With a reported 15.3% market share, Weimob is the largest provider of WeChat solutions for small and medium companies in China.
The Tencent-backed company filed for its Hong Kong IPO on the 31st of December 2018. The data disclosed provides an interesting outlook into the world of WeChat 3rd party solution providers.
Weimob performance
Weimob has shown very positive performance over the last few years, with a healthy growth of paying customers. This growth, however, happened amid a very high churn rate (percentage of existing customers which canceled their subscriptions).
Churn rate was almost 60% in 2015 for Weimob. This means that if Weimob had 100 customers in 2014, they needed to acquire 60 more customers in 2015 just to maintain their numbers.
Despite this trend, Weimob managed to maintain healthy revenue growth.
But this growth happened at the expense of profitability. Due to the very high attrition rate, Weimob had to heavily invest in customer acquisition in order to keep its customer base expanding.
Churn rate significantly lowered in 2017 down to 27.2%. In the meantime, the average revenue per customer of Weimob also increased, while new customers number remained strong.
These combined trends enabled Weimob to finally turn profitable in 2017.
Weimob services
Weimob industry solutions
Weimob stands out by providing a lot of specific industry templates for small businesses to leverage WeChat.
This includes of course e-commerce, but also hotels, food & beverages, and a lot of solutions for offline businesses wanting to leverage WeChat for services or membership.
This has also been a drawback for Weimob: given the wide number of templates and features it has to support, the platform has long been considered buggy and inconsistent.
Other platforms such as Youzan focused on a smaller number of features (Youzan is specialized in WeChat e-commerce for the most part) which enabled more focus and higher quality of service.
Weimob advertising solutions
On top of its Software as a Service solution, Weimob also branched out into a new industry: advertising.
The company started offering advertising solutions to help its merchants drive traffic. The offering of ads from Weimob spans over platforms, including the entire Tencent ecosystem, Baidu and Q&A platform Zhihu.
Although Weimob doesn’t disclose exact revenue from advertising, they’ve been growing exponentially: Weimob’s revenue from targeted marketing grew by 1,910.4% in 2017.
Repurchase rate from advertisers also improved, from 34.9% in 2016 to 50.6% in 2017 (more than half of advertisers remained Weimob’s clients).
These trends led Software as a Services (SaaS) revenues of Weimob to go from 100% of revenues in 2015 to less than 50% in 2017.
General context
This growth of Weimob happens in the context of a booming market: social e-commerce is expected to grow from 2% to 15% of total e-commerce from 2013 to 2022.
This growth of social e-commerce led the boom of 3rd-party providers offering solutions for companies wanting to leverage WeChat as a marketing channel.
Social commerce is also focused on smaller transactions and a large variety of industries. This fragmented nature fits well with Weimob strategy of providing a lot of customized templates for small and medium Chinese businesses.
As a result, Weimob managed to get a significant market share of the 3rd party WeChat providers market (according to the company’s own IPO filings, so this market share data should be taken with a grain of salt)
Conclusion
Launched just in 2013, Weimob managed to establish itself as a leading provider of 3rd party WeChat solutions for small businesses.
While it covers a wide range of industry, the company has managed to successfully reduce churn among its clients and built a more profitable business through its SaaS and advertising investments.
There are still questions as to Weimob’s ability to maintain its market share. But it is clear that Weimob pulled the impressive achievement of establishing itself as a clear leader in an extremely competitive and fragmented market.