GUANGZHOU -- Chinese technology heavyweight Tencent Holdings seeks to make another foray into the online shopping business, tapping into the 1.2 billion users of its popular WeChat app.
WeChat mini shop, an app function Tencent has been testing since last summer, allows entrepreneurs and companies to easily set up an online store. Sellers can add video clips to showcase products as well.
In addition to selling their own products, online shop owners are able to feature goods offered on partner e-commerce sites such as JD.com. This provides the owners the ability to flesh out their lineups and collect commissions on sales of third-party products. They would pay Tencent a small payment-processing fee.
"Once the decision is made to upgrade a product, speed is of the essence," said Allen Zhang, WeChat's chief developer and a Tencent executive, at a programmers' conference on Tuesday.
WeChat was launched a decade ago on Jan. 21, 2011, and has continued to add features over the years, including peer-to-peer payments and video-sharing. WeChat's business volume came to 113.7 billion yuan ($17.6 billion) in 2019, according to a Founder Securities estimate, equivalent to a third of Tencent's total.
The online mini shop function aims to leverage the connection among friends and acquaintances forged through WeChat. By bringing together these services on the increasingly indispensable app, Tencent looks to generate earnings from payment processing and online advertising.
One Guangzhou resident who sells homemade bread to her friends applied this month to start a WeChat mini shop, through which she plans to sell recipe books and other bread-related products. "I think I can give good recommendations, since I've read so many different books on bread," she said.
This is not Tencent's first experience with online shopping. The company had transferred its old in-house e-commerce operations to JD.com after acquiring a stake in the platform in 2014, so it could instead focus on mobile games and other businesses.
With the coronavirus outbreak giving a major boost to the e-commerce sector, Tencent is now looking to get back into the game. There is concern that growth in its online payment settlement service, which is said to be preferred by many smaller brick-and-mortar stores, could slow without a strong, complementary e-commerce service.
China's e-commerce market is currently dominated by Alibaba Group Holding, which holds a roughly 50% market share by value. JD.com controls just over 20% of the market, while Pinduoduo, another platform backed by Tencent, holds just over 10%. Tencent hopes to tap JD.com's and Pinduoduo's resources and know-how as it mounts a challenge against Alibaba.
Tencent has been successful in linking WeChat to services offered by its partners and investees. For example, WeChat users can easily share stores and products on JD.com, but cannot share links to products on Alibaba unit Taobao.
But some have criticized Tencent for blocking access to outside players. ByteDance Vice President Xie Xin in early January said a mini program for WeChat developed by his company has been under review for almost two months.
Chinese authorities have been cracking down on the country's tech giants. Tencent may be forced to revisit its strategy if WeChat is determined to be abusing its market power.