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Friday, 20 February 2015

Are chat apps the future of mCommerce?

Japanese chat app Line believes that you should be able to do everything you want, while you are chatting. Its 170 million active user base may be a drop in the ocean compared to the 1 billion-plus who use Whatsapp. But Line is systematically diversifying its portfolio to arrive at creative ways of monetisation that go way beyond just chat. It has launched a Uber-style cab booking service in Japan, an instant grocery ordering service in Thailand, and now, a restaurant booking service. On top of this, Line@, an enterprise focussed version of the chat app, was introduced this month to facilitate communication by brands, celebrities and enterprises, with their own employees and vendors, or with customers. All services introduced by Line are backed by their own payment gateway Line Pay, facilitating in-app purchases and monetisation of the business.

But Line is not the pioneer in this field. Rival chat app WeChat, which is even more popular in China, has gone further ahead, and did it earlier than Line did. Rejecting a $3 billion buyout offer from Facebook, the chat app has diversified way beyond advertising-based monetisation and sponsored content, into eCommerce and services - taking it several steps ahead of Facebook. For example, WeChat gave the Chinese New Year’s tradition of gifting money a digital spin. Rather than giving tangible red envelopes of money to family and friends, WeChat users could send monetary gifts of up to CNY100 (around $16.50) through the chat app. More than 5 million people participated in the first two days of Chinese New Year, with a total of 20 million envelopes delivered. Brands can set up their own shops or WeChat service accounts, which allow them to send articles directly to the subscribers who follow their shop and to interact with loyal or potential customers by sending targeted promotions. In addition, WeChat also offers a direct sales platform. Without leaving the WeChat app, the 500 million users of the service can make a transaction in a matter of moments, whether to gift a red envelope, upgrade while gaming, purchase shoes, or book a taxi – with Wechats Didi Dache service

These apps are creating a new form of business – an incredibly tight ecosystem where social media, commerce and payment systems are tightly integrated. In the process, they are moving beyond mere chat applications to lifestyle services hubs. And they are teaching Facebook and other social media giants a lesson or two about how to creatively monetise a vast, captive user base, beyond ads and sponsored content.