/WeChat takes on Alibaba with in-app luxury brand sales

WeChat takes on Alibaba with in-app luxury brand sales

It is hard to survive in China without WeChat, the gargantuan messenger app that has gone far and beyond simply texting. People use it to chat, pay, order food, or to request for a cab. Now, you can even buy luxury handbags on the country’s largest social app. Brands like Longchamp and Burberry are eyeing more sales as they hop on the WeChat bandwagon and set up their in-app stores.

WeChat, China’s dominant networking app owned by Tencent, is more than just a place to chat with your friends. The app with nearly 900 million monthly active users is ready for a good fight with Alibaba, China’s e-commerce behemoth, in the online retail sector by bringing in luxury fashion brands.

Longchamp, for instance, has launched two WeChat in-app stores. One to beckon consumers to order customized handbags, and the other to allow shoppers to post and flaunt their newly purchased handbags from its physical store in Shanghai.

Longchamp’s in-app store on WeChat. Screenshot from WeChat.
Longchamp’s in-app store on WeChat. Screenshot from WeChat.

“There are so many brands in the market, and each has its own story to tell. Innovation is the key to success,” Jean Cassegrain, Longchamp’s CEO, told local press Jiemian.

“We’re aware of the importance of WeChat. There’s no Facebook, Twitter or Google here [in China] which we are more familiar with,” said Cassegrain, adding that he gives the China team quite a bit of flexibility to explore marketing channels.

Other luxury brands such as Givenchy and Dior are also testing the market through flash sales on WeChat.

Indeed, it is smart for those brands to test Chinese consumer behavior via WeChat, especially when the app earlier this year optimized the process to make it easier for companies to launch multimedia campaigns and open online stores. Business opportunities followed soon after WeChat’s strategic move with several brands flocking to the app for more sales.

However, this is no good news for Alibaba. WeChat has now emerged as a significant threat for the dominant e-commerce giant which boasted 507 million mobile monthly active users on its China retail marketplaces in March, according to its financial report.

The online retail race also affects the competition over mobile payment between the two companies. Back in 2014, Alibaba’s Alipay still dominated the mobile payment market with 80 percent of the market share. However, in the first quarter this year, Alipay’s market share dropped to about 54 percent, whereas WeChat held about 40 percent, according to think tank Analysys’ report.

While the battle between the two Chinese tech giants is getting fiercer, there is one thing that WeChat and those high-end fashion brands should keep an eye on. First-time buyers might have a doubt or two on purchasing a watch or handbag that is worth tens of thousands of dollars on WeChat. At the end of the day, it may come down to a race of which company can provide a better mobile shopping experience.

As a social app, WeChat does provide these brands a great channel to attract users and effortlessly take them through the purchase with personalized customer service. Alibaba will have to figure out a way to court customers in its less social environment in this case.

(Top photo from Baidu images)

Timmy contributes at AllChinaTech. He's passionate about photography, education, food and all things tech. He holds a master's degree from Columbia University Graduate School of Journalism.