used in war zones and in space.

For the agricultural industry, plant monitoring devices could potentially detect parasites and pollutants in crops, and tell farmers when they need more water and nutrients (or less). Precision agriculture is already benefiting from connected sensors that monitor elements of crop growth that can prevent crops from ruin, which can have an economic impact at an industry as well as individual level. When these devices are developed further and are more widely accessible, the farming industry could perform more efficiently.

At the Internet of Things Summit in San Francisco, we will be hearing from Lance Donny, CEO of OnFarm. OnFarm combines a comprehensive array of leading farm hardware technologies into a single grower-friendly management and decision platform.

“We have an internet of things platform for agriculture and integrates disparate devices in the field into one software product,” Donny said, “We’re kind of the operating system for the farm.” OnFarm evolves farm information. You control your dashboards, what’s important and how you manage it; with data from the best companies.

Plant monitoring devices also embrace the recent trend of returning to our roots – a movement of reconnecting with the physical world, without leaving behind progress we’ve made in the digital. As global awareness grows for environmental issues such as climate change and pollution, the need for a better understanding of how the modern world can work with nature and not against it is increasingly important.

Source: https://www.linkedin.com/pulse/20140826194314-32097202-plant-monitoring-devices-the-internet-of-plants

Internet boom boosts ranks of China’s super rich

The number of mainland millionaires is set to almost double in the next five years, outpacing other major emerging and developed economies, despite recent concerns over the country’s slowing economic growth, a survey found.

The rise of the mega rich is exemplified by Alibaba Group Holding’s Jack Ma Yun, who founded the e-commerce giant in his Hangzhou flat in 1999 and is now the mainland’s richest person. His rise to riches highlights a seismic change in the wealth creation process from bricks-and-mortar companies to creative, services-oriented businesses that rely on technological innovation.

The number of mainland US dollar millionaires was expected to nearly double to 2.3 million by 2019, faster than the growth in America and India, Credit Suisse said in a report published yesterday. The number of American millionaires, the single largest group and one expected to account for 37 per cent of global wealth by 2019, is tipped to grow 39 per cent to almost 20 million, while that of Indian millionaires is forecast to surge 61 per cent to 294,000.

Growth of 62 per cent is expected in Hong Kong and 50 per cent in Singapore.

“We see exciting development potential for novel consumer goods, lifestyle products and innovative financial services in this high-growth Asia region,” said Fan Cheuk-wan, chief investment officer at Credit Suisse’s private banking unit.

A rising class of super wealthy mainlanders is supported by a boom in the internet sector, which accounts for five of the country’s 10 richest people this year. Eclipsing the property tycoons, who have dominated the rich list for the past few years, technology entrepreneurs Richard Liu Qiangdong of JD.com, the second-largest e-commerce firm on the mainland that raised US$1.8 billion in the United States in July, and Lei Jun of smartphone maker Xiaomi are in the top 10 list, thanks to a surge in online shopping and the need for inexpensive smartphones.

In a separate note, Swiss private bank Julius Baer said productivity improvements in human capital led to real wage growth and reform efforts would also boost ordinary people’s incomes.

Credit Suisse estimated household wealth on the mainland would increase 11 per cent a year for the next five years to US$36.2 trillion in 2019, making it the world’s second-wealthiest economy after the US from 2016. It said mainlanders would represent 9.8 per cent of global wealth in five years, up from 8.1 per cent this year.

Despite an upbeat prediction, the mainland’s third-quarter gross domestic product growth, due to be announced next week, is expected to slow further as a property downturn weighs on investment and spending.

Source: http://www.scmp.com/business/china-business/article/1616490/internet-boom-boosts-ranks-chinas-super-rich

Alibaba’s Jack Ma takes Li Ka-shing’s crown as Asia’s richest man

Hong Kong tycoon Li Ka-shing has been replaced as Asia’s richest man by a relative newcomer, Alibaba chief Jack Ma.

But the veteran property and ports tycoon nicknamed “Superman” wished the 50-year-old mainland entrepreneur all the best as Ma took the top spot in the region in the Bloomberg Billionaires Index, a position Li had held since April 5, 2012.

