Does Tencent’s E-Commerce Move Spell Trouble for JD.com? from freemexy's blog
Does Tencent’s E-Commerce Move Spell Trouble for JD.com?
Tencent (OTC:TCEH.Y) recently launched Minishop, a new tool that lets merchants directly launch online stores on WeChat. WeChat is the most popular messaging app in China with over 1.2 billion monthly active users, so the move could set the foundations for a new e-commerce marketplace.To get more JD.com news, you can visit shine news official website.
Tencent previously allowed retailers to set up shop on WeChat's Mini Programs platform, which also hosts games, ride-hailing services, delivery services, and other tools. But companies usually need to hire developers to create the Mini Programs, since they were essentially stand-alone apps.
The Minishop tool simplifies the process and helps vendors quickly set up WeChat shops without help from external developers. This could make it easier for merchants of all sizes to sell products on WeChat -- and it could spell trouble for China's e-commerce leaders Alibaba (NYSE:BABA), JD.com (NASDAQ:JD), and Pinduoduo (NASDAQ:PDD).Yet Tencent's announcement is especially troubling for JD, its longtime e-commerce partner. Tencent owns nearly a fifth of JD, it hosts JD's Mini Programs on WeChat, and the two companies offer cross-platform marketing solutions for other companies. Tencent and JD also co-invested in the flash sale underdog Vipshop in late 2017. Does Tencent's Minishop indicate it's evolving into a competitor to JD? Or is there still room for both these platforms to grow?
Is Tencent getting ready to cut ties with JD?
On the surface, Tencent and JD seem like steadfast allies, united in their fight against Alibaba (NYSE:BABA). But there are cracks appearing under the surface.
Tencent initially owned a 20% stake in JD after the latter's IPO in 2014, but it had reduced that stake to 17.1% by early 2020. That reduction might seem minor, but Tencent’s stake in Pinduoduo also declined over the past year due to the e-commerce company’s secondary offering. At the same time, Tencent ramped up its investments in Missfresh, an online grocery delivery start-up that directly competes against JD and Walmart's JD Daojia joint venture.
Tencent's introduction of WeChat's Mini Programs platform in 2017 indicated it wanted to lock users into a walled garden with "in-app apps." Doing so would allow Tencent to own an "app store" without owning a major mobile OS, and tether its users more tightly to its sprawling ecosystem.
JD launched its own Mini Programs, but Tencent also allowed other retailers to set up shop in WeChat. That decision arguably diluted the partnership between the two companies and suggested Tencent was building a decentralized e-commerce marketplace to challenge Alibaba, JD, and Pinduoduo. The introduction of its Minishop tools, which could open the floodgates for smaller vendors, supports those aspirations.Tencent's Mini Programs surpassed 400 million daily active users last quarter, representing roughly a third of WeChat's monthly audience. Tencent's WeChat Pay, which is integrated into the app, is also one of the two most widely used digital payment platforms in China. Those two growth engines, along with WeChat's growing number of e-commerce Mini Programs and Minishops, could support WeChat's evolution into an e-commerce platform.
During last quarter's conference call, Tencent President Martin Lau admitted many of Tencent's "investee companies" (including JD and Vipshop) are "also engaged in e-commerce platforms," but "building a stronger e-commerce ecosystem within WeChat is actually going to be synergistic to them" as more people grow accustomed to "buying products and services on WeChat."
In other words, Tencent wants WeChat to become a top destination for online shopping -- which could pull shoppers away from other stand-alone marketplaces like JD -- and its desire to host more merchants could force JD and other retailers to rely more heavily on promotions to stay competitive on WeChat.
Tencent (OTC:TCEH.Y) recently launched Minishop, a new tool that lets merchants directly launch online stores on WeChat. WeChat is the most popular messaging app in China with over 1.2 billion monthly active users, so the move could set the foundations for a new e-commerce marketplace.To get more JD.com news, you can visit shine news official website.
Tencent previously allowed retailers to set up shop on WeChat's Mini Programs platform, which also hosts games, ride-hailing services, delivery services, and other tools. But companies usually need to hire developers to create the Mini Programs, since they were essentially stand-alone apps.
The Minishop tool simplifies the process and helps vendors quickly set up WeChat shops without help from external developers. This could make it easier for merchants of all sizes to sell products on WeChat -- and it could spell trouble for China's e-commerce leaders Alibaba (NYSE:BABA), JD.com (NASDAQ:JD), and Pinduoduo (NASDAQ:PDD).Yet Tencent's announcement is especially troubling for JD, its longtime e-commerce partner. Tencent owns nearly a fifth of JD, it hosts JD's Mini Programs on WeChat, and the two companies offer cross-platform marketing solutions for other companies. Tencent and JD also co-invested in the flash sale underdog Vipshop in late 2017. Does Tencent's Minishop indicate it's evolving into a competitor to JD? Or is there still room for both these platforms to grow?
Is Tencent getting ready to cut ties with JD?
On the surface, Tencent and JD seem like steadfast allies, united in their fight against Alibaba (NYSE:BABA). But there are cracks appearing under the surface.
Tencent initially owned a 20% stake in JD after the latter's IPO in 2014, but it had reduced that stake to 17.1% by early 2020. That reduction might seem minor, but Tencent’s stake in Pinduoduo also declined over the past year due to the e-commerce company’s secondary offering. At the same time, Tencent ramped up its investments in Missfresh, an online grocery delivery start-up that directly competes against JD and Walmart's JD Daojia joint venture.
Tencent's introduction of WeChat's Mini Programs platform in 2017 indicated it wanted to lock users into a walled garden with "in-app apps." Doing so would allow Tencent to own an "app store" without owning a major mobile OS, and tether its users more tightly to its sprawling ecosystem.
JD launched its own Mini Programs, but Tencent also allowed other retailers to set up shop in WeChat. That decision arguably diluted the partnership between the two companies and suggested Tencent was building a decentralized e-commerce marketplace to challenge Alibaba, JD, and Pinduoduo. The introduction of its Minishop tools, which could open the floodgates for smaller vendors, supports those aspirations.Tencent's Mini Programs surpassed 400 million daily active users last quarter, representing roughly a third of WeChat's monthly audience. Tencent's WeChat Pay, which is integrated into the app, is also one of the two most widely used digital payment platforms in China. Those two growth engines, along with WeChat's growing number of e-commerce Mini Programs and Minishops, could support WeChat's evolution into an e-commerce platform.
During last quarter's conference call, Tencent President Martin Lau admitted many of Tencent's "investee companies" (including JD and Vipshop) are "also engaged in e-commerce platforms," but "building a stronger e-commerce ecosystem within WeChat is actually going to be synergistic to them" as more people grow accustomed to "buying products and services on WeChat."
In other words, Tencent wants WeChat to become a top destination for online shopping -- which could pull shoppers away from other stand-alone marketplaces like JD -- and its desire to host more merchants could force JD and other retailers to rely more heavily on promotions to stay competitive on WeChat.
The Wall