An Italian apparel e-retailer sets up shop on Chinese mobile messaging service WeChat
August 1, 2014 09:42 AM
One of the world’s largest mobile messaging services is getting into e-commerce and Yoox Group S.p.A, the Italian web-only luxury retailer, is among the first global brands to participate.
Yoox announced this week it would set up a shop on WeChat, a Chinese messaging system with 600 million users, 500 million of them in China. Consumers who follow the “Yoox online concept store” on WeChat can shop directly from WeChat, including for some products Yoox says will be sold exclusively on WeChat. They can also read fashion articles, chat online with fashion experts and play social games.
A feature called “shake you style” on lets a WeChat user shake her phone to see fashion suggestions that she can then easily share with her friends.
WeChat is offered in 15 languages, though the e-commerce feature is only available in China. Yoox says it will also open WeChat accounts in Italy and the United States to communicate with WeChat users in those countries.
In terms of active users, WeChat is the world second-largest mobile messaging service provider after WhatsApp, which Facebook Inc. acquired this year. Monthly active users of WeChat increased 125% to 355 million in 2013, according to Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers.
“This is an interesting partnership,” says Forrester Research Inc. e-commerce analyst Kelland Willis. “This move with the integrated shopping makes sense for Yoox. By partnering with WeChat, they are making shopping and transacting experience much easier. This is also an opportunity for Yoox to partner with a Chinese digital brand without the stigma of being on Tmall or Taobao, which can be perceived to be lower-end by Chinese consumers.” Taobao and Tmall are the large online marketplaces that dominate online retail in China; both are owned by Alibaba Group Holding Ltd., which is preparing to offer its shares publicly this year on the New York Stock Exchange.
WeChat’s parent company, Shenzhen-based Tencent Holdings Ltd., is increasingly butting heads with Alibaba. Tencent, which generates most of its revenue from online games, owns e-commerce site Yixun.com, No. 5 in the 2014 Internet Retailer China 500, and this year entered into a strategic partnership with Alibaba’s biggest competitor, JD.com Inc., No. 1 in the China 500, which ranks retailers by their online sales in China. (Alibaba is not ranked because it does not sell merchandise itself, rather providing a platform that other merchants use to sell.)
Supported by the Tencent, WeChat is offering more services to e-retailers. WeChat in May added shopping cart management features that allow retailers to sell their products via the messaging service.
While many smaller Chinese retailers have tested the WeChat e-commerce service, that could change. “I would guess that more U.S. retailers will jump on board this ship. “ Willis says.
Valerie Hoecke, senior vice president, digital, of cosmetics brand Benefit Cosmetics, mentioned the WeChat initiative in a presentation in June at IRCE 2014 as she pointed to the differences between how social networks in China and the U.S. are seeking to generate revenue. “In the U.S., social media companies’ business focuses on ads as their model to generate revenue, and they just focus on the top of the purchasing funnel, in another words, increasing brands awareness,” Hoecke said. “In China, we are excited that social media companies like WeChat have tailored e-commerce services toward the bottom of the e-commerce funnel and provide deeper e-commerce features, such as live-chat, loyalty programs and mobile payment. It is very helpful for the brands, and we are eager to test it in the future.”
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