“I am nothing but happy when young people from China do well,” Li, 86, said via his spokeswoman. A spokesman at Alibaba declined to comment on Ma’s net worth.

Ma, a former English teacher who started the Hangzhou-based company in his flat in 1999, has added US$25 billion to his fortune this year, riding a 54 per cent surge in the company’s shares since its September initial public offering. He has a US$28.6 billion fortune, according to the Bloomberg ranking. Li has a net worth of US$28.3 billion.

“The billionaires in China are growing their wealth faster because China’s economy is still developing, with plenty of room for growth,” said Francis Ying, an analyst at Yuanta Research.

“Hong Kong is already a mature market.”

Alibaba’s US$259 billion market capitalisation makes it larger than Amazon and eBay combined, and more valuable than all but eight companies in the Standard & Poor’s 500 Index.

More than half of Ma’s wealth comes from his 6.3 per cent stake in Alibaba, valued at US$16.3 billion. He also controls almost half of Alibaba’s closely held finance unit, including online-payment service Alipay.

Ma’s interest in the online-payment company is expected to dilute in the next three to five years, with new investors or stock distribution to employees. Ma will not realise any benefit from the dilution, Alibaba says.

Alibaba raised a record US$25 billion in its September 18 IPO, selling shares for US$68 each. They were trading at US$104.97 in New York yesterday.

“If you look at the whole Chinese internet space as a group, it’s definitely getting very significant,” said Tony Chu, a money manager for RS Investment. Alibaba has become “a global stock, which you cannot ignore”.

Li, who controls Cheung Kong (Holdings), one of the world’s three biggest property developers, has seen his fortune fall US$1.9 billion this year, according to the Bloomberg ranking. While shares of the real-estate company gained this year, some of his other investments, including Husky Energy, have dropped.

Li started with a plastic-flower factory and began investing in Hong Kong property after the 1967 riots depressed prices.

Source: http://www.scmp.com/business/companies/article/1661622/alibabas-jack-ma-takes-li-ka-shings-crown-asias-richest-man

Tencent Aims to Cash In on Its Hit Messaging App

By staff reporter Qu Yunxu
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(Beijing) – Tencent Holdings Ltd.’s popular messaging application WeChat, or Weixin, has been a mobile phone miracle. Since its launch in January 2011, the voice and text chat application has attracted more than 500 million users. And Tencent wants more.

In late 2013, the company proposed a “connect everything” strategy for WeChat. Under the plan, Tencent wants to make WeChat a platform that connects people, businesses, services and many other entities to make it an integrated online community offering information, entertainment, financial and business services, and various other options for users.

Weixin Group, the Tencent subsidiary that operates the app, has already taken some steps forward. In August 2013, WeChat launched a payment feature called WeChat Wallet in partnership with Tencent’s third-party payment service provider Tenpay. In the following months, more functions were added to the messaging app, including services for wealth management products, hailing taxis, buying movie tickets and group buying.

Now the people running the app want to attract a large number of online merchants to join its platform. In September, WeChat unveiled a plan named Smart Life that is aimed at providing ways for businesses to better engage with consumers through their WeChat accounts. Planned features include ways to order food, book hotels, buy public transportation tickets, pay tuition fees, make doctor appointments and more.

WeChat’s management has held a number of public lectures across the country to promote the Smart Life solutions.

“It is an approach to cultivate (potential) offline (users),” said Geng Zhijun, head of WeChat’s offline promotion team. “It is also a process for us to collect opinions from businesses and send them to our product development team for revisions.”

For a long time, WeChat has been seen as moving slowly into the e-commerce arena. Executives, led by Zhang Xiaolong, founder of WeChat and the president of Weixin Group, have at times expressed concern that commercial activities on the platform may hurt the user experience. Since the app’s launch, the WeChat team has launched measures to limit excessive marketing and advertising on its platform.

Now, some industry experts say, WeChat may have started to change its attitude.

