WhatsApp ‘Carts’ Signal Path to Monetization

Among Facebook’s big properties — Instagram, WhatsApp, Messenger, etc. — WhatsApp is famously under-monetized. It’s also the property that Facebook has vocally declared free of ad support, which of course is the mother ship’s core revenue model. This has left the world wondering how WhatsApp will monetize.

Front-running models include premium messaging for enterprises, and m-commerce for brand clients. The former has already kicked off in WhatsApp Business, including service, support, storage, and other premium messaging features. Continuing on this path would give it an almost Slack-like revenue model.

But the other revenue model is arguably more fitting. As Facebook has already shown with Messenger, and as we’ve examined in the past, “conversational commerce” is an opportune area. This involves giving brands the ability to converse with fans & followers, including pre-sale questions and loyalty-driving customer service.

Facebook Unifies ‘Conversational Commerce’ for SMB Marketing

Step Forward

With that backdrop, Facebook took a step towards making WhatsApp more of an eCommerce play this week by adding “Carts.” This makes it easier for users to “shop” in a traditional eCommerce way, including buying several items. The previous UX conversely let them do this in more of a one-off manner through dialogue.

Another way to think of this is that a key eCommerce performance indicator is average order value, otherwise known as cart size. It’s difficult to boost that metric if you don’t have an actual “cart.” So that’s essentially what Facebook is doing with this latest move, just in time for the height of the holiday shopping season.

The way it looks from the user’s perspective is a familiar “add to cart” button. Buttons can be encountered through messaging threads or on merchant’s stores. After shopping in this way, users can view their cart and check out by sending an order request to the business… transmitted just like a WhatsApp message.

Beyond UX enhancements for users, Carts bring more functionality to the sell-side. Specifically, it gives brands and merchants a back-end interface to keep track of order inquiries and other customer management. In early tests, these features resonated most with merchants and compelled the new feature to full rollout.

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Time and Place

Carts notably follows a procession of m-commerce related features from WhatsApp over the past few months. Those include QR codes to activate eCommerce from items encountered in the physical world (think: storefront decals). Recent features also include social functions to share product links in organic chats.

And of course, the timing is right as eCommerce continues to inflect in the Covid era (and possibly in a post-covid world of hybrid shopping). Combine that macro-environment with WhatsApp’s two billion global users and Facebook may have an untapped opportunity for commerce-based brand engagement.

And there’s still room to expand. Next rollouts could include payments in some regions where orders don’t integrate with a transaction system. Meanwhile, we’re bullish on these conversational commerce updates — particularly in emerging markets where mCommerce and messaging are like peanut butter and chocolate.

This is the latest in Localogy’s Skate To Where the Puck is Going series. Running semi-weekly, it examines the moves and motivations of tech giants as leading indicators for where markets are moving. Check out the entire series here, and its origin here

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