Time for Facebook to Switch ON the WeChat-ification of WhatsApp?
Chat apps have become more than just a medium of communication. This is probably best demonstarted by WeChat whose massive user base in China, uses the app for more than just messaging. WeChat is being used for booking movie tickets, transferring money, hailing rides, playing games and a host of other activities as well.
WeChat has provided tools (mostly APIs) to other companies to set up their own accounts in the chat app. These accounts can then be used for promoting products/services, interacting with customers etc. The end result has been that WeChat is now an integral part of consumers’ mobile lifestyle in China and a big contributor to its parent company Tencent’s profits.
Looking at WeChat’s amazing growth and financial performance, Facebook planned to do something similar for Messenger. At its F8 developer conference, Facebook unveiled Messenger Platform. Messenger Platform will allow its 600 million users to create and share content with third-party tools, and communicate directly with businesses. Although a good move, we feel these moves should be targeted at Whatsapp as well.
Whatsapp, which is the biggest chat app on earth in terms of subscriber base was bought by Facebook for a whopping $19 billion. As of September 2015, Whatsapp was on track to have around 900 million users and I’m pretty confident that by now or by sometime next year Whatsapp would have a billion users. Whatsapp should be the one that Facebook should try to make ‘WeChat like’ instead of just Messenger.
1. Engagement levels
As of June 2015, Messenger had around 700 million users and as of September 2015, Whatsapp had around 900 million users. However, raw numbers aren’t enough to build a WeChat like business. What WeChat primarily has is engagement, so people are locked inside the chat app. A lot of Messenger’s dominance lies in the west as seen in the image below.
Photo credit: adweek
As of now, for both Messenger and Whatsapp, their core utility and in most cases sole utility is just texting. So the engagement with each app depends upon how much it is used for texting. Problem with western markets is that a lot of texting happens through iMessage and SMS. iMessage is popular because of Apple’s dominance there. SMS is still popular in the west since in most countries, SMS is generally free on an unlimited basis along with a data pack. So for Messenger, when it comes to texting, it faces competition from both SMS and iMessage. Accordingly, Messenger’s engagement levels are competed by both iMessage and normal SMS.
Whatsapp on the other hand is very popular in emerging countries such as India, African countries and Latin American countries. In these emerging countries, a miniscule number of people own iPhones, so the competition from iMessage is negligible. Most people in these countries use Android whose built in messaging app i.e Hangouts has failed to gain any traction at all amongst users. Apart from that, since operators in both Africa and India don’t provide unlimited texting for free, the appeal of SMS amongst the citizens who use smartphones has constantly continued to dwindle. This has left Whatsapp a clear opportunity to become the most dominant/sole platform for texting. This in turn has led to one of the highest engagement levels for Whatsapp.
Whatsapp already has a significant amount of engagement, and engagement that’s not competed with unlike Messenger. We don’t know the current numbers, but back in January this year, WhatsApp was boasting about 30 billion messages being exchanged on its platform. I am not going to take into consideration Hike or any other app, because Whatsapp’s reach in countries like India is too strong for any upstart to compete with it. Now that Whatsapp already has the engagement required, it’s much easier to convince users to use Whatsapp for other services as well. Messenger on the other hand has its attention competed with other texting platforms as well.
2. Consumer Preferences
As mentioned before, Messenger’s dominance lies mostly in the west. In most western countries, the general consumer preference is to have one app for every function. Users generally don’t prefer several functions clubbed into one app. Messenger itself was spun off because Mark Zuckerberg believed a stand alone app would lead to a better experience, but now this standalone app i.e Messenger itself is trying to amass various functions by the virtue of becoming a platform. Apart from that, Facebook isn’t the first company trying to convert their chat app into a platform in US. Vurb had tried the same in US and had backing from Tencent as well, but its position in Apple’s App Store is #175.
FB Messenger is 1 more place I'll never order an Uber. You can already call Uber from Goog Maps, Foursquare, OpenTable etc but I never have
— Doug MacMillan (@dmac1) December 16, 2015
Whatsapp on the other hand is dominant in countries where smartphone penetration is still low but rising at a rapid rate. Although the power users are comfortable using one app for each function, there is still a set of people who know nothing about apps as such and these are the current feature phone users. If Facebook starts adding utility to Whatsapp at a rapid rate, these feature phone users who buy smartphones for the first time can very well become accustomed to using Whatsapp alone for their daily needs.
I have seen this work out in the real life. I have seen many people whose primary motivation to use the internet for the first time was Facebook alone and when they got on to Facebook, they discovered a world of its own. You can see videos, visit pages of businesses, make new friends, read articles, chat etc. I was an early adopter of internet so if I wanted to watch videos while on my computer, I would visit YouTube, for reading news I would BBC or NYTimes or so on. My mom on the other hand, made the effort to use internet only for Facebook, but soon after discovering all what Facebook has to offer, she considers Facebook the internet itself and in some ways that makes sense. She can watch videos, see what her relatives were doing, join cooking groups and all other stuff from just one destination.
The same can be applied for Whatsapp as well, there are users who have yet to make the jump to smartphones. If by the time these users make the jump to smartphones, and Whatsapp amasses a lot of things that various apps do, these first time users will make Whatsapp their de-facto app for almost anything and everything. Even today, the primary motive for a lot of people to buy a smartphone is so that they can be on Whatsapp and Facebook. What WeChat did in China isn’t a lot different.