Many companies like Vdian and Koudaitong, which help small merchants develop online stores mainly through social networking, have connected their services into the WeChat platform. They have become an increasingly important segment of a business chain that WeChat is building to connect online consumers and offline businesses.

Time is limited for WeChat because major competitors like Alibaba Group and Baidu Inc. are also flexing their muscles for the battle in the mobile phone-based world of commerce. Meanwhile, investors and businesses are wondering whether the technician-led WeChat team, which has been widely criticized for lacking flexibility in market operations, can really adapt to the changes.

Coming Full Circle

Industry experts say the launch of the Smart Life plan is the start of WeChat’s commercialization efforts, but merchants have stayed on the sidelines so far. Most of them are curious to see when real change will come about.

In September 2013, Tencent started its WeLife, or Micro Life, project. The team, led by Geng Zhijun, was designed to build a link between life service providers and real stores on Tencent’s mobile platforms.

However, the project did not go smoothly. While Geng’s WeLife team aggressively promoted the services among bricks and mortar stores, Zhang and the WeChat team were very selective in allowing ads on the app.

“Many people thought it was a WeChat promotion and were quite excited, but later they found out it had nothing to do with WeChat,” the owner of a beauty shop said.

Vendors who joined WeLife later found they had access to very limited services.

“The WeLife and WeChat teams were not well connected,” another vendor said. “They had different thoughts about business solutions and WeLife didn’t get access (to WeChat).”

Then in May, Tencent decided to change its structure and made WeChat an independent business division. WeLife, which reportedly had 80 million registered business users in 40 cities, was merged into WeChat, and Geng was named head of WeChat’s business development department.

Also merged into WeChat in the reshuffle was the WeChat payment team, which had been under Tenpay.

The debut of WeChat Wallet was crucial, said Wu Yi, head of the WeChat payment operation. “The payment service enables a complete business circle for both e-commerce players and offline businesses. Otherwise, it is only advertisements.”

Indeed, the launch of WeChat Wallet soon prompted Jack Ma, chairman of Tencent’s big rival, Alibaba which operates the payment service Alipay, to respond to the new competitor. Alibaba launched an aggressive marketing campaign supporting its messaging app Laiwang in the hopes of competing with WeChat.

Several months later, WeChat Wallet had sudden success through a small product it offered during the Spring Festival holiday. Five days before the holiday, WeChat launched a virtual “hongbao,” or red envelope full of cash, service based on its payment function. This allowed users to send a virtual hongbao as a traditional Chinese gift to their friends, and users loved it.

More than 8 million people used the service during the holiday, Tencent’s data showed. The total number of hongbao received topped 40 million and some 400 million yuan was involved.

Thanks to the hongbao service, WeChat Wallet had its service linked to millions of bank accounts in just a few days.

The unexpected success offered a glimpse of the huge potential of the payment service to the WeChat team, even though they had not even designed ways for users to spend the money they received as gifts, so it just went to bank accounts.

“The hongbao was only one scenario,” Wu said. “Our idea is to develop more scenarios for WeChat Wallet.”

In September, WeChat added a new quick payment feature to WeChat Wallet, allowing users to make payments from it or a debit card by scanning a quick respond code shown on their mobile phone. Now, nine retailers including Dairy Queen ice cream shops and Haolinju grocery stores have signed on to accept such payments.

WeChat has also taken steps to widen the access to its platform by abolishing the 20,000 yuan deposit required for merchants to connect with WeChat and allowing more e-commerce operators to access its payment service.

But some vendors are still annoyed by the complicated procedures needed to join WeChat.

“Seventeen documents are required for connecting to the payment service,” the beauty shop owner said.

The more challenging task for WeChat is to cultivate the potential clients among the offline vendors. Since May, the WeChat team has travelled around the country to deliver presentations to vendors on ways to do business on the Internet and WeChat.

“Offline businesses have totally different rules and Internet is quite mysterious to them,” Wu said.

One business model WeChat has outlined for vendors is the offering of coupons to customers visiting stores, meaning customers must make payments through WeChat to get the discount. If the payment is completed, the customers’ data will be saved so vendors can make future marketing plans.

