Messaging Apps and Platforms of Convenience

on June 15, 2015

The potential for messaging apps to evolve from an app delivering messages between friends and family into a platform to deliver goods and services to consumers is talked about widely in many circles here in Silicon Valley. Anyone who has studied WeChat’s evolution from simple messaging app to powerful platform understands the massive potential but also the challenge to duplicate WeChat’s model in places other than China. Messaging apps or other social platforms, where consumers spend most of their time on mobile devices, make for extremely valuable and convenient places to bring capabilities beyond just sending messages.

When you look at WeChat, there is no question there is nothing like it in any market outside China. From WeChat, consumers can do more than just talk to friends and family. They can order taxis, food from local restaurants, do banking, pay bills, shop from vendors who have services accounts, and a host of other things. WeChat has built in the capabilities for business to build a storefront right into WeChat. There are even startups growing in China who only exist and are built entirely on WeChat. It is not that far of a stretch to suggest that WeChat is the mobile internet in China. This is why it is not surprising that WeChat’s average revenue per user is $7. Generally speaking, the ARPU of internet services in China is quite low. WeChat’s amazingly high revenue per user shows us just how valuable a messaging app platform can be. If a messaging app in China can have such a high revenue per user then imagine how valuable something like this can be if it comes to the US.

There are several examples I’ve come across recently which highlight a few reasons why I believe the US market is ripe for a messaging app platform to break out. The first example comes from MGM. When you stay in the MGM Luxury Suites, you are issued a phone number to text to which you treat as your own personal concierge. You can text this number anything you need and it will be taken care of. You can order room service, say you need a shirt dry cleaned, shoes polished, make reservations at a restaurant, get tickets to a show — whatever you need and it gets done for you. All without having to pick up the phone and talk to another person. I have heard from several folks who have used this and they raved about how convenient the whole experience was.

Another example comes from Home Depot. Home Depot’s mobile app lets you type or even speak into the search bar what you are looking for. It can then help you locate the product in the store or add it to your shopping list. Once a shopping list is made, the app will use the item locator and help you find what you are looking for. You can even order products ahead of time for store pickup or even while in the store and they will be waiting for you at customer service. I was talking to the CMO of Home Depot at a conference I spoke at a few weeks back and she made the point while discussing this app that 10% of Home Depot’s online commerce happens from the app and from within the store. For Pro account holders, there is also a chat service built in which offers assistance as needed.

These are two examples which highlight the extreme degree of convenience a business or service can provide that allows us to use a tool we are comfortable with, like the smartphone, and eliminates the need to verbally speak with a human. It is this last part I feel may offer the greatest value from these services.

How often can we recall horrible experiences we have had as consumers because we had to speak to another person on the phone? How many times have we ordered a pizza or take out just to encounter another person who is having a bad day or generally rude and it rubs us the wrong way? Think about this experience for people who are introverted or feel talking with someone they don’t know to be awkward or daunting? Human interactions can be awkward for many people. Eliminating them when they are not necessary would be delightful. And most human interactions with businesses are not necessary and can be automated or accomplished through a chat app or service.

The convenience of using a messaging platform for a wide variety of services is simply too high for it not to make its way to the US market. How is a different question. Arguably, Facebook Messenger is best positioned to be leveraged by businesses and service companies to interact with customers. iMessage is also well positioned, but it seems unlikely Apple will open it up for companies to build onto. Apple Pay and Android Pay can offer integrated payment solutions similar to WeChat’s Tenpay. Mobile payments are a key part of WeChat’s success and the same will be true for any messaging platform in the US.

What works with WeChat as a platform, not just for messaging friends and family but as a communications and commerce platforms for businesses to interact with customers, may not be replicated in the US the same way. But there is no question in my mind what WeChat delivers in concept will make its way to the West in some way, shape or form. Companies like Magic and Operator have aspirations in this area but neither have launched yet in any scalable form. It’s hard to know if they will succeed or not. This will be a hot space to watch as it may be a gold mine for whoever can pull it off.