Last week, I presented on the WeChat phenomenon. While I was able to give the class a quick overview of the platform and why it’s so revolutionary, I also wanted to take a deeper dive into the app – explain how it started, why it grew so quickly, and why it continues to be successful.
What is WeChat?
So, let’s start with the basics (for those of you who didn’t see my presentation). WeChat is a Chinese messaging platform developed by Tencent in 2011. It is commonly referred to as China’s everything app because its features encompass almost all of the apps on your phone. Yes, that’s right all of them.
You can send messages, video call, shop online, pay for products at physical stores, pay your utility bills, split dinner tabs, book plane tickets, listen to music, order food for delivery, pay for taxis, book doctors appointments, play games, listen to music and more – all while never leaving the platform. Pretty convenient, huh? According to one American venture capitalist, “WeChat is there at every point of your daily contact with the world, from morning until night.”
Rise to Success
It seems pretty obvious why WeChat has grown to over 700 million users so quickly and most report using the app on average about 10 times a day or more, but there are a number of key reasons why WeChat has become so successful. One of the main reasons has to do with the uniqueness of the Chinese market and its high mobile penetration. China’s mobile ownership is higher than those in America, Brazil and Indonesia combined. Additionally, the Chinese are already way ahead in eCommerce, making 50% of their purchases via mobile verses about a third in the US.
WeChat was able to appeal to the Chinese because it was a convenient, free mobile messaging solution that allowed users to easily integrate a number of features all on one platform. Furthermore, the free messaging part of the app was key because unlike the US, text messaging in China was expensive so users quickly adopted the platform.
A second reason behind WeChat’s success is Tencent’s (the parent company) QQ messaging platform. The QQ platform was designed for PCs, but the company quickly saw the growth of mobile and innovated the platform to what is now WeChat, also referred to as Weixin. Additionally, the QQ platform boasted over 800 million users and once the Weixin software was developed, Tencent allowed users to seamlessly switch over to WeChat, giving the platform huge user base and network effects advantages. The launch of WeChat was not without competition, however, due to government regulation, which banned Facebook and Twitter, and Tencent’s ability to role out new features faster than any of its competitors – Kik, WhatsApp and Viber – WeChat quickly won and retained majority of the market.
Lastly, WeChat has been able to convince over half of its users to attach their wallets to the platform. This is a major win for Tencent due to the mistrust and security concerns that are top of mind for most of its Chinese users. However, Tencent’s identity and security features, combined with its trustworthy brand image, have won over millions. This is huge for WeChat because Ecommerce is one of its major revenue drivers and it currently has over 10 million shops available on the platform. It is reported that WeChat brought in $1.8 billion in revenue last year, which is astonishing considering most messaging apps are barely profitable.
And it doesn’t look like WeChat is slowing down, which means that the more users and features it has, the more data and information it collects. It currently collects more data than Amazon, Google and Facebook combined. So it is no surprise that large brands are flocking to the platform to advertise and create shops on the app to tap into the enormous user base. This is really good news for WeChat and their continued success.
So, is WeChat the future of Social Media?
Well, it’s complicated. WeChat has definitely figured out how to seamlessly integrate social media into every aspect of its users’ digital life, but unfortunately it won’t be that easy for the rest of the world. Many have even argued that a WeChat of the west might not be possible. This type of system is difficult to implement in other areas of the world for a couple of main reasons.
First, WeChat is so much more than just an app, it is basically a mobile operating system – one that has fixed many of the shortcomings of our OS. Hamish McKenzie of Tech Crunch put it brilliantly; WeChat is “tight ecosystem that uses a social graph as the fabric for a connected web of services that cover almost every aspect of your digital life, from communication to entertainment to shopping to banking.” In the US, there are still a number of issues with current mobile OS and no one has been able to solve them yet.
Additionally, China’s mobile and Ecommerce markets are much more advanced than the rest of the world. China basically skipped the pre-web era and went right to mobile devices and WeChat. They don’t know anything different than the super app. In the US and Europe, users have become accustomed to the multi-app environment and it will be difficult to break these habits.
So unfortunately, there isn’t a clear-cut answer. Personally, I believe WeChat does represent the future of social media and we will all eventually adapt to the one app model, but I’m quite not sure which player will be able to pull off the WeChat phenomenon. My best guess, however, would be Facebook since it currently has the largest network and most features, but what do you think? Interested to know others’ thoughts on WeChat and if a similar model is in our future.