Messaging Apps and Platforms of Convenience

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.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

1,092 thoughts on “Messaging Apps and Platforms of Convenience”

  1. I’ve got big issues with your chat-integrated utopia:
    1- 99.99% of my interactions with RLHB (let’s acronym it or it’ll never be a thing: Real Live Human Beings) are pleasant, often instructive on top of pleasant. To rebound on your examples, if I’m in a DIY store, I’ll probably need advice. If I’m in a hotel, I’ll often ask were to go eat, which way I should start off on my idle stroll. When I don’t call in my bi-weekly sushi and actually walk there, I often get free stuff. My butcher taught me to cook meat, my grocer gave me stuff for christmas, seeing and smelling my patissier’s shop drives my purchases…
    2- All your examples are vertically integrated, ie the opposite of a chat-driven horizontal experience: chat functionality got added to a specific-purpose app, not the other way around. Integrated chat sets expectations correctly… my Sushi place couldn’t handle a tweeted order…
    3- Exposing actions through a generic chat app is complicated, expensive, and redundant. We got apps and multitasking so we can do stuff on Amazon without missing texts from friends, and, above all, so we can have the best tool for the job at all times, not some lowest common denominator catch-all trying to get me to tweet for Domino’s crap instead of calling in to order at my excellent mom-and-pop pizza place.

    I understand messaging apps are also trying to re-create impulse buying in the virtual world. Hopefully that won’t work too well, delayed gratifications is on of life’s key skills ^^

    Reply

    1. Wondering if there will be some kind of counter cultural backlash to all this, with business catering to those “in the know” and intentionally avoiding twitter, text apps, etc. While they may be totally appropriate for a Big Box store, or a hotel, your pizza shop example struck a nerve.

      What better advertising, anyway, than happy customers tweeting for themselves…

      Reply

    2. What I’m pointing out is at the first level of an interaction, a human voice conversation is rarely necessary. I don’t need to talk to a human to order a pizza, or ask if an item is in stock. Lots of examples here.

      Furthermore, I’d argue large numbers of people are simply more comfortable talking via message than a voice conversation. This is why the elimination of an awkward human interaction for someone who is not comfortable doing so, brings up the messaging opportunity. Like everything there is context to conversations. Messaging apps, or messaging within apps, can eliminate friction of talking via voice for many where it’s inefficient.

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    3. I agree with your points 2 and 3, but probably not with point 1. DIY store example is better done with human assistance for now, but may be finding a restaurant on Urbanspoon is not worse than asking a receptionists at the hotel and flagging a taxi driver on the street is not better than calling Uber. And there is Uber for everything now. Washio will do your laundry, Heal will call a doctor and Saucey will even deliver your booze…

      I think we are in the market for a personal assistant app that will aggregate all these apps and provide a convenient interface to the user.

      Reply

      1. For the restaurants around me, Yelp and such are very unreliable. I do live in an out-of-the-way untouristy part of town, so gaming the reviews is easy because there’s few of them; but on the other hand the incentives to do so are also rather weak. I’d assume the ratio of fake+untrue:real to bet the same everywhere.
        Last christmas I spent 3 unfun, frustrating hours on-line looking for books for my mother. Once I got to the shop with my iffy list, I asked for the salesguy’s validation, a passing customer jumped into the conversation, and I left with completely different stuff, in less time (trip included) and it was rather more fun.

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        1. I can see how reviewed or curated content on Internet may lack in comparison with establishing an emotional connection with human respondent. There is plenty of content though that is less sensitive to human perception. As an example, taking a bus to work does not require getting reviews on the route or a driver.

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          1. Very True. But if we’re still on IRL vs Apps vs Chat, I’d argue Chat isn’t a very good solution for that either. Right now if I want bus schedules I can
            1- send a code via text and and get when the next bus is coming (per bus). I assume that’s what Chat would do too (and can’t see why I’d want Chat for that when Text works)
            2- scan a QR code and get live data on the next buses at a stop (per stop)
            3- open the app and see the next buses from my favorite lines at the stop closest to me right on the landing page, or look up whatever else.

            Unsurprisingly, I mostly use the app, except at the rural stops where data doesn’t work. “Excuse me m’am, you’re waiting for the 81 ? I didn’t just miss it then ?” also works, mostly ^^

          2. In my view chat can only be used as a supplement to the app when the service algorithm is not well formed OR there are some Internet connection issues. For example for Uber service chat or a voice call is used if the pickup address you specify in the app confuses the driver and he needs clarification.

            I may stretching it a bit, but isn’t message browsing takes us back to the epoch of WAP browsers in 2000s, when there was really no good data connection or good HTML browsers? Nowadays, you can blast rich mobile content over 4G networks like never before. So pure apps with rich content should not pose a problem.

            And yes, for public transit I use Google maps.

    4. This is the argument of original sin, applied to technology. Whether sharpened tools, nuclear power or social apps, technology provides the means, and humans must decide how they are to be used.

      The view that technology is dangerous has always had value, but the positive impacts of technology have always outweighed the negatives vastly.

      People must be trusted to apply the values they see fit to their lives, with technology and information among the tools they use to choose those values.

      There is no utopia, but countless small ways that lives can be improved, and that is good enough.

      Reply

      1. I’m not saying it’s dangerous, and I’m not taking a moral standpoint except in the concluding sentence maybe, if you want to stretch it (I’d argue that’s not moral, that’s scientific, but the two sometimes do meet ^^)
        I’m saying
        1- chat is a very bare and unfun means of communication/shopping, especially compared to IRL
        2- horizontal general-purpose chat is probably not a good vector to get good service compared to vertical apps with integrated chat (which we can run alongside our general chat tools, not instead of, so the need for horizontals to do that is unclear to me)
        3- the expense and effort to get on What’sApp and such weeds out small retailers, which are usually the most interesting/distinctive ones.

        Reply

  2. Interesting that as strong a platform as WeChat is, Apple is still doing quite well in China. This seems to indicate that while a chat platform is central to Chinese users’ lives, the broader mobile platform still matters.

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    1. There is still a question to how much Chinese consumers are investing in the Apple ecosystem, meaning spending on apps, services, etc. It is happening but not nearly the way it does in other countries. China is unique in that the hardware/brand itself is very sticky in Apple’s favor. People often use this as a worrying point but I’m not worried about it at this time.

      WeChat can be used on iOS and is heavily WeChat and Apple can be successful at the same time, but right now its fascinating to see how much mobile time / commerce, etc., happens in WeChat in China. Beyond WeChat most of what Chinese consumers use are all home grown apps and services which are cross platform on iOS and AOSP Android.

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        1. Of course, but WeChat has little presence outside of China and where it does it is only a messaging app and not platform.

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    2. It’s interesting to observe how IT companies once upon a time were happy to sell us hardware. Then they moved into software. The into services. Now it seems they want a piece of everything we’re doing with our PCs and Phones.
      That might make sense at a macro level, because 1-5% of all my expenses is a lot more money than my whole IT budget. At a micro level though, they risk dropping the ball at the lower stages and finding themselves w/o a user base to milk (as well as pissing of the suppliers on the other side of the rent extraction).
      I’ve just spent the WE with regular people firmly on the non-techie side of life… It’s amazing how the simplest thing are being confused up by deficient interfaces (all icons should have a text substitute dammit !). I’m wondering if the vaunted next billion isn’t already using Mobile, at 1/10th of its capacity. Actually, I’m pretty sure of it.

      Reply

  3. “WeChat can be used on iOS and is heavily WeChat and Apple can be successful at the same time.”

    Please untangle that sentence.

    Reply

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