Taobao opens WeChat payment, Internet giants accelerate the demolition of barriers

Recently, Taobao began to try to open WeChat payment, reducing the barriers between Internet giants. Let us look at the logic behind this.

Recently, many netizens have discovered that Taobao can support WeChat payment to complete payment. In response, Taobao's official customer service said: WeChat payment is currently only available to some users and some products. The related topic #Taobao gradually opens WeChat payment# has become a hot search, with a reading volume of 170 million.

This feature has received widespread praise from users. Some netizens said, "The landscape has been opened up! Shopping has become more convenient" and "We've finally waited for this day." A media survey showed that more than half of consumers hope that WeChat Pay will be integrated into Taobao.

In addition to the voices of users, it is not difficult to find that in recent years, Internet giants are accelerating the removal of barriers and interconnection. For example, Alimama and Tencent Advertising have joined hands, and Tencent and Byte have made peace and opened up the live broadcast rights of "Honor of Kings" and "League of Legends". What is the deep driving force behind the Internet giants' transition from blocking and building walls to interconnection and openness? What development opportunities will come after interconnection?

1. From Shielding to Openness

In the history of China's Internet development, the battles between giants to build walls have permanently changed the entire Internet landscape. From the initial "3Q War" to the later "Tencent-Bytedance War", banning and blocking external links have always been the most direct and effective means of competition.

Back in July 2013, WeChat closed a large number of marketing accounts, including many public accounts of Taobao sellers. At that time, many Taobao sellers used social traffic on WeChat for marketing promotion and attracting customers.

At that time, the WeChat ecosystem had third-party service tools such as Taobao Affiliate, WeChat Shopping, and Pocket Link, which helped Taobao sellers collect data, conduct marketing and management, and even set up stores, allowing users to purchase Taobao products within the WeChat ecosystem.

In August, Alibaba blocked Taobao’s customer marketing data interface on WeChat. In November, Alibaba blocked all WeChat links. Taobao explained at the time that it was for the sake of user data security to prevent users from clicking on fake Taobao links and being deceived.

WeChat’s counterattack was to shut down all Taobao’s traffic channels. Later, Alipay, Sina Weibo, KuPan, Xiami Music, etc. also joined the battle. Alipay chose to close the payment interface to WeChat merchants, and the remaining platforms closed the “Share to Moments” entrance.

Afterwards, Alibaba launched the chat tool "Laiwang", Tencent blocked its invitation registration link, and WeChat also blocked Kuaidi's red envelopes.

The year 2013 was the highlight of WeChat's development. With 355 million users, WeChat was becoming the core position of Tencent's mobile Internet ecosystem by building a complete system of "public accounts + payment tools + Guangdiantong".

In order to create a closed-loop traffic ecosystem, Tencent and Alibaba began to compete directly. The final result of the competition was the "Taobao password" with garbled characters, which inevitably added trouble to users' daily use and violated the Internet spirit of "openness, collaboration, speed and sharing".

In 2021, relevant departments of the Ministry of Industry and Information Technology organized an "Administrative Guidance Meeting on Blocking URL Links". Participating companies included Alibaba, Tencent, ByteDance, Baidu, Huawei, Xiaomi, Momo, NetEase, etc., requiring that all platforms must lift the blocking in accordance with the standards within a deadline.

Tencent and Alibaba have gradually broken the ice since then. In September, Alibaba-affiliated platforms such as Ele.me and Youku all opened WeChat payment interfaces, and by November, WeChat already supported Taobao's external links to be opened directly without redirecting.

In 2023, the two sides accelerated cooperation and interconnection. On June 18, 2023, Tencent Advertising and Alimama achieved bilateral subsidies, and Moments ads could directly jump to the Taobao APP, becoming a major traffic entrance for Taobao merchants; in September, Alimama and Tencent Advertising officially announced the deepening of cooperation, opening up multiple traffic scenarios such as video accounts, Moments, and mini programs, which can directly jump to Taobao, Tmall stores and Taobao live broadcast rooms; at the beginning of this year, Xianyu, a subsidiary of Alibaba, launched an official WeChat mini program and began to support WeChat payment.

