Tencent Tests WeChat Features to Make Offline Retail More Intelligent

While everyone is buzzing about how Alibaba’s proposed concept of the “New Retail” model is going to revolutionize the traditional retail industry, another e-commerce behemoth, Tencent, which owns the power messaging platform WeChat, is quietly testing out some features that will help business owners make their offline retail more intelligent.

One of these testing grounds is the Beijing-based Huaguan supermarket. In June, the market launched a new mini program that offers its customers self-service checkout in any of its local stores. Consumers only need to scan a QR code that will direct them to a price tag system through which they can pay for their products via WeChat Pay.

The new tool has been warmly welcomed by Chinese shoppers visiting Huaguan, according to China Internet Watch, which reported that on the first day, 75 percent of the shoppers who had WeChat Pay checked out in this way. The participation rate increased to 94 percent on the second day. Huaguan completed over 10,000 deals on WeChat Pay the day after.

Launching in January of this year, mini program, the lightweight app within WeChat, has been viewed as a potential disruptor of the country’s online payment industry. However, the “pay on the go” concept that underpins the product has made it hard for merchants and brands to retain customers.

Since April, mini programs have pushed out a series of new features including nearby search, official account connection, and keyword search, aiming to build up an online-to-offline (O2O) retail environment that helps merchants and brands better capture the high stickiness of WeChat users.

Bai Zhenjie, the Operations Director of WeChat Pay, told Chinese site 21st Century Business Herald in June that the key to the “mini program retail model” lies in the integration of Mini Apps, QR codes, WeChat Pay, and Coupon Wallets all powered by the social app WeChat, which allows brands and merchants to offer loyal membership management, digital payment, big data analytics, offline services and more to help them naturally combine online and offline shopping experiences for Chinese consumers.

In the case of Huaguan, the supermarket has also leveraged the mini program to expand its number of loyal members. The growth rate of its new members has increased since the launch from 0.2 percent to 1.1. percent, according to China Internet Watch. These people’s purchasing power is higher than the average by 129 percent.

The same report also cited other data sourced from a convenience store in Wuhan. Within seven months, the store has attracted one million new members and settled more than eight millions transactions with mini programs. Moreover, the re-purchase rate of participating consumers reached 70 percent.

With the digital customer relationship management (CRM) system synchronizing on the single app, Huaguan has also become capable of conducting big data analytics to profile and group consumers, based on their diverse shopping behaviors and preferences. It, therefore, can approach different clients with a highly targeted marketing strategy.

As WeChat becomes a social e-commerce tool for more and more luxury labels including Burberry, Cartier and IWC Schaffhausen, the potential for wider adoption of the mini program retail model is poised to be massive for luxury businesses in China.