About us: Aurora Mobile (NASDAQ: JG) established in 2011, is a leading customer engagement and marketing technology service provider in China. Its business includes notification services, marketing growth, development tools, and data products. As its sub-brand, MoonFox Data is a leading expert in data insights and analysis services across all scenarios, aiming to help companies gain market insights and empower precise decision-making.

SHENZHEN, China, May 31, 2024 /PRNewswire/ — I. Net Profit Soars by 50%, WeChat Channels Lead Tencent’s Growth

On May 14th, Tencent Holdings released its Financial Report for the First Quarter of 2024. The report shows that Tencent’s revenue in the first quarter was RMB 159.501 billion, increased by 6% YoY and 3% QoQ; While net profit was RMB 50.265 billion, increased by 54% YoY and 18% QoQ. Among its three major business segments, the Tencent Games business has not fully recovered, with revenue continuing to record a YoY negative growth in the fourth quarter. The businesses of Online Advertising, Tencent Financial Technology, and Enterprise Services maintained growth momentum, with the segment of integration of digital technologies and the real economy accounting for more than 30% of Tencent’s revenue for three consecutive years and becoming the largest contribution to Tencent’s revenue since 2022. Behind the growth of these segments lies the same contributor: WeChat Channels.

Having been launched for four years, WeChat Channels has now grown into the “Hope of the Tencent“. In its latest financial report, Tencent stated that services including WeChat Channels and Search Ads, Game Applet platform service fees, and Channels merchant technology service fees contributed to an increase in Tencent’s gross profit & operating profit that exceeded its revenue growth. Tencent’s Q1 gross profit increased by 23% YoY, with gross profit margin rising from 45% in the same period last year to 53%; operating profit reached RMB 52.6 billion, increased by 38% YoY.

In the first quarter of 2024, the total user’ usage duration of WeChat Channels increased by over 80% YoY. By expanding product categories and encouraging more KOLs to participate in live streaming, Tencent strengthened the retail streaming ecosystem on WeChat Channels. WeChat Channels is bearing greater commercial value, and its future potential should not be underestimated.

II. Four-Year Transformation for WeChat Channels: Commercialization Exploration and User Value Enhancement within WeChat

The growth of WeChat Channels is inseparable from the strong support of WeChat. According to MoonFox iApp data, in the first quarter of 2024, WeChat’s monthly active user(MAU) base reached 1.02 billion, an YoY increase of 4.122 million. In terms of user stickiness, WeChat’s average daily launches per user in the first quarter was 21.9 times, an YoY increase of 2.1 times.

Changes in WeChat MAU and Average Daily Launches per User in Q1 2024

MAU

Average Daily Launches per User

January 2023 – March 2023

1.014 billion

19.8 times

January 2024 – March 2024

1.018 billion

21.9 times

Data Source: MoonFox iApp;

Data Period: January 2023 – March 2023, January 2024 – March 2024

As a member of the WeChat ecosystem, WeChat Channels has been constantly drawing on WeChat’s strong vitality over the past four years, inheriting and expanding WeChat’s massive and deep user base. The continuous enrichment and optimization of WeChat Channels’ commercial functions have also brought about an increase in user engagement and interaction frequency, which in turn has contributed to the growth of WeChat’s user base and activity levels.

Regarding the exploration and expansion of WeChat Channels’ commercial functions, it initially facilitated private connections by integrating with WeCom, building a convenient communication bridge between users and enterprises. Later, with the addition of the “Products” tab, WeChat Channels introduced a brand-new shopping experience for users. Subsequently, the launch of content marketing functions transformed WeChat Channels into an efficient advertising platform for advertisers, while also providing users with more diverse content choices.

