Will WeChat-Style Conversational Commerce Come To The U.S.?

by | Jan 14, 2020 | Technology

If you’re an executive for a U.S. brand, you should be familiar with WeChat, the ultra-popular Chinese messaging and social media app developed by Tencent. The app, which has amassed a whopping 1 billion active monthly users since its release in 2011, has transformed an entire ecosystem of e-commerce and may foreshadow what will transpire in markets beyond China.

What can Western brand leaders learn from WeChat, and will a messaging ecosystem like it ever emerge in North America?

WeChat Demonstrates The Power Of Ubiquitous Messaging

For most Chinese citizens, living without WeChat is impractical, if not impossible, thanks to about a million mini apps. Digital payments are also a core part of the WeChat conversational commerce model. WeChat Pay allows users to pay for products and services and enables digital money transfers to friends and family. A recent update allows users (currently iOS only) to send and receive funds using only a mobile number.

The combination of messaging and digital payments allows WeChat users to complete a wide variety of tasks. Users can not only message friends and family, but schedule doctor’s appointments, order food, pay utility bills, hail a taxi and so much more. More than a third of its users spend about four hours on the app each day.

WeChat not only demonstrates how a successful technology can integrate into everyday life, but also how the ubiquity of messaging can transform the way a society functions. For example, in China, business cards are now a rarity, because most people scan WeChat QR codes to connect online instead of exchanging physical business cards. Cash is becoming a rarity too, as nearly every merchant in China accepts mobile payments through WeChat. Even panhandlers in China use WeChat to make money using WeChat QR codes.

Mobile-First Really Means Mobile-First In China

Nearly 98% of China’s 800 million internet users are mobile, and WeChat’s growth has coincided with a massive expansion of mobile payment usage in China. In fact, the mobile payments market in China is 50 times the size of that in the U.S., and China accounts for nearly 40% of the estimated $101 billion spent globally via mobile apps in 2018.

Many brands in China design products and services to meet the needs of China’s massive mobile-first, messaging-obsessed society. Restaurants allow customers to order and pay for meals with WeChat. Automated, self-service convenience stores are gaining traction in China, where customers use their smartphones to enter the store and pay for their purchases. Some of these stores also allow customers to scan items with their smartphones. Chinese citizens have become so enamored with their mobile phones that several cities have created pedestrian lanes designated solely for mobile phone users.

Why Hasn’t WeChat Caught On In The U.S.?

One reason WeChat isn’t widely used in the U.S. is that it must compete with existing messaging apps such as Facebook, Twitter and WhatsApp. Also, WeChat Pay has to compete with other payment processors like PayPal, and the U.S. version of WeChat lacks many of the key features that make the app indispensable for Chinese consumers. For example, you need a Chinese bank account to pay merchants through WeChat.

Government regulations also play a key role in WeChat’s success in China. The Chinese government blocked competitors like Facebook Messenger from entering the market, allowing WeChat to grow. Tencent also received government subsidies to innovate the WeChat platform.

Will A Messaging Ecosystem Emerge In The U.S.?

The short answer is yes.

When you take into account the rising popularity of messaging around the world and in the U.S., the creation of a WeChat-like messaging ecosystem in the U.S. is inevitable. After all, for U.S. consumers, especially millennials, messaging is by far the preferred channel when engaging with brands compared to phone or email. And 83% of millennials open a text message within 90 seconds of receiving it. The adoption of conversational commerce will increase as millennials take up more buying power of the U.S. economy.

While a WeChat-like messaging ecosystem will increasingly emerge in the U.S., it will likely happen through disparate conversational AI and messaging platforms instead of an all-encompassing mega-app like WeChat.

U.S. Brands Can Prepare

Global companies can prepare by studying each unique market in order to engage with consumers effectively and understand user personas of customers who prefer messaging. Brands need to think about engaging with conversational-first consumers through messaging in the same way that those consumers are messaging with their friends and family.

U.S. brands must also learn from the mobile-first China model. For example, if a company does not already integrate with Apple or Google Pay, then the business is likely already losing a significant number of customers.

Brands have the opportunity to ideate products that can be found, bought and serviced conversationally. At the same time, brands can start thinking about building a presence on conversational platforms, leveraging automation and AI to take on millions of conversations with consumers.

If doubts remain about the utility that can be built into messaging interfaces and the potential reach of conversational commerce, just look to China.

This article originally appeared in Forbes.

Check out more articles by Evan Kohn here.