The two sides have not stopped accelerating their cooperation and interconnection. The reasons are mainly due to two aspects. One is that the current traffic ecology of the mobile Internet has become stable. Surrounded by "new kings" of content e-commerce platforms such as Kuaishou and Douyin, Taotian Group is facing greater traffic pressure. It is key to tap into the consumption needs of existing users.

On the other hand, after Alibaba proposed the "1+6+N" organizational structure reorganization in March last year, it emphasized the maturity and marketization of each individual business. The protection of the internal traffic ecosystem is a thing of the past. Alibaba CEO Zhang Yong once said, "Facing the capital market alone, mature one and go public one."

2. Alibaba needs new traffic, Tencent wants a new story

"There are no eternal enemies, no eternal friends, only eternal interests." This famous saying by British Prime Minister Churchill is suitable for describing the ever-changing international relations. It is also suitable for explaining why Internet giants have moved from shielding each other to interconnecting with each other. The demand for interests is always the primary driving force.

Alibaba has never lacked rivals. Among shelf e-commerce platforms, Pinduoduo's market value once surpassed Alibaba, and among interest e-commerce platforms, Douyin is said to have set a GMV target of 3 trillion yuan in 2024. Although the official person in charge of Douyin's e-commerce said that the relevant data was untrue, it is undeniable that Douyin has become one of the most threatening rivals of Taotian Group.

As the traffic dividend disappears and e-commerce platforms embrace discounts and call for "price power", Taotian Group needs new traffic. Improving user experience, enhancing user stickiness, and thereby increasing user repurchase rate is the only way forward.

Jack Ma once proposed the general direction of "returning to Taobao, returning to users, and returning to the Internet" at an internal communication meeting. Alibaba Group CEO Wu Yongming also emphasized: "In the next three years, putting users first will become the group's primary goal."

In terms of specific actions, Taotian Group has been focusing on content development, constantly updating and revising the Taobao Mobile APP, launching the "Night Taobao" program, and enriching the leisure and entertainment interactive scenarios; on the other hand, it has been introducing more pure content anchors, paying more attention to user time-related indicators, and setting user purchase frequency as the operating goal second only to GMV.

The significance of opening up WeChat Pay and interconnecting with Tencent is not only to bring payment convenience to Taobao users, but also to make it possible for Taobao Group to leverage WeChat's large base of highly sticky users, while also bringing more advertising scenarios to Taobao merchants and improving conversion rates.

A person from a payment company said: "Taobao probably faced great competitive pressure, so it lowered its profile and directly connected to WeChat Pay. WeChat Pay's direct jump optimizes the user experience and helps improve conversion rates. Given its large scale, even a one percentage point increase can contribute significant revenue."

According to Tencent's third quarter 2023 financial report, as of the end of the third quarter of 2023, the combined monthly active user numbers of WeChat and WeChat reached 1.336 billion, a year-on-year increase of 2% and a month-on-month increase of 0.7%. In terms of user numbers, usage frequency, and duration distribution, WeChat is still the mobile social platform with the most active users and the most advertising and marketing value.

Public data shows that in the comparison of advertising value of typical media platforms in June 2023, WeChat ranked first among a number of mobile social platforms in terms of monthly active users and user usage frequency, and was ranked together with the mobile video platform Douyin as the "king" with the highest platform advertising value.

Opening up the WeChat traffic channel can reduce the marketing costs of merchants and improve their operating efficiency. On Double Eleven 2023, Alimama and Tencent Advertising launched the "Double Eleven Super Explosion Plan" to provide subsidies and traffic support to merchants. The advertising ROI of some excellent merchants on Tencent can exceed 5, significantly exceeding the average level of less than 2 on short video platforms. Many brands such as Jiaoxia and Longliqi have found new business through Alimama UD and video accounts.

