(Chinese Version)

Yesterday, after TMTPOST published an article investigating why WeChat Business has been labeled a ´pyramid scheme´, we attracted the attention of many practitioners. Within the span of a day, more than one hundred people had joined in my WeChat friends circle to talk about what the future holds for WeChat Business. To be honest, I wasn´t exactly sure how to respond, as there is no way to dampen the spirits of those who have been thoroughly persuaded by WeChat Business “entrepreneurs“. But why is WeChat Business—a huge business trend—so completely immune to all questions of morality? Other than the “brainwashing” propaganda found in marketing models and their representatives in the business world, what are the deeper reasons for this? This is a brand new form of business; why do we speak as though we can have no control over the outcomes? Why must we speak about WeChat Business as if it must fend for itself, with its forward direction heading who knows where, leading us toward either higher evolution or extreme alienation?

If we want to understand this issue, we have to first make clear certain things, such as, how has WeChat Business come about? What is its current situation? And what does the future hold?

Last year, I wrote an article for TMT, entitled “WeChat Business madness becoming more dire: what is next for social e-commerce?” In this article, I defined WeChat Business quite clearly as a form of business developing on social software platforms. It is essentially a form of social e-commerce, and its advantages include:

1. Social platforms have the time and user traffic needed to reach a large number of customer groups, and their fragmented time provides a basis for consumer behavior;

2. There is trust and sensitivity among consumers, as the social platforms are based on familiarity, which can break through the “trust” threshold in consumer behavior and stimulate consumers’ emotions;

3. Social platforms are a scene, an entire sphere of life with high consumer stickiness. There is mutual sharing among users, and a popular consumer scene can produce even more consumer stickiness through high volume and continued influence.

Simply speaking, social e-commerce has resolved the main problems of traditional e-commerce, which are lack of traffic, lack of competitiveness, and lack of continued viability. It can bypass the traditional goals of e-commerce—economies of scale, increased standardization and competition—and resolve the “law of the jungle” atmosphere one often encountered in traditional e-commerce, such as price wars, fake products, lack of integrity, and a survival-of-the-fittest attitude.

WeChat Business is able to grow within the auspices of social platforms precisely because the completely new ecosystem of community-based e-commerce can resolve many of the problems that have affected e-commerce. It represents a step forward for a form of business, a trend.

Therefore, the earliest WeChat Business networks consisted of e-commerce that developed within like-minded online communities. For example, a painter spends a lot of his free time painting works of art. By showcasing them through his friends’ circle, he attracts the attention of some of his WeChat friends, who just have to buy one of his paintings. An IT professional goes home to the countryside and discovers her hometown’s home-cooked walnuts. When she shares them with her friends’ circle, many of her friends want to buy some. Or a beautiful woman might be sharing her best beauty tips within her friends’ circle, and many of her friends might want to learn more about her facial masks and makeup. The list of examples can go on and on. The earliest forms of WeChat Business must have been like this, based on reaching people who had the production capacity or cognitive ability needed to supply rare products, and who could rely on their own personal charm to build trust and an emotional foundation with consumers. This facilitated commercial trading behavior within stable, pre-existing social circles.

This kind of WeChat Business ecosystem is healthy, ordered, and can function well in the long-term. It also serves as a perfect prelude and paints a bright future for the future popularization of community-based e-commerce.

However, this pretty state of affairs hasn’t lasted long before a group of barbarians have entered the picture with their greedy business sense.

1. This business sense does not serve existing relationships on social platforms. A seller can increase his potential sales influence by adding many more friends, but he will have difficulty finding success outside of the groups of friends with whom he is already familiar, and such behavior will naturally dilute the trust and sympathy among acquaintances on social platforms.

2. This business sense does not serve small-scale buying and selling. Once again, people want to sell their products on an even large scale and at even larger profits. With this attitude, WeChat Business will start following the traditional prescriptions for e-commerce growth: larger scale, product standardization and competitiveness, getting further and further away from the personalization and service-oriented attitude found in community-based e-commerce.

3. This business sense does not serve the small-scale and slow-building business models that rely on consumer interest being generated by word of mouth and shared life experiences. Instead, in the zeal to make quick money, one begins to adopt methods such as pyramid schemes, warehouse transfers, offline overstock, completely without concern as to whether the product actually makes it into the hands of the customer. This transforms the relationship between producer and consumer into one between merchant and merchant. It is completely removed from the ideals of community-based e-commerce and has effectively become a diseased form of business.

