WhatsApp making progress on WeChat emulation ambitions

Facebook has been promising some sort of payments solution for WhatsApp, and it seems to be making a bit of progress in Indonesia.

According to reports from Reuters, Facebook is in discussions with several potential partners to offer a mobile payment feature in the app in Indonesia. Although this is not Facebook’s first venture into mobile money, there is a stuttering initiative in India, the Indonesian experiment will focus on creating a digital wallet to tap into one of the worlds’ fastest growing eCommerce markets.

Earlier this year, Facebook CEO Mark Zuckerberg suggested to investors a wander towards mobile money was an ambition of the business, though this should actually surprise few. When you consider the success of Tencent-owned WeChat in diversifying the offering of the messaging app, Facebook is playing catch-up.

For those who haven’t used WeChat, what you can actually do is quite remarkable. The app was solely focused on messaging to start with, but now you can send images, make phone calls, peer-to-peer payments are included, as are in-store purchase via NFC and paying utility bills. Soon enough, cards could become redundant, such is the growing usage of mobile payments through digital wallets and WeChat.

If Facebook could capture a slice of this success, WhatsApp might start to begin paying off the $19 billion Facebook had to fork out during the acquisition.

The original purchase of WhatsApp was seemingly a means to capture a messaging application which was taking the world by storm. However, the data which WhatsApp would have offered the Facebook advertising machine would have been very beneficial. The team has found integrating the two platforms very difficult to date, though mobile money is certainly a way of creating additional revenues.

In Indonesia, the Facebook team is in discussions with several partners to tap into the eCommerce platform, though in India it is focusing on peer-to-peer payments in-app. There are several reasons for the differing approach, regulatory barriers being one, though experimenting with two ideas could offer two new features for a global rollout.

Interestingly enough, something which might get the White House twitchy is the alleged conversation with one of the potential partners; mobile payments firm DANA, which is backed by Ant Financial, an affiliate company of the Chinese Alibaba Group. Considering the current relationship between Washington and Beijing, these must be interesting conversations.

Globally, this is a very good move from Facebook. According to data from Sensor Tower, WhatsApp was the most downloaded application during the first quarter, with 223 million new installs, taking the total north of an estimated 1.5 billion users worldwide. This is a massive addressable audience, representing huge potential if the team can get all the moving parts to align.

Xiaomi taking big steps on the global stage

After taking the lead in the Indian market, Xiaomi has continued the solid progress by snapping up second spot Indonesia, another one of the world’s most lucrative markets.

According to estimates from Counterpoint Research, Xiaomi has collected second place in the market share rankings for second quarter shipments (22%), only trailing behind worldwide leader Samsung (25%). Indonesian smartphone shipments grew 25% annually and 5% sequentially during Q2 2018, partly due to seasonal demands, but also down to the consumer becoming more entwined within the digital economy.

“The overall tech ecosystem in Indonesia is more robust as compared to a year ago,” said Tarun Pathak of Counterpoint Research. “With smartphone users all set to cross the 100 million mark this year, it presents an opportunity for the players in the mobile ecosystem to tap the growing demand of digital consumption. Users have now started migrating from entry level smartphones to mid-tier smartphones which has increased the replacement rate over the past few quarters.”

Xiaomi might have had a bit of a wobble during the end of 2016 and the beginning of 2017, but that looks to be nothing but a distant footnote now. Aside from leading the Indian market for the last two quarters for shipments market share, progress in the Indonesian market provides an excellent foothold in a digital economy which will only go upwards. While other brands are scrapping to capture the minimal profits in the developed markets, the Xiaomi strategy seems to be focus on the areas where smartphone penetration is low. The massive profits might be years down the line, but patient brand-building is a proven strategy.

Offering users entry-level smartphones begins the relationship, and with a broad portfolio of mid-range devices, Xiaomi can take users on a journey to the much hyped digital society. With smartphone penetration increasing, data tariffs becoming cheaper and digital services becoming more prevalent, it won’t be too long before lives are dominated by the small screen. Creating the relationship with the consumer now will serve Xiaomi very well in the long-run.

The success of Xiaomi has been partly put down to the success of the Redmi series through both offline and online channels, allowing it to lead the sub-$150 device segment. This segment still accounts for more than 50% of the overall market, while the $100-$150 sub-segment was the fastest growing price band across the quarter. The price is starting to creep up, which will start to make Indonesia attractive to other brands who operate at the premium end.

Looking at the premium end of the market, Apple currently has less than 1% of the market, though owing to a globally renowned brand increasing this share once the consumer is ready to spend bigger won’t be much of a challenge; there don’t seem to be many markets Apple can’t dominate. Xiaomi is attempting to create a position for itself at the top-end of the scale with the launch of Poco, but it will have considerable work to do to make sure it can compete with the likes of Apple and Samsung at the branding game.

Building the foundations in the developing markets before scaling the customer up through the low- and into the mid-end device portfolio is a sensible way to do business. Xiaomi is making powerful steps on the global stage through gradual relationship building.