Alipay’s Mini-Programs: What Luxury Retailers Need to Know

For a short period, experts wondered if they would stick. Now, WeChat’s mini-programs have been making headlines for their exponential growth in popularity. Totaling more than half a million with more than 170 million daily active users, these lightweight sub-applications have been harnessed as an attractive selling tool by KOLs (key opinion leaders) and luxury brands. WeChat isn’t alone, though— Alipay has been quietly testing its own mini-program service, and they're out to compete for the consumer's attention. This week, Alipay, the mobile payment app owned by Alibaba, rolled out additional technological features for its mini-programs, which have been in a beta testing stage since August 2017, a spokesperson for the company confirmed. Tech giant Alibaba has long been regarded as the main competitor to WeChat's parent company, Tencent, and so it may be no surprise that they are stepping up to compete on this latest tech battlefield. Alipay doesn’t have an official launch date yet, according to the company, “we’re pretty focused on user experience, and we don’t have a specific target date because we want to make sure we continue to refine the product and make it more relevant for businesses and users." However, due to Alibaba's booming e-commerce capabilities and connections, in its Beta stages, Alipay has been slowly and consistently growing a portfolio of mini-apps behind the scenes. While some of the most well-known companies on Alipay's mini-programs aren’t exactly high-end, including bike sharing app Ofo and taxi-hailing service Didi, Alipay’s spokesperson says the feature is open to a number of services, from fashion brands to gas stations. Brands who adopt them are often seeking to attract more customers and returning customers through strategies like loyalty programs, new user incentive plans and after purchase incentive plans. The key appeal of mini-programs for businesses, according to Alipay, is the ability to assemble a variety of payment solutions, such as electronic membership card management, coupons, and e-invoice management, without having to create the framework themselves, helping to reduce operational costs. Alipay claims to differentiate its mini-program service from WeChat with acute expertise in dealing with mobile transactions—WeChat’s mini-programs, on the other hand, are more about social sharing and entertainment. Without referencing any specific brand categories, the spokesperson says feedback from brands using the mini-programs service has been positive. “They think the customers on the Alipay platforms are more loyal and the conversion rate is higher compared to other platforms.” Tencent declined to comment on the matter. Alipay says data shows that their seven-day retention rate for users of mini-programs is around 29 percent. “This goes back to the very nature and positioning of the mini-programs that we provide…[which] all leverage Ant Financial’s key technological capabilities that are very relevant to transactional use cases and were designed from day one to facilitate transactions and make business easier, online and offline. We are very much focused on this at this stage, and when you have a focus it’s easier to know where you’re going and to provide a better user experience.” WeChat’s own mini-program data for 2017 showed a 600 percent increase in time spent in these sub-apps, while only 3 percent of users reportedly returned to the mini-program after the first week, according to third-party data. Nevertheless, their appeal continues to balloon, including for luxury brands, as users become accustomed to them and as their interfaces get more sophisticated. Meanwhile, both WeChat and Alipay have been in a race to grow their mobile payment service and have rapidly expanding overseas in a grab for Chinese tourists, making mini-programs on both platforms an arguably attractive option for international retailers looking to appeal to traveling shoppers. Thomas Graziani, founder of Walk the Chat, has, in the past, called Alipay’s move a jump on the “mini-program bandwagon” that wouldn’t likely be replicated by other programmers in the near future. But that was before WeChat’s own mini-program service experienced a leap in growth. Alipay is confident that its development is moving in an inevitable direction. “The competition in the market continuously asks for innovation that helps reduce operational costs,” Alipay’s spokesperson told Jing Daily. “This is a natural process—we’re not following anyone’s footsteps, we are there because there’s a genuine need in the market and we’re taking our time and doing it gradually.”

Sectors

Insights

Company

Alipay’s Mini-Programs: What Luxury Retailers Need to Know