Initially available in the U.S., Tango’s e-commerce platform powered by two retail heavyweights, Alibaba — the Chinese firm that led Tango’s $280 million Series E round, which valued it at more than $1 billion — and Walmart, a household name in the U.S.
Following Asia’s Lead
The new shop is available as a new tab at the bottom of the app. Through a mixture of Tango’s own curation and learning from a user’s activity, it showcases items that can be bought inside the chat app. Payment and logistics are handled by the two partners. Tango said it takes a cut of each transaction, but declined to reveal exactly what size that is.
This follows on from Tango’s channel program for publishers (and retailers), and taps into the success with social commerce that we’ve seen in Asia, where WeChat has become the de facto mobile Internet platform in China, particularly for retailers, and Japan’s Line has tested other commerce moves, too.
Despite Facebook’s recent activity turning Messenger into a platform, Tango is the first messaging app in the U.S. to offer such a service. It is initially live in the U.S. only, where most of Tango’s user base is located, but Chi-Chao Chang, VP of Tango Labs, told TechCrunch that it will eventually roll out to other global markets. The main challenge, Chang said, is finding the right retail partners in each market.
“We’re currently engaged with retail players and payment providers in other markets with a view to launching overseas,” he explained, pointing out that local nuances, such as a reliance on cash-on-delivery, must be factored into a global launch.
Moving Toward A Marketplace
So, where is this all going?
Chang told us that Tango’s objective is to be a marketplace for peer-to-peer selling. That sounds much like Alibaba, Tango’s investor which missed the mobile messaging revolution in China and is keen to make up for it with investments in international players. (That’s exactly why it invested $200 million in Snapchat earlier this year, as we explained at the time.)
“We want to be a marketplace, where millions of buyers and sellers transact on a regular basis,” Chang said. “The first part of seeding this marketplace is Tango shop — which is focused on our 300 million registered users.”
(Chang declined to provide details of how many Tango users are active each month. Though the metric has its flaws, it is one measurement to gauge how a company is progressing — Tango said it had 200 million registered users and 70 million monthly actives last March when Alibaba made its investment.)
“The combination of the buyers and sellers will make [Tango Shop] very interesting further down the road,” Chang added. “We hope to learn from Alibaba but there will be a lot of innovation for the [global] markets that we enter.”
When I put it to him that mobile messaging commerce works in Asia, but not necessarily in the U.S. — where the relatively high usage of iMessage and popularity of SMS has made it trickier to build an audience for chat apps — Chang said he was confident that Tango has what it takes to break through.
“When it comes to merchants, the West is very different. eBay grew from casual sellers with lots of collectibles and they continue to do the same. Tango will tap into the casual seller space/free market,” he commented.
The deal is an interesting test for both Walmart and Alibaba. For the former, it is a no-lose way to try out new the potential of new communications mediums for business and distribution. For Alibaba, the company that totally missed the mobile messaging revolution — which handed rival Tencent a huge advantage when it comes to mobile distribution in China — Tango appears to be one bet on the future of media and mobile in the U.S.
An Experiment In Mobile Distribution
It still isn’t clear exactly what Alibaba’s plan for the U.S. is but, with filings this week showing it is now a majority owner in mom e-commerce site Zuliliy, it is clear that the Chinese firm is stacking up plenty of bets on the future of commerce Stateside.
I think Tango has an uphill battle to make Shop work in the U.S. market, where the likes of Messenger, Snapchat and Kik are winning the market. Tango has also struggled to win in overseas markets — but it gets top marks for adopting innovation from the East. Don’t be surprised if Facebook follows suit in the near future.