Timeline for WeChat Channel Launching Key Commercial Functions

Private Connection

  • January 2021: WeChat Channels integrated with WeCom (WeChat Work)
  • November 2021: New version of WeCom enabled sending/receiving and
    watching live streaming on WeChat Channels

E-commerce

  • May 2021: “Products” tab added to WeChat Channels homepage
  • November 2021: WeChat launched “11.11” WeChat Channels Live Streaming
    Shopping Festival

Content Marketing

  • June 2021: WeChat Channels Advertising Platform launched
  • May 2023: Tencent Advertising’s full UV(Unique Visitor) bidding platform
    upgraded, Auction Ads mechanism launched on WeChat Channels

Knowledge
Monetization

  • January 2022: Paid live streaming allowed replay viewing on WeChat Channels
  • April 2022: It launched a knowledge live streaming column on WeChat
    Channels

Local Life
Services

  • May 2023: It tested local life services on a small scale on WeChat Channels,
    while adding the function of group purchase, voucher redemption in live
    streaming rooms

Source: Public information, compiled by MoonFox Research Institute 

In 2022, WeChat Channels took a step further into knowledge monetization by introducing paid live streaming, allowing creators to monetize their premium content while satisfying users’ demand for high-quality content. In 2023, WeChat Channels set its sights on the local life services sector, testing local life services and providing users with a more convenient and practical living experience.

III. Initial E-commerce Dividends, Multiple Operational Initiatives Accelerate WeChat Channels’ Commercialization Process

In 2024, the commercialization layout of WeChat Channels is accelerating, and the e-commerce business, as its important component, is unleashing enormous dividends. Previously, WeChat officially disclosed that in 2023, the GMV (Gross Merchandise Volume) of WeChat Channels achieved nearly a threefold increase, its number of orders grew by over 244%, and the product supply increased by approximately 300%. Among these, the proportion of brand GMV on WeChat Channels reached 15%, with brand GMV growing by 226% and the number of brands increasing by 281%; The growth of service providers scale was also very rapid, with over 3,000 ecosystem partners, and their GMV grew by more than 4.5 times within a year, contributing to over 35% of the overall GMV share. Compared to numerous competitors, WeChat Channels is currently in a period of UV dividends, with relatively low UV costs, which easily attracts a large number of small and medium-sized generic brand merchants to join the platform.

E-commerce Performance of WeChat Channels in 2023

GDP Growth

300%+

Order Growth

244%+

Product Supply Growth

300%+

Brand GMV Growth

226%+

Brand Number Growth

281%+

Number of Service Providers

3000+

Source: Public information, compiled by MoonFox Research Institute

WeChat Channels continuously roll out and refine various commercialization functions, gradually building a diversified e-commerce ecosystem and releasing more and more dividends for content creators, merchants, and users. The e-commerce business of WeChat Channels not only provides merchants with a new sales channel but also offers users a more diverse and convenient shopping experience. With the launch and optimization of more innovative functions in the future, WeChat Channels is expected to become an important platform connecting users, merchants, and content creators, further promoting the development and prosperity of the e-commerce business. It is reported that WeChat Advertising is currently testing a new capability that allows direct access to WeChat Channels Shop from Moments and Ads, bringing new UV growth paths for merchants operating the Shop.

Key Stages in the E-commerce Development of WeChat Channels

Function Updates – Building E-
commerce Infrastructure

Regulation and Governance –
Governing the Ecosystem
Environment

KOLs Operations – Resource
Support

  • May 2021: Added “One-
    click to open the store”
    function on WeChat
    Channels, streamlining the e-
    commerce process;
  • November 2021: Optimized
    user experience, allowing
    WeChat Channels users to
    view their “Orders”;
  • December 2021: WeChat
    Channels e-commerce
    updated basic functions,
    tested the “short video
    shopping cart” through gray
    box testing.

  • July 2022: Introduced
    optimized rules for using
    WeChat Channels
    Storefronts, updating the
    ecosystem rules for WeChat
    Channels e-commerce;
  • February 2022: Released a
    new batch of Storefront
    product quality inspection
    standards, conducting
    product quality inspections;
  • March 2023: To rectify
    irregularities in the WeChat
    Channels ecosystem, non-
    core products were removed
    from WeChat Channels
    Shop.

  • June 2023: To enhance
    privacy protection, Tencent
    initiated testing of virtual
    account for WeChat
    Channels Shop;
  • July 2023: Launched the
    Basic Tutorial for WeChat
    Channels Merchant to
    Increase Sales
    official guide
    and upgraded the KOLs
    incentive plan, entering the
    resource support stage;
  • January 2024: Tencent
    Advertising released the
    Guide for WeChat Channels
    Merchant to Create Best-
    selling Products and
    Generate Massive Orders
    .

