Chinese cosmetics sales find a win-win platform on Weishang

WeChat’s online shopping platform, Weishang, is rising almost on the same level of e-retail giant Alibaba or JD.com. Here’s what makes it click.

Unilever announced in Oct 2018 that it would be selling its HAZELINE brand Snow series on Weishang. According to Beijing Business Today (Oct 21), Unilever is adopting a new retailing model for its products that combines its traditional channel of drugstores and specialist stores with Weishang’s platform, with an annual sales target of 250 million yuan (29 million USD).

Weishang uses WeChat to combine CtoC and BtoC sales methods, and can be said to be a form of micro-commerce. In China, product retail via WeChat became commonplace from around 2015. Product sales to individual users and corporations were carried out on the WeChat application, which boasts a MAU (Monthly Active Users) of over 100 million. Now, with a market size that has ballooned to over 500 billion yuan (72.2 billion USD), the Chinese government has introduced a “People’s Republic of China E-Commerce Act” to govern micro taxes concerning businesses and to protect consumers. (To be implemented in 2019).

Looking at the system in detail, first Weishang differentiates between individual business operators and corporations. Different versions of WeChat are provided for these two categories. This is a unique feature provided of WeChat.

In the case of individually business operators, the main functions used for product retail are 1) Friends Circle (Moments) 2) Group Chat 3) Weishop (Weixin Shopping Outlet).

1) Friends Circle (Moments)

Basically, this allows daily posts for product photos and prices to publicize these products to friends and conduct sales.

2) Group Chat

Anyone with a WeChat account can form a group and join a chat group. Individual business operators can share cosmetic information or news on daily necessities with an existing group, or join groups that deal with relevant products to promote their products and post about their product retail. They can also form a new group with the aim of selling their products.

Some individual business operators have contracts as influencers or have contracts with agents to push products, and upload product review videos on these groups, and it is not uncommon to result in annual sales exceeding billions. In China, there are many professional agents for these Weishang influencers. These agents are responsible for sourcing suitable influencers to match the target product.

Other than influencers, there are also private wholesalers that buy and resell products.

These are the two main types of individual business operators, and by using WeChat’s payment system, WeChat Pay in their transactions, they can enjoy a one-stop process from product promotion, retail, purchase and payment, which is a great plus.

3) WeShop App

“WeShop” is under the Tencent umbrella of smartphone shopping apps. Anyway can set up shop online for free, and there are now over 72 million retailers online, with a total product count of around 1.5 billion on this mammoth EC site (as of Nov 2018). This makes it attractive for shops to join this WeChat network, with its user base of friends and group chats as well as the landing page for retail.

On the other hand, corporations use WeChat in a different way, as a mini-program for their product sales. Under the new system started under the mini-program in 2017, there is an app within app that can be run within WeChat .

This mini-program allows corporations doing product retail to issue releases on WeChat, and this app also targets advertising, sales, purchase and payment within WeChat, reaching out to one billion users.

In this manner, individual business operators can use WeChat to run their businesses in various ways, and this is, in short, what Weishang is.

60% of Weishang sales are cosmetics related

Looking at Weishang’s actually set up, the Chinese Electronics Commerce committee announced in the “2016–2020 China Micro Commerce Research and Development Strategy Report”. In 2016, there were over 30 million in micro-commerce, with sales exceeding 500 billion yuan (72.2 billion USD). In 2019, that figure is projected to exceed 1 trillion yuan (144.4 billion USD).

According to the same report, main transactions comprised of beauty, cosmetics, apparel and infant-related goods, health products and agricultural goods. Amongst these, beauty and cosmetics products made up 60% of total sales.

Weishang is unique in that most of its transactions comprise of products targeting women. 70% of the individual business operators on Weishang are women.

So, what are the actual benefits for corporations to use Weishang as a retail platform?

In Chinese society where the market is overcrowded with products, the reliability of products through user reviews helps a product stand out. Deep-rooted distrust of mass media and advertisements makes news on SNS a major factor in purchases.

On top of that, using the SNS platform, Weishang businesses can provide a streamlined shopping experience for consumers through the gathering of personal data and simple payment processes. For both consumers and users, the Weishang retail platform is a win-win app.

Text: Ching Li Tor
Original text (Japanese): Team Roboteer