Luxury brands have experimented with mini-programs hoping to insert themselves into the daily lives of consumers, but what’s the next step?
If you don’t already know, mini-programs are “sub-applications” for the highly popular Chinese social media app WeChat that offer advanced features to users so they can turn their accounts into platforms more suited to e-commerce, task management, and more.
WeChat’s mini-programs have seen astonishing growth since they were first launched in January 2017. By the end of January 2018, a total of 580,000 mini-programs—involving one million developers, linking with 2,300 third-party platforms, and enchanting over 170 million daily active users—could be found on the app.
Jing Daily looked at two new reports on this topic:“WeChat mini-program overview 2018” from China Internet Watch and “Mini-program Ecosystem Evolution 2018” from the mini-program agency Jisu App. Both offered holistic reviews of mini-program developments thus far in 2018, and each reveals some unexpected nuances about consumer shopping behavior on mini-programs while offering hints about what luxury brands should prioritize next.
Consumers Have Gotten Used to Spending on Mini-Programs
Brands have noticed that mini-programs are a very effective selling tool when used correctly. Thanks to the massive popularity of E-shopping festivals in China like 6/18 and Singles Day, fashion e-commerce mini-programs have exploded in growth. The proof is in the numbers: traffic for this type of mini-program has increased by more than 60 percent since 2017. Jisu’s data shows that a majority of users spend seven percent of their income shopping with mini-programs, equaling roughly $29 (200 RMB) per month, and the average order value on mini-programs in 2018 so far is between $29 and $147 (200-1000 RMB), which is five percent higher than last year’s average.
Even though $29 can barely cover one pocket of a luxury handbag, the report shows that consumers are trusting their money with mini-programs more and more, and the sub-app’s convenient pay feature and offline consumption scene has helped smooth a transition to buying on the platform. Because of this, even WeChat Pay’s rival Alipay decided to roll a mini-program folder out on its homepage, as reported by Technode this week.
Young women lead spending on mini-programs thus far, with the ratio between female and male users equaling 71 percent to 29 percent. In terms of age, over 70 percent of mini-program users belong to Generation Z or younger—24-year-old and under. Meanwhile, the geographic consumer layout has shifted over the last year from primarily larger cities to also include smaller cities, something that rings of more opportunity for luxury brands wanting to extend their reach.
WeChat sees an enormous amount of traffic, and companies are hoping to cash in on those users through mini-programs that lead users to their own platforms. The recently IPO’d e-commerce company Pinduoduo—which is now under investigation for allegedly selling counterfeit goods—has more users (230 million) on WeChat than its own app. It’s using a business model of capitalizing on social currency; the more consumers share their page, the lower the price is for them. And even though Pinduoduo serves value-conscious consumers in underserved cities—a somewhat different demographic than the luxury market—it has proven the power of WeChat traffic.
WeChat Cashing in from Gaming
At the end of 2017, the mini-game ‘Jump Jump’ saw viral popularity on WeChat, fueling the gaming ability of mini-programs. The China Internet Watch report noted that 81% of the 170 million daily active mini-program users have played these mini-games.
When McDonalds and Nike reportedly paid $732,000 (five million yuan) each to have their logos appear in ‘Jump Jump’, WeChat saw gaming as a key opportunity. Using games as another area to distribute ads, WeChat decided to officially launch ‘rewarded’ video ad platforms for their mini-games in May 2018, allowing advertisers to insert rewarded video ads during specific game scenes.
Luxury brands like Guerlain, Dior, Hermes pioneered mini-program gaming in their market and have seen different types of engagement.
According to Jisu’s app report, we’re now in a period of ‘hyper-growth’ in mini-programming and past the platform’s early stages of ‘exploration’ and ‘market activation’. Despite the fact that mini-programs are on the way to their ‘maturity stage’, luxury brands still can jump aboard this consumption trend before it’s too late.