China’s latest ecommerce innovation: decentralized ecommerce

While the pandemic has prompted rapid advancements in online shopping around the world, brands have long looked toward China as an example of ecommerce and retail innovation. Experiential retail is common to building brand love, more than half of the population uses mobile payments and online deliveries are nearly instant in as little as 30 minutes—showcasing the overall maturity of China’s ecommerce market.

But the landscape isn’t without its challenges, either. The most popular marketplaces that offer the greatest reach are highly standardized environments that can limit brands’ ability to stand out. The user journey is highly focused on product searches, meaning purchasing decisions are based mainly on price or convenience. These both make it difficult for brands to differentiate, requiring them to continually pay to reach their 'own' customers—customers that don’t actually belong to them, but rather belong to the marketplace.

A new opportunity for brands to take back control

From challenges come opportunity, and popular messaging app WeChat now offers an antidote to brands that feel over-reliant on these standardized platforms that offer little CRM control. WeChat's mini programs—'Instant' Apps embedded in WeChat for disposable interactions, at a fraction of the cost of a full app—allow brands to sell products through WeChat. This creates an environment that isn’t much different from direct-to-consumer channels: brands gain unprecedented access to the consumers that have connected through mini programs, helping them build a relationship with brand loyalists that can kickstart campaigns, deliver key product insights or result in direct sales.

More than 81.5% of WeChat users spend more than an hour on the app each day, according to Hootsuite, and Chinese users spend more than a third of their online time within there. This is significant, because it positions WeChat as the go-to platform for brands seeking to reinvigorate the customer decision journey (CDJ) with emotionally resonant experiences that capture audience attention and data–and ultimately lead to a sales relationship that they can better manage and control.

With the ability to both converse with consumers and convert them, Minishops signal what I believe will be the next big shift in ecommerce in China, if not the world: decentralized ecommerce, or 'private traffic,' in which brands create distinct, closed virtual environments to organize and connect with their customers­.

Mini programs continue to bridge online and offline

Originally, WeChat’s mini programs were developed for short-term use, often augmenting experiences in physical locations, like pop-up stores or installations. They were always ideal for bridging together offline and online experiences and were particularly useful for building relationships with consumers who already showed an interest in the brand.

Now shoppable, mini programs deliver on the key benefits of decentralized commerce: brands can segment their audience into groups to engage with them through greater relevance, can bring digital shopping to life through mobile features like AR content and can encourage users to share these experiences with friends and family—a behavior that fits well in-line with Chinese consumers’ preferences to make purchasing decisions based on recommendations.

Decentralized commerce ushers in an age of virtualization

More broadly, decentralized commerce gives brands the ability to break free from uniform marketplace formats to virtualize the shopping experience, further bridging together the experience of shopping at home or in a store. Consider a beauty brand whose mini program uses augmented reality to give consumers a preview of how different products would look on their face.

The brand might cater to an organized group of customers who prefer a conservative look one way, while offering tutorials to younger consumers who are just getting into cosmetics. It may create an entirely new experience for consumers who identify as makeup artists, giving them opportunities to create digital content and showcase their talent.

This level of tangible personalization—impossible to achieve on the big ecommerce platforms—is key for brands that want to appeal to loyalists, whether they’re testing a new product or building interest in more premium items. In this respect, sophisticated mini programs not only function as a CRM platform but can also help kickstart campaigns and key product insights.

Preparing for a decentralized future

And what about the rest of the world? Chinese brands moving toward decentralized commerce would offer a glimpse for the West at what brands could achieve through a direct relationship that blends social with commerce—a reality that’s already coming to fruition with shoppable Instagram content or niche, brand-focused Facebook groups. But currently, these platforms are missing the in-app currency needed to make a purchase without leaving the ecosystem.

As mini programs further develop to become a popular shopping channel for both brands and consumers, it’s likely that traditional ecommerce marketplaces will adapt­, either by opening up some of their data to sellers, or by enabling similar decentralized platforms themselves. If the latter happens, brands and consumers will both win by enjoying more distinct digital experiences that deliver on brand promise and strengthen loyalty.

Ramzi Chaabane is head of business and strategy at MediaMonks Shanghai.