Wanda's App Has Been Plagued With ProblemsBloomberg News
Ffan’s dwindling user base dwarfed by Baidu, Tencent apps
Users balk at 30-minute loading times as Wanda rolls out fixes
As consumers worldwide increasingly turn to buying online instead of going out shopping, Chinese billionaire Wang Jianlin thought he could get ahead of the threat to his 185-mall empire by launching an app to lure people in: to buy movie tickets, book dinner reservations, check for parking spaces and download discount coupons.
But so far Dalian Wanda Group Co.’s Ffan, or feifan as the app is called in Chinese, has been plagued by problems. They include the loss of two major partners, multiple management changes and a steep decline in users. Perhaps most importantly, its weak functionality and slow download times mean people who try it seldom come back.
"Unpleasant user experience is fatal," Sandy Shen, a Shanghai-based Gartner Inc. research director, said of Wanda’s app. "Customers rarely return if their first-time experience is not positive."
During recent visits to shops in three Shanghai malls, five Wanda partner retailers all said Ffan didn’t work well or they hadn’t heard of it. Two said the tool negatively affected their business: customers complained they couldn’t download promised coupons; sales clerks couldn’t process them because the app was always shown as "busy." All of the workers declined to be identified for fear of bad-mouthing a business partner.
An attempt in March to purchase a coupon sold at 0.1 yuan (1 cent) that could be used to redeem a 25 yuan facial mask at a Watsons store in Shanghai’s bustling Lujiazui financial area took almost half an hour to load. The app has rolled out several fixes since then, and the load time has shortened to seconds.
In a written reply, Wanda Internet Technology Group, the division responsible for Ffan and other Internet businesses, said the company is working to come up with a better product that will provide consumers with new experiences.
Wanda jumped into the field known as online-to-offline commerce in order to compete with Alibaba Group Holding Inc. back in 2014, in a $3 billion partnership with Tencent Holdings Ltd. and Baidu Inc. Yet the two partners have pulled out and now have apps doing similar things.
Ffan has also suffered from management instability, with three chief executive officers since 2014. In the latest reshuffle in October, Wanda spun off its Internet technology group from its financial group. The original Ffan team was disbanded and regrouped into four divisions -- marketing tools for merchants, the consumer-facing app, Internet finance, and cloud computing -- headed separately by executives who previously worked for firms including Google Inc. and Microsoft Corp., according to Wanda.
Wanda has been seeking help from new partners. A pact with International Business Machines Corp. would develop the cloud business, and a partnership with China UnionPay Co. would create a quick-pay system usable at Wanda supermarkets, theaters, hotels, theme parks and hospitals. Wanda has also made investments in Chinese parking app ETCP; Wi-Fi provider WiWide.com; and Heading Information Co., which makes software for retail stores, in order to improve its apps’ functionality.
The failure of Ffan would be a blow to Wanda Internet’s strategy. The division is pinning its success on the popularity of the Ffan app, which in addition to the consumer app has another merchant-to-merchant function that provides real estate listings for merchants who want to open up new stores. Ffan is open to consumers and stores from beyond Wanda’s own malls and theaters, according to Wanda.
Having a way to head off the migration from malls to e-commerce is key to positioning Wanda for the future, as evidenced by Chairman Wang’s comments at the World Economic Forum in Davos this year. Developing its own proprietary technology also would keep Wanda from having to rely on competitors’ apps to draw consumers to its businesses.
Wang, who transformed Wanda’s entertainment division into a global player with its purchases of U.S. cinema chain AMC Entertainment Holdings Inc. and Hollywood studio Legendary Entertainment, said anyone who doubts that Wanda can be a major Internet technology player need only look at its success developing into the world’s largest cinema operator.
"Wanda Internet has now figured out the direction to go in," Wang said at a press conference in March announcing the link with UnionPay. "We will do more and talk less. Let the results speak for us."
According to Wanda, Ffan boasted 80 million active consumers as of September 2016. But independent data show otherwise. After reaching a high of 5.13 million users in December 2015, Ffan usage fell 84 percent to a low of 824,000 people in February, according to data from research firm Questmobile.
The discrepancy may be due in part to the fact Ffan counts users of other functions including WiWide Wi-Fi and ETCP who don’t need to download the app, according to a Wanda official who declined to be identified because the person isn’t authorized to speak publicly.
Still, Ffan users are dwarfed by the 43.3 million using Tencent-backed Dianping service and 19.2 million for rival Baidu’s Nuomi app, Questmobile’s March data show.
"Without Tencent and Baidu, Wanda now probably faces more challenges in doing this on its own," said Catherine Lim, a Bloomberg Intelligence analyst in Singapore.
A key to success is building up a database of users’ habits, behaviors and preferences, said Kitty Fok, Beijing-based managing director at IDC China, which Wanda’s competitors have been doing for a decade.
"For any newcomer, the first challenge is how to get people notice you, be willing to log in your system and start to buy things," she said.
Internet technology remains a small part of Wanda’s empire, with its expected contribution just 2.4 percent of revenues to a business empire that forecasts a target of 265.8 billion yuan this year.
According to Wanda’s 2016 annual work report, Ffan will turn a profit in 2018 and go public by 2020. The business is also planning to raise 10 billion yuan financing from private equity investors later this year.
"It remains a question what kind of resources Wanda can pull together to prove that its ideas can work," said Gartner’s Shen.
— With assistance by Jing Yang De Morel