Tencent Takes on Alibaba by Adding Shops to WeChat Messaging App

May 30, 2014 6:21 am ET

May 30 (Bloomberg) -- Tencent Holdings Ltd. allowed users of its WeChat instant-messaging app to sell goods online, bringing Asia’s largest Internet company into closer competition with China’s e-commerce giant Alibaba Group Holding Ltd.

Tencent introduced an in-app function for holders of public accounts of Weixin, as WeChat is known in Chinese, to upload photos of merchandise, manage orders and communicate with customers, according to a posting on the Shenzhen, China-based company’s website. Shoppers at the so-called little WeChat stores can make purchases with Weixin Payment, Tencent’s third- party payment system.

WeChat has about 396 million monthly active users and has been valued at as much as $64 billion by CLSA Ltd. Tencent is trying to make money from the app through advertising, gaming and e-commerce services as it competes against Alibaba for the estimated 302 million Chinese who shop online.

“It’s great in terms of moving forward with their monetization plans; it’s another revenue stream,” said Stephen Yang, an analyst at Sun Hung Kai Financial Ltd. in Hong Kong. “Hopefully this will become another profit center for them.”

The announcement came a day after the official People’s Daily newspaper criticized WeChat for not being as “pure” as it used to be. The commentary in the People’s Daily said that increased advertising and promotions had changed the nature of WeChat, which began as a platform to communicate with friends.

Tencent vowed to limit the amount of marketing on its Moments function, which allows users to see photos and postings of friends, the company said on its official Sina Weibo microblog account.