Sina Corp to launch online payment service
Firm wants a seamless payment system, and regards the service as a key driving force for profit growth
Sina Corp, the Nasdaq-listed Internet company that owns micro-blogging service Sina Weibo, will launch an online payment service in April, in a bid to translate its heavy Web traffic into revenue amid increasing competition.
Dubbed WeiboPay, the online service will team up with merchants that sell goods via their corporate accounts on Weibo, said Hong Lizhou, the general manager who oversees Sina Weibo's marketing strategy.
The company wants to provide a seamless payment system, and regards the service as a key driving force for profit growth, Hong told China Daily on Thursday.
According to Hong, after Weibo users select their products, they will be redirected to a payment page where they will have the option to pay with a credit card or a third-party payment solution provider such as WeiboPay.
Customers can pass on their credit card information through WeiboPay, which will act as a middleman between the merchant and the bank.
WeiboPay is similar to Alipay, a popular online payment tool operated by e-commerce giant Alibaba Group Holding Ltd, which has more than 550 million registered users and handles around 8.5 million transactions daily.
Alipay provides payment services in China to more than 500,000 external merchants in addition to Alibaba's own business units.
Sina Weibo's users will have equal access to Alipay when they select their payment options, but Hong hopes that WeiboPay will grow in the long run based on the company's solid user base. He added Sina is in talks with a number of companies to develop cooperation projects.
The battle on the e-commerce front follows a call to make Sina's business more profitable. The company saw its net profit drop 74 percent in the fourth quarter to $2.4 million, according to its latest annual report.
Charles Chao, Sina's chairman and chief executive officer, said in February that the company's Weibo service is likely to generate returns this year as it has reached "a critical mass" despite a slowdown in its growth rate.
Sina has more than 500 million registered users on the micro-blogging service. On average each user spends 90 minutes per day on the platform, Hong said.
Micro blogs have become critical focal points for brands to interact with users, and Sina has the opportunity to leverage its client base to cash in on the boom, according to Calvin Chan, general manager at the Beijing-based AdMaster, a company that monitors the online advertising sector.
"In 2012, China's micro blog sector had an estimated market value of $79 million. About 28 percent of active users search for product information via Weibo, and 43 percent of them tend to share their preferred brands online. This fast-growing landscape should not be ignored," he said.
The influence of word-of-mouth marketing on consumers' buying behaviors is huge, given that two-thirds of netizens seek comments from online peers, a McKinsey study in 2012 showed.
"Given the context, Weibo has significant power in terms of marketing, as 85 percent of its users have engaged in branded campaigns," said Mykim Chikli, the Shanghai-based chief operating officer of Zenith Optimedia, a marketing consultancy that evaluates the return of advertising investment.
Sina has successfully carried out online campaigns for premium brands via its micro blog services.
In December, it collaborated with Chinese smartphone maker Xiaomi Corp to sell the Mi-2 phone. In January, automaker Mercedes-Benz (China) Ltd sold 666 Smart cars in an eight-hour online campaign on Weibo.
"The winning formula for marketing via Weibo is the secondary dissemination of information online, which will help to expand marketing efforts from the streamlined, paid-media model to a more interactive model," Chan said.
Weibo has triggered investors' concerns regarding the speed of its monetization plans, especially after the quick rise of WeChat, a mobile chatting application developed by Tencent Holdings Ltd, China's biggest Internet company by sales.
But Hong said he believes that the two platforms have their distinctive advantages, and precise online advertising is the area where Weibo shines.