3. User devices
As is the case in most Western markets, people have access to high speed data and their smartphones also have enough internal storage and processing power to make the experience of using every full fledged native app a pleasing experience. Whereas over here in India, Asia and in Africa, most smartphones sold come in the $100-$200 price range. This means that internal storage is a compromise in most smartphones. Most $100 and lower smartphones have 8GB of internal storage. I’m aware that Android 6.0 allows users to use SD cards as an internal storage but very few current $100 smartphones except for Android One and few exceptions will be updated to Android 6.0.
Even if we leave the internal storage debate apart, there’s the problem of internet. Most $100 smartphones users prefer using 2G data packs because of its low cost. Play Store itself doesn’t load properly on most 2G connections, it’s therefore no wonder that most apps simply don’t work properly on 2G connections. These apps if they end up being accessible by Whatsapp would be a huge benefit.
Messenger has done this with Uber, Whatsapp can do it with Ola/Uber. Most people simply can’t expect a decent experience on Ola or Uber if they’re using 2G internet. On the other hand, if Ola/Uber were contacts that could be saved on Whatsapp such that people could send their location and book a ride it would be a huge win. Not only would their experience using a 2G connection be better, but they would even save precious storage space. There are several other apps which can be integrated into Whatsapp and bring out a better experience. Take the ‘My Airtel’ app for example. The only reason I use the app is to know how much data balance I have remaining. If there was an Airtel contact on Whatsapp which could tell me the talktime balance, data balance and special offers I have, it would be a huge win. Several people book railway tickets, so imagine having a Railway/IRCTC contact on Whatsapp that lets you know the PNR status.
If Uber, Ola, Airtel, IRCTC and lots of other app developers had Whatsapp implementation, there would be much lesser apps and much more space saved for say yet another game or video.
As a bonus point for Whatsapp, accessing Whatsapp is also cheaper than accessing full fledged apps. As mentioned already, Whatsapp works well on 2G data connections which are already cheaper than say 3G/4G connections. But the benefit in case of Whatsapp is that several operators in India provide dedicated Whatsapp packs which are at least 3 to 5 times cheaper than full fledged 2G data packs making access to Whatsapp even cheaper. A similar initiative called Airtel Zero had been rolled out by India’s top telecom operator Airtel to make access to apps free of charge such that the company owning the app would pay the charge but has seen almost zero traction because of the Net Neutrality backlash from general public. Interestingly, since these dedicated Whatsapp packs were launched before all the Net Neutrality chaos started, they have still managed to survive.
Another interesting facet is that even the main Facebook app has dedicated data packs costing lower than a full fledged 2G data pack but since Messenger is now an app of its own, accessing Messenger requires access to a full fledged data pack which in turn makes access to Messenger more expensive.
4. Existing implementations
Even though Facebook hasn’t promoted or provided tools to businesses to help them make the most out of Whatsapp, some people have already started using Whatsapp.
BSNL for example has started allowing people in Indore to book complaints through Whatsapp. Similarly I find several Indian websites giving users the option to share an article on Whatsapp but very few or rather none do that for Messenger.
This article perhaps demonstrates the use cases of Whatsapp in the best manner. Some excerpts from the article:
“The messaging application WhatsApp is now a vital part of Sheersat’s work, boosting his income from around Rs 300 per day to Rs 1,000. He is able to support his wife and three children better.”
“Bangalore restaurant, Wok n Tava, was doing moderate business before its manager, Subhen, thought of starting a WhatsApp group of regular customers. He sent messages about discounts and offers on the group in the little English he could manage. Since then, Wok n Tava gets more enquiries and orders in a single day than their earlier weekly average.”
“It makes more sense to keep in touch with regular customers through WhatsApp than by posting updates on Facebook or Twitter or sending emails, which people get in bulk and don’t pay much attention to,” says Adrian Pereira, owner of garden restaurant Cocoparra.”
This shows that there is a genuine set of companies or people eager to use Whatsapp from a B2C perspective.
Whatsapp wasn’t a side project Facebook started which all of a sudden grew big nor was it got for free. Facebook paid a whopping $19 billion for Whatsapp. By comparison, Nokia’s phone division which has had such a long history, has thousands of people working for it was sold for less than half of Whatsapp’s price to Microsoft.
Now that Facebook or rather Jan Koum promised that Whatsapp will not have ads, making Whatsapp a platform would be the best way to monetize it. Tencent’s WeChat for example has an ARPU of $7 and the company has built most of it by being a platform. WeChat only dabbled in advertisments sometime earlier this year, a good amount of money has been made solely by being a platform which Whatsapp can be as well.
We are not expecting Whatsapp to be WeChat overnight, but there are things Whatsapp can add to become more useful to the end user. For example, providing tools that would allow Ola or Uber to get bookings directly from Whatsapp or helping operators serve information about balance to customers or helping IRCTC to show PNR status or startups such as Grofers being able to receive orders directly or E-Commerce companies delivering order updates through Whatsapp and so on.
The potential Whatsapp has (specially in India) is enormous and Facebook just needs to dedicate some of its engineering talent to make Whatsapp a central tool in our lives. Yes, there are other issues like Net Neutrality, monopoly and lack of competition to look at, but that’s for an other article altogether.