Retailers   //   November 13, 2019

WhatsApp is trying to make inroads into in-app commerce

WhatsApp is making commerce moves.

Last week, the Facebook-owned messaging app announced a new feature allowing “small businesses” to upload catalogs to the app. These would essentially be mobile storefronts for the companies to showcase products and prices, although Reuters noted that transactions couldn’t be facilitated through the program just yet.

That, however, is likely to change thanks to another update this week: Facebook Pay. This is exactly what it sounds like — a Facebook-built service to facilitate transactions on its properties. (Facebook noted that Pay is not affiliated with the Libra blockchain project.) Facebook said this new program will begin on Facebook and Messenger and soon be extended to other programs liked WhatsApp and Instagram.

Put together, Facebook is making clear inroads to both try and make brands feel comfortable selling products on the WhatsApp platform — as well as an easier way for consumers to shop. The company seems to be taking cues from the likes of WeChat and Line, which have built huge user-ships overseas where people not only chat but buy things.

For WhatsApp — which boasts over 1.5 billion monthly users — this is clearly the strategy to monetize its user base. This catalog feature is a way for small businesses to better target users. In countries like India, which has 400 million WhatsApp users — and is WhatsApp’s biggest market — this is a clear path to monetization. Given the app’s ubiquity, brands have already been experimenting with ways to advertise on the platform. Now, Facebook is trying to facilitate more brand interactions within its own app’s walls.

There are big hurdles in the way for Facebook to really succeed at this move toward commerce. For one, it will have to shift WhatsApp’s perception as an app that’s more than just one-to-one messaging. According to Zak Normandin, founder of the conversational commerce platform Iris Nova, this is clearly a way for Facebook to keep WhatsApp users engaged on the platform. “It plays into a much larger shift we’re seeing,” said Normandin. “Organizations are starting to see the power connection and commerce — especially as it relates to transactions.”

This move, said Gartner senior director analyst Charles Golvin, is an attempt to replicate leaders in China, like WeChat. “That’s fundamentally what Facebook’s ambition is here,” he said. This, however, leads to the second hurdle for Facebook to overcome: trust. Many consumers — especially in the U.S. and Europe — are loath to share their personal data with the social network. Numbers published earlier this year from Pew show that over half of adult Facebook users are uncomfortable with the company storing advertising data related to their preferences. Focusing on WhatsApp may be a helpful way to avoid this problem. Recent Pew data said that only 29% of Americans knew that the app was owned by Facebook.

Still, getting users to sign up for Facebook Pay will likely be difficult. “I think consumers are concerned about Facebook’s treating of their private data,” said Golvin. As a result, whether they would feel comfortable turning over their private financial data to more easily facilitate transactions “is a big question mark.”

Overall, in territories like the U.S., conversational commerce will require a huge behavioral shift. “Whether consumers are ready, willing and able to transact and engage in commerce on these apps is very much an uncertainty,” said Golvin.

According to Normandin, brands using direct messaging platforms is clearly the next frontier, but there are some risks. “My concern is with the exploitation of messaging,” he said. “Brands will start to treat it like an email, and it [could] lose its trust factor.”

While that may be true, the fact that Facebook continues to make inroads into the commerce messaging space hints at the future to come. “The potential is incredible,” said Normandin.