Therefore, the current state of affairs for WeChat Business is already quite far removed from community-based e-commerce. Some of the worst aspects of traditional e-commerce—such as fake products, vicious competition, and lack of integrity—are growing and taking root in community-based e-commerce, and will eventually completely negate all of the promise community e-commerce once had. From this perspective, the WeChat Business we see today has simply followed down the old path laid out by traditional e-commerce, simply using social platforms as a new channel and becoming further removed from the future promise of community e-commerce. There is an appeal found online not to let WeChat Business “be wiped out in the bud” This refers to those sellers on WeChat Business who appear to be there solely to fulfill their dreams of striking it rich, without taking into account the inherent characteristics of an online ecosystem such as WeChat Business. Those who seek thusly to satisfy only their own interests will, sooner or later, set WeChat Business on a path of no return.

What will be the future of WeChat Business?

There is strength in being small

Community ecosystems are people-centered, and their location can have a tremendous impact. We say that there is strength in small-scale for WeChat Business for the following reasons:

1. It is centered on entrepreneurism for the “little people.” These little people are not college students looking to make some money, but rather people who fully understand the nature of WeChat Business, who have some sort of professional capacities and charm. One example is KOL. In every profession there is a group of people who have certain professional capacities and specialized knowledge and who are able to influence the spending decisions of their fans. Those people who think that WeChat Business is just another means for the low-educated few to make a fortune  really need to just think again.

2. “Scarce products” are at the core of WeChat Business. We need to understand that not every type of product is suitable for WeChat Business; the ones that are most suitable are premium products that are closely aligned with relationships between people and that have added value. One example is facial masks. If someone posts about a certain facial mask on his or her friends list, this can directly stimulate others to consume the product. The person who made the post added value to the product, so much so that the consumers will almost ignore how much the facial mask costs in the end, and the product can be sold at a relatively high premium to the consumer. So, just to correct a common misconception, the strength in WeChat Business products lies not in high pricing and high profits, but rather in the fact that the human relationships underlying the buying and selling are strong, producing added-value, high premiums, and continued trust.

3. The experience is the key element. WeChat Business is not selling products; it is selling a service experience. If I purchase your facial mask from within my friends’ circle, what I have actually purchased is my trust in you and your consumption habits. This means that the purchase itself is just the beginning. The subsequent observation, interaction, and feedback are all necessary components of the WeChat Business experience. When we say that WeChat Business has strength in its smallness, it is because we recognize that WeChat Business is an experience that is personalized and service-oriented. It has certain boundaries and certain systems, and it cannot grow too large. The community ecosystem is a made up of many decentralized interests coming together. It is small but beautiful; small but organized; small but self-sustaining.

While large shops will end up in failure

Because character can generate feeling, and because feeling can generate support, the community-based e-commerce ecosystem is actually a small, closed circle of relationships. If you start to get greedy, you can fall prey to the two misconceptions I outline below, which present a real danger.

1. WeChat Business is not a public venture. Because it is based on social networks, everyone is able to access WeChat Business, and it almost seems as though WeChat Business is a new trend in entrepreneurship for the masses. This is a mistake. It’s true that WeChat Business fosters innovation at low-cost, but it is definitely not suitable for everyone. Many people at the lower levels of society are using WeChat Business rather blindly, and it is easy to become brainwashed and led astray. 

2. WeChat Business is not doing business. Many people think that WeChat Business is a way for them to do business, but this is not the case. Following traditional business practices mean seeking high volume, high profits, and low cost, whereas WeChat Business is actually working with relationships. It seeks to facilitate stable, healthy, and enduring relationships. This means that one cannot use WeChat Business seeking big and easy money. It is a new form of stability, an enduring form of doing business. If you want to make a lot of money and think that WeChat Business is the way to do it, and you start using warehouses and overstock, you are going to go astray.

So do you now have enough information to know whether you are suitable for WeChat Business? Do you understand how to do WeChat Business, and where WeChat Business is going to go in the future? Small is strong and big is dead. I have corrected some of your misconceptions about WeChat Business, and in doing so I have hopefully helped to foster a bright future for community-based e-commerce. 

Of course, there are also people who believe that the WeChat Business experience within the multi-level marketing vortex is undergoing a reshuffling. It is becoming more professional, more secure, and WeChat Business predators will dominate the market. The small WeChat Business users will be marginalized and die off, and we will see the survival of the fittest. If this is truly the case, then it is really a shame. If that is the case, then the community-based e-commerce trends, as represented by WeChat Business, have been completely misinterpreted. The future of WeChat Business lies in a community ecosystem fostered through person-to-person relationships. Let us refrain from using business logic to understand this matter.

(The article is published and edited with authorization from the author @Kaiyan Erlang, please note source and hyperlink when reproduce.)

Translated by Jennifer Smith (Senior Translator at ECHO), working for TMTpost.