Messaging App WeChat Launches 'Minishop' To Compete With Alibaba, JD In China's e-Commerce Sector

Business owners and merchants on Tencent Holding Ltd's (OTC: TCEHY) messaging application WeChat will be able to build virtual stores using a new tool called "WeChat Minishop" on a trial basis.

What Happened

Minishop incorporates order management services, transaction, logistics, and after-sales support. The stores will support live-streaming, which is popular with Chinese consumers.

Tencent's new tool will allow vendors to create so-called e-commerce mini-programs, instead of having to turn to external developers.

Jacob Cooke, CEO of WPIC, an e-commerce and marketing company, told CNBC that the Chinese technology giant would be able to harness the treasure trove of consumer data it holds and be able to "recommend e-commerce products similar to what they see in offline purchases that consumers make via WeChat Pay."

The messaging platform's users are already exposed to e-commerce while using the app, as they can purchase flight tickets and make payments within the platform.

Why It Matters

WeChat is China's most popular messaging platform and has over a billion users. Incorporating e-commerce with the app is likely to present a challenge to Alibaba Group Holding Limited (NYSE: BABA) and JD.com, Inc (NASDAQ: JD), which currently dominate the sector in the country.

Tencent doesn't plan on charging payments to create a store, in order to incentivize the move of retail partners away from rivals such as Alibaba and JD.com, CNBC noted.

Price Action

On Wednesday, Tencent OTC shares closed 3.36% higher at $69.81.