Singles' Day 2023: How can luxury leverage mobile payments?

Barriers between China’s rival mobile payment systems, Tencent’s WeChat Pay and Alibaba’s Alipay, are disintegrating, with more e-commerce platforms providing both options for an increasing number of users and products. This is good news for luxury brands, which would be able to offer their customers a wider range of payment options on major e-commerce platforms like Tmall and JD.com. The payment integration could propel higher sales volumes and enhanced customer loyalty, critical factors in sustaining the luxury sector's growth trajectory in China. Consumer choice WeChat Pay had been introduced as a payment alternative on some Alibaba platforms in 2021, like the food delivery service Ele.me and video-streaming portal Youku. And Taobao has begun testing WeChat QR code payment functionality for some users, a feature that has been in beta mode since March last year. Although the rollout is gradual, numerous users have reported encountering the new payment option on Taobao. Mobile payments are an integral part of daily transactions in China, with tech behemoths Alibaba and Tencent leading the pack. Together, they captured over 90 percent of the mobile payment market in 2019. For high-end brands, the customer experience is paramount, extending beyond the quality of goods to the seamlessness of the purchase process. This adaptability not only positions these brands favorably in the competitive market but also aligns with the affluent Chinese consumers' tech-savvy nature, who value efficiency and exclusivity in their transactions. Traditionally, Alibaba and Tencent operated on a 'walled garden' model to keep users within their respective digital realms. For instance, Alibaba's e-commerce powerhouse Taobao only supported its payment app, Alipay, while Tencent's platforms WeChat and WeChat Pay operated similarly. However, a shift began in 2021 as Beijing tightened its regulatory grip on Big Tech, urging them to stop blocking rivals' systems. Step by step However, interoperability is still nascent. An indication of the extent the two systems have connected will come next month, when the world's largest shopping day, Singles' Day (11.11), rolls around. In 2022, Alipay and WeChat Pay processed a combined $143 billion in transactions on Singles' Day, up 8.48 percent from the previous year. Increased competition and convenience could lead to more consumers using mobile payments during the upcoming shopping event. Additionally, integration would open up new opportunities for merchants to reach consumers on both tech giants’ platforms. However, it is unclear how many users will have access to integrated payment options this Singles’ Day, and it remains to be seen how convenient the integrated payment methods will be.

Sectors

Insights

Company

Singles' Day 2023: How can luxury leverage mobile payments?