Stores want their partnerships with WeChat to generate more foot traffic, but the effects may be limited. At a store launched in the eastern city of Hangzhou by WeChat and Shopin, a retailer of discount brands, a reporter found very few customers visited the store due its poor location.

Healthy Competition

Tencent’s rivals also have set their sights on connecting online and offline businesses. Before Smart Life was launched, Alibaba unveiled plans to connect hospital, retail and public transportation services to the Alipay app. With 190 million active users, Alipay is now the country’s largest third-party payment provider.

What Alipay lacks is an online community based on the social networking function. A source at Alipay said the company is considering the launch of a social networking function for its app, and “as soon as end of the year, a beta version will be tested.”

As part of the Smart Life solutions, WeChat linked its platform to the two hotel chains Chatinn and Podinns, allowing users to make reservations and order room service through the app.

Podinns has also partnered with Alipay and Baidu’s online map service. Zhang Wei, deputy general manager of Podinns, said that the company likes each for a different reason: WeChat for the social networking, Alipay for the payment potential and Baidu Maps for navigation.

Zhang said WeChat generates a lower percentage of deals than tourism websites do, but the marketing costs are lower. Thus, the company usually uses WeChat to promote new products.

In the catering sector, hotpot chain Haidilao Hot Pot became the first restaurant to accept payments through WeChat. “WeChat payment is the largest payment source on mobile devices and accounts for 20 percent of the total payments (that Haidilao received),” said Feng Hailong, the eatery’s head of information technology.

Shortly after partnering with WeChat, Haidilao was approached by Alipay and agreed to a deal with it, Feng said.

Fierce competition has also erupted in the healthcare industry. In July, Alipay unveiled a project called Future Hospital that plans to embed everything from making an appointment, paying a hospital and checking test results in its mobile app. The project was launched in partnership with Guangzhou Women and Children Medical Center. Within a month, WeChat launched its version, called Smart Hospital, with Guangdong Women and Children Hospital.

As of October, WeChat said it was working on deals with more than 100 hospitals. Alibaba said it is talking with a similar number and has deals with 15.

Other Partners

In August 2013, WeChat tied its payment service to Yixun.com, Tencent’s shopping website, but sales have been flagging. Then early this year, Tencent sold Yixun.com to the e-commerce giant JD.com, granting the latter access to WeChat.

After rounds of bargaining over design and accessibility, JD.com’s products and services were offered on WeChat in late May in preparation for JD.com’s annual sales day on June 18.

It is unclear what WeChat’s contribution to JD.com’s sales have been. The latter’s financial report shows that in the second quarter, 24 percent of its total orders came from mobile devices, up 6 percent from the previous quarter. However, Liu Qiangdong, the CEO of JD.com, said most of the mobile orders came from the company’ app.

A source from JD said it is still researching the buying habits of WeChat users, something it believes is very different from those of PC users. Most of the shoppers coming from WeChat are new users with distinct purchasing preferences, the source said.

While merchants are looking at WeChat as a new marketing front, WeChat’s Wu emphasized it “is not a marketing tool.”

Despite this, the earliest business on WeChat has been Alibaba vendors using the app to market their shops. They promote products on WeChat, then direct buyers to Alipay to make final payment.

This spurred WeChat to close accounts that were doing what it deemed excessive marketing in July 2013. Shortly afterward, Alibaba cut ties between WeChat users and Taobao and Alipay.

The conflict between WeChat and Alibaba has hurt many online vendors. A seller of suitcases on Taobao said the battle between the two Internet giants hurt his plan for mobile marketing, resulting in the loss of hundreds of thousands of yuan.

But the vendor has stayed on WeChat and said he has figured out how to business on the app. “Although it leads to fewer real deals, the marketing costs are very low. It suits small vendors who use it for brand promotion.”

Intern reporter Liu Xiaojing contributed to the article

(Rewritten by Han Wei)

Source: http://english.caixin.com/2014-12-10/100761362.html