For Tencent, in the year when video accounts are accelerating their commercialization, expanding more high-quality brand merchants to become advertisers can bring more new growth stories. According to Tencent's third-quarter 2023 financial report, among Tencent's four main businesses, online advertising business grew the fastest, with revenue of 25.7 billion yuan, a year-on-year increase of 20%.

CICC's research report believes that video account advertising is still a clear growth point for Tencent's future performance. "Tencent's budget for customers in industries such as e-commerce is still increasing. Previously, Tencent and Alibaba have been deepening their cooperation in the advertising field. The direct connection of WeChat and Taobao advertising traffic is expected to achieve mutual benefit and win-win results."

At present, the synonym of open interconnection is mutual benefit and win-win.

3. Openness becomes a consensus and brings growth

It is not difficult to find that since 2023, Internet giants have been accelerating the pace of open cooperation.

Among them, Douyin and Tencent shook hands and made peace, and the "Tencent-Bytedance War" came to an end. Tencent opened the live broadcast copyrights of "Honor of Kings" and "League of Legends" to Douyin, and Douyin also welcomed more Tencent games. Zhang Daxian and a group of game live broadcast platform anchors flocked to Douyin, Douyin's game live broadcast personnel and live broadcast content were enriched, and the popularity of related Tencent games also ushered in a "small spring".

On the evening of January 21, when Zhang Daxian live-streamed "Honor of Kings", the number of likes exceeded 200 million times, and the cumulative number of viewers exceeded 54 million. Related topics quickly topped the Douyin hot list.

A Tencent game operator told the media, "Although Tencent's opening of game live broadcast rights can help Douyin enhance its competitive advantage in the field of game live broadcasting, attract more users and anchors to join the Douyin platform, and further expand its market share. But for "Honor of Kings", it can meet users' demand for diversified content, improve user experience, increase user stickiness, and provide more interactive opportunities for "Honor of Kings" players. This is a win-win situation."

The cooperation between the two also extends to the promotion of "Meta Dream Star". According to public data, Tencent's heavyweight party game "Meta Dream Star" concentrated 38% of its advertising on ByteDance's advertising platform "Chuanshanjia" from November to December, while Tencent's own advertising platform "Youlianghui" only placed 12% of its advertising.

In addition, content platforms and e-commerce platforms are also accelerating the "removal of walls". Alibaba's new retail platform Hema Fresh has settled in JD.com, and Hema has opened a store on an e-commerce platform outside the Alibaba Group for the first time; Shentong and Jitu Logistics have connected to the JD platform, and no longer require merchants to use JD Logistics; Xiaohongshu launched the data alliance "Planting Grass with Counts" at the 2024WILL Business Conference, opening up the planting grass and conversion data to JD.com, Vipshop, Douyin, Qunar, Meituan and other platforms and multiple brands...

Zhang Yong, former chairman of Alibaba, once said, "The social value generated by the large cycle between platforms must be far greater than the small cycle within a single platform. If the platforms can be interconnected, it will definitely bring new reform dividends." As user choices become more abundant and traffic becomes more expensive, how to improve the accuracy of advertising, shorten the user decision-making and payment links, and improve user experience will become the key to leveraging user demand. Removing barriers and communicating and interconnecting is the fastest way to achieve a win-win situation. The new era of "co-opetition" has arrived, which will inevitably place higher demands on the giants.

References:

1. Witness history! You can now use WeChat Pay to shop on Taobao. Alibaba and Tencent are “tearing down the wall” again | Radar Finance
2. King of Glory begins broadcasting on Douyin, and the “Tencent-Bytedance War” accelerates the ice-breaking | Tech Planet
3. 40% of the advertising for Tencent's new game went to ByteDance | LatePost
4. Taobao is becoming more content-oriented, and the thinking has changed | Xinmei daybreak

Author: Laisheng WeChat public account: TopKlout