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Payment and Beyond: Evolution of Mobile Payment Tools in China in the Age of New Retail

  • Categories:Press release
  • Author: KT Wu
  • Origin: Hanshow Retail Academy
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(Summary description)

Payment and Beyond: Evolution of Mobile Payment Tools in China in the Age of New Retail

(Summary description)


In China, mobile payment is playing a crucial role in the age of new retail – and not just in payment area. Currently, China's mobile pay is dominated by Alipay and WeChat Pay. Before the year 2018, the two giants merely competed each other on the paying per se. But now Alipay and WeChat Pay have both expanded their services to support not just ecommerce but also physical stores. Besides smart payment services, they also offer services to smartly achieve tasks such as recommending products, promoting social sharing, distributing incentives, and managing memberships, etc. 


Smart Recommendation System


The smart recommendation system is based on the payment tools’ ability on big data, which could be utilized to create customized marketing strategies according to retailers' needs. Retailers offer data of their products and customers, which will be combined with Alibaba or Tencent’s user data base. The combined data include shoppers' age, gender, purchasing preferences, education backgrounds and locations, etc. Those are constantly being analyzed to generate predictions on user’s interested products. Then on places such as WeChat Moments (a function of WeChat that resembles Instagram) there will be these products’ promotions, leading users to their seller's platforms.


Picture 1: Alipay’s Recommendation System



Users are tagged based on four categories: basic features (such as age, gender), geographical location, purchasing amount and purchasing preferences (based on categories).


Example: How Sam’s Club uses WeChat Pay to target potential customers.


Picture 2: Sam’s Club’s Promotion on WeChat Moments



The promotion especially targets WeChat users who are located near Sam’s cloud warehouses (for stock/ delivery only) or have searched for highly-related keywords. Furthermore, in order to attract new customers, WeChat also filters out users who follow Sam’s WeChat official account, or have already received Sam’s shopping rewards. 


Example: How YSL uses WeChat to increase their conversion rate during Chinese Valentine's Day (Aug, 25)


Picture 3: YSL’s Promotion on WeChat Moments



The promotion on the left targets female users, which shows top selling lipsticks’ try-on photos, and encourages sharing with friends. The promotion on the right, on the other hand, targets male users. It shows the products in gift boxes, and reminds users to prepare presents for the occasion. 


Promoting Social Sharing


Payment tools often encourage users to share with their friends. Users could invite friends online to receive rewards or join a group-buy with them. Or they could send them virtual gift cards. WeChat Pay is well-positioned in this area due to its dominance as the largest messaging App in China.


Example: Rewards Sharing


Picture 4: WeChat Pay encourages users to invite their friends to get rewards together.



First, complete payment in an offline store. Second, receive a reward. Third, share the reward with friends. Fourth, use the reward to pay on the next purchase.

Example: Group-buy Sharing

Picture 5: Screenshots from Pintuan Xiaozhan WeChat mini program

Source: WeChat


The mini program features various group-buy groups (left picture). For each formed ‘group’, there is a button to share the link directing to this page (middle picture). Users can share it to a WeChat group or on their WeChat Moments (right picture).


Example: Social Gifting


Picture 6: Screenshots from ‘Say It with Starbucks’ Alipay mini program

Source: Alipay


The mini program allows users to send virtual gift cards to friends. First, choose a card and a product (left picture). Then select a friend, write a message, specify the sending time, and pay (right picture).


Smart Distribution of Coupons

Payment tools have different ways to give out the rewards from retailers. They could be given after customers have paid in stores, or just sent out online to attract customers to come to stores to use them.


Example: How Uniqlo uses Alipay to enhance customer loyalty


Picture 7: User uses Alipay to pay in Uniqlo store and receives a 20 RMB reward from Uniqlo



The reward can only be used on the next purchase. In this way, Alipay combines rewards with second purchases, thus encourages customers to shop again.


Example: How Carrefour uses WeChat Pay to attract customers to stores



Picture 8: User pays using WeChat and then receives rewards from a nearby Carrefour store



Offering rewards based on locations could attract customers to stores, just like handing out leaflets. But it is more efficient and cost effective. 


Example: How WeChat Pay helps retailers attract customers to stores on August, 8 Shopping Festival


Picture 9: WeChat gives incentives from ‘Sungiven Foods’ stores.



On Aug 1st – 8th, 2020, WeChat Pay cooperated with multiple retailers to send out incentives. Users can search certain keywords in WeChat to obtain these incentives. In this way, many users will be directed to the retail stores. 


In fact, Alipay and WeChat Pay users often receive rewards while they are browsing the payment App. Some of these rewards are even given based on the platforms’ big data algorithm. The rewards all serve to direct customers from online to offline.


Membership Management


Membership and loyalty are crucial to all retailers’ business. Now with payment tools’ support on membership management, retailers not only can increase their number of members, but also better maintain their existing members. 


Example: Just pay, and become a member



Picture 10: Customer pays in a 7-Eleven store, and then receives invitation to become a 7-11 member



Customer completes payment in a 7-Eleven store (First Picture), and is invited to fill in information to become a member (second picture). The filling process may seem a bit complex, but it is only required on the first time. Later when the user joins membership of any other brand, the platform will automatically fill in the information for them. The membership card will be saved in the virtual wallet of the platform (third picture). When the customer purchases again in 7-Eleven, the platform will automatically help them gain more points (fourth picture). The platform also shows users the change of their membership points, and send them members-only coupons. 


The strategy is very successful in helping converting customers to members. According to the data disclosed by WeChat Pay, in the Meiyijia convenience stores of Guangdong province, this strategy brought 100,000 new members in one day. 


Example: How Semir uses Alipay to achieve personalized marketing among its members


Alipay combines Semir’s millions of customer data with their member data, and classifies the members to different levels based on their shopping time and shopping frequencies, etc. Members from each level are given different rewards to better encourage spending and prevent possible member loss. After launching Alipay’s online membership system, Semir managed to gain 300,000 new members in two months. Their monthly sales contributed by members also account for more than 30% from the total sales.


In general, Retailers can now seamlessly bridge the gap between online and offline efforts and communicate more effectively with their customers For consumers, they can enjoy smooth/efficient shopping experience, while better informed on promotions retailers/brands have to offer.


It’s worth pointing out that, WeChat and Alipay typically do not work directly with the retailers. Many technology providers, such as Miyatech and Docom, serve as a bridge between them. These providers rely on the payment tools’ omni channel access and data capability, to support retailers in better serving the shoppers. 





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