WhatsApp is taking a leaf out of the telecom, insurance, and internet services playbook to try and sell its WhatsApp for Business solution to enterprises as it tries to find new ways to make revenues from over one billion users who use the messenger every month.
Instead of selling the solution directly to enterprise companies as it has done in the past, the idea now is to create an ecosystem of companies to do the selling so that WhatsApp can remain as a “lean tech company”.
The instant messaging company has been partnering with dozens of third-party companies to resell WhatsApp for Business for some months now, just like how in the telecom era value-added services companies used to sell services like SMS based notifications and advertisements, according to two sources briefed on WhatsApp’s plans. But the company has been more or less silent about this rollout.
Over 40 companies including Zendesk, Twilio, Gupshup, Nexmo and Yalochat have already acquired licences to resell WhatsApp for Business to other companies. On Wednesday, Mumbai-based Karix Mobile also announced that it has partnered with WhatsApp to offer WhatsApp for Business to its customers.
“WhatsApp is becoming the world’s biggest telecom company and Yalo is the new Twilio for developing world,” says Deepak Ravindran, the founder of Pirate Fund, a community of startup founders. Ravindran has earlier founded three mobile messaging based companies. Twilio is a company that allows programmers to integrate sms and voice calls (and now WhatsApp) into their products without having to directly interface with telecom companies.
WhatsApp for Business is being sold as a replacement for text message based notifications and conversations between an enterprise and its customer. The company currently offers its services to a host of other consumer tech companies like BookMyShow and Netflix. For instance, Netflix will send you a notification when a new show is released.
“The market itself is like VAS 2.0 where you could potentially build applications without having the need of a mobile app,” says Ravindran, who is helping Yalo launch in India.
In 2017, FactorDaily had reported that WhatsApp was in talks with BookMyShow, Oyo and airline companies to replace SMS based notifications and one time passwords. In the following months, WhatsApp rolled out WhatsApp for Business with them. More than 100 companies now use WhatsApp Business APIs.
WhatsApp sells notifications and also conversations. Notifications could cost about 30 paise each in India and conversations are priced on a tiered basis depending on the number of users a company has. In the case of Karix, for instance, a notification will cost 0.82 US cents of which 0.42 cents (or about 30 paise) is WhatsApp’s fee. The platform charges a flat fee of 0.4 cents per conversation. Prices range from roughly .5 cents to 9 cents per message and could vary depending on the country and volume. Conversations are free if the user initiates a chat and the business responds within 24 hours.
The company, which Facebook acquired in 2014 for $22 billion, so far has not made any big revenue making bets. But in 2017, the free to use instant messenger, launched WhatsApp for Business, using which enterprises could stay in touch with its users on WhatsApp.
Unlike its parent company Facebook, until now, WhatsApp has not used advertising to make money. However, with WhatsApp co-founders Brian Acton and Jan Koum leaving the company, the deck has been cleared to unify the underlying tech that powers WhatsApp, Instagram and Facebook Messenger.
WhatsApp’s Chief Business Officer Neeraj Arora quit the company in November 2018. It has now hired former Ezetap executive Abhijit Bose as India head. WhatsApp had launched peer to peer payments in India but has been unable to expand it beyond a million users because of regulatory issues. Indian regulations required that WhatsApp set up an Indian entity, store financial data locally and make it available to the central bank for periodic audits.
“With local third-party players as partners, WhatsApp will also not have to deal with regulators directly,” said a source, who declined to be identified.
In August last year, WhatsApp said that it will start showing advertisements to users through the stories feature. As our columnist Himanshu Gupta argued then, one could justify this move saying that stories are a public feed and by advertising through stories feed, WhatsApp doesn’t violate a users’ privacy.
Since WhatsApp messages are encrypted, it would be hard for the company to target users with advertisements with the pinpoint precision offered by Facebook Messenger or Instagram. But by integrating the three services, Facebook could potentially match users using their phone numbers and target them better.
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Updated at 11:24 am on March 6, 2019 to replace “Companies such as…” with “Over 40 companies including..” and to add a line “Prices range from roughly .5 cents to 9 cents per message and could vary depending on the country and volume.”
Updated at 01:11 pm on March 6, 2019 to update the story with WhatsApp's response.