WeChat: More than a mobile application

It is a known fact that we are living in a digital age, where people are becoming increasingly reliant on technology and smart phones to permeate every aspect of modern life. The development of mobile applications have skyrocketed over the past few years. And who can blame the people who decide to pursue businesses in the mobile application market? The development of mobile applications can be versatile to any idea, require low capital investment with the high growth of opportunity if successful. However, with such low barriers to entry, it has become extremely difficult to 1. Find a novel idea 2. Prevent competitors from replicating the idea 3. Establish a sustainable revenue source.

One mobile application called WeChat, better known as Weixin in China, may have found a way to achieve all three, spearheading the creation of a dominant social media platform in China. Currently with approximately 438 million users, WeChat is one of the most powerful standalone mobile applications in the world. WeChat, at the very most basic level, started as a messaging application similar to Whatsapp, allowing users to communicate with their friends and families internationally through message, voice and video. In comparison to Whatsapp, who charges $0.99 for download of the application after a year of free usage, Wechat is free to download and use. Despite the fact that the application is free, WeChat is expected to earn $6.8 billion yuan (1.1 billion US) this year and $9.6 billion yuan the year after. This is because WeChat is much more than a simple messaging application and has found a way to innovate thier revenue base, along with its network and product offerings.

When you first log onto WeChat, the application looks pretty basic. WeChat has all the functions of a messaging application: text, voice call, video call, sending photos and videos and emoticons. You are also able to have a profile and view a list of contacts. To put it simply, WeChat looks like a basic phone with all the functionalities of a smart phone. Some differentiating features are that you are able to post “moments” and share stories with everyone on your contact list similar to posts on Facebook. These functions are all free and quite similar to other applications. Where the app starts generating money is by offering their users the ability to purchase games and stickers to use in messaging your network of contacts. You might be thinking, paying for special add-ons is nothing new and you have probably experienced it. Now comes the twist. WeChat has a function in place that allows its users in China to connect their banking information so that you can now use the application as a payment system in stores. Users simply scan the product code in store and then they seamlessly pay for it using their WeChat account. With the integration of a payment system, WeChat has become a platform for purchasing, connecting consumers to select retailers. By partnering with WeChat, smartphone maker Xiaomi was able to sell 150K phones in 10 minutes. As if this wasn’t enough, WeChat’s users in China can also use WeChat to book taxis. After partnering with Dididache one of China’s most popular taxi hailing apps, Dididache was able to make $170K in bookings in seven days, signaling that other companies have a powerful dependency on this application for sales.

There are several other features that WeChat has incorporated to optimize its use for its users in China but I will focus on their ability to use network innovation, system and channel innovation to create a brand that people actually cannot live without. Quite basically, WeChat has created a mini ecosystem within smartphones with network capabilities that surpass the functions of a smartphone with normal applications. The brand is slowly penetrating to every aspect of their consumers life, seamlessly integrating important basic functions such as payment systems to spur the growth of other features such as m-commerce. WeChat has been able to amalgamate networks and systems that are essential to the Chinese user to create a new channel for consumers to live, socialize and connect with businesses. This careful integration of network, system and channel innovation has positioned WeChat to become the dominant social media brand in China.