Source: Public information, compiled by MoonFox Research Institute

IV. Venturing into Local Life Services, New Blue Ocean Battle with Meituan and TikTok

On April 29th, WeChat Channels released policies for local life service merchants to join the platform, including two top-level categories of dining, tourism & hotel, with nine second-level categories such as full-service restaurants, fast food, bakeries & snacks, accommodation, and scenic spots. Currently, only chain restaurant brands are allowed to join the dining category, and there are also restrictions for the tourism & hotel category, such as the scenic spots in only AAAA-level and above to be permitted to join. In terms of fees, local life service merchants joining WeChat Channels in 2024 can enjoy a preferential 0.6% technological service fee for the entire year, which will later be restored to 2.5%, relatively lower than the 2% to 5% fee range for most e-commerce categories. The security deposit for categories is RMB 20,000, and the floating security deposit is charged based on a certain percentage of the total transaction amount within 30 days.

As the engine driving WeChat’s commercialization and Tencent’s revenue growth today, WeChat Channels shoulders the critical task of expanding its reach. The reason why the local life services sector has re-entered the sights of internet giants after the “thousand-team battle” and the “food delivery battle” have quieted down is quite simple: it is almost the last “blue ocean” in the domestic consumer internet market.

The appearance of WeChat Channels has intensified competition in the local life service sector. The advantages of WeChat Channels lie in its massive user base and the convenience of WeChat Pay. WeChat Channels can leverage WeChat’s social network to provide local life service merchants with more exposure opportunities. At the same time, the widespread adoption of WeChat Pay also makes it more convenient for users to consume on WeChat Channels. However, WeChat Channels also faces challenges. First, it need to find its positioning between TikTok and Meituan to avoid being caught in the middle of the competition. Second, it needs to figure out how to transition users from WeChat’s social scenarios to local life consumption scenarios. Finding its advantages in the competition and providing better services will be the main challenges that WeChat Channels is facing.

V. How Rapidly Growing UV Leads Brand Advertisers to Tap into Opportunities? 

Fundamentally, all internet businesses are ultimately UV businesses. Especially as mobile internet dividends peak and UV costs continue to soar, finding new “blue ocean” has become a consideration for many brands, and WeChat Channels is precisely that rapidly growing market.

In the first quarter of 2024, the UV dividends of WeChat Channels allowed advertisers to see a new “blue ocean”. Previously, Tencent had mentioned that advertisers had a strong demand for WeChat Channels Ads, and it would gradually increase the advertising share of WeChat Channels in the future. According to the data released by Tencent, advertisers seem to favor WeChat Channels as well. In 2023, Tencent’s advertising business revenue reached RMB 101.5 billion, a YoY increase of 23%. Tencent stated in its financial report that the growth in advertising revenue was driven by new ads inventories from WeChat Channels and WeChat Search, as well as the continuous upgrades of its advertising platform. Among these, advertising revenue from consumer goods, internet services, and the healthcare industry increased significantly. Apart from WeChat Channels Ads, its live streaming is another potential arena, and compared to platforms like Kwai and Douyin, WeChat Channels is still in the early stage of development and has yet to produce its own top-tier KOLs. However, in the early stage, this also presents an opportunity for many small and medium-sized advertisers to overtake others, attracting a large number of mid-tier KOLs and brands to cash in on WeChat Channels.

At the same time, the official WeChat Channels team continues to roll out various incentive policies like introducing more UV. With a series of actions, the development of WeChat Channels will be further accelerated. For advertisers, this may present an opportunity to overtake others in live streaming e-commerce. With the upcoming 618 Shopping Festival, all parties are competing to layout their strategies, and it is expected that WeChat Channels will also introduce various incentive policies in succession, which will also be an opportunity for it to further flex its muscles and demonstrate its capabilities. This battle may attract more brands to join the platform. For the future, let’s wait and see what kind of results WeChat Channels will deliver in the next quarterly financial report.

Source : MoonFox Analysis | How WeChat Channels Burdens of Tencent's Hopes for the Future Amidst Rapid Commercialization

The information provided in this article was created by Cision PR Newswire, our news partner. The author's opinions and the content shared on this page are their own and may not necessarily represent the perspectives of Thailand Business Directory.

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