WhatsApp Business Model | How does WhatsApp Make Money?

Poonam Chauhan Poonam Chauhan
Jun 30, 2021 7 min read
WhatsApp Business Model | How does WhatsApp Make Money?

Are you eager to know all about the business model of WhatsApp? If the response is yes, then this blog is all you need.

There would be hardly anyone on this planet who is not aware of what WhatsApp is? It is one of the most vital communication tools. It’s not like WhatsApp doesn’t have any competition, there were several players like Line, Wechat, Fiverr, but nothing compares to WhatsApp. Every single user who uses smartphones has this one application installed on the phone.

It is the application that keeps us connected with family, friends, and colleagues. We utilize WhatsApp's functions for a variety of purposes. Thus it has become an indispensable tool in our everyday lives. The platform has a wide variety of applications and may be used for both professional and personal reasons. For example, to send text or voice messages, photos, and videos to our loved ones and friends, we choose to use the app.

Statistically speaking, it has around 2 billion active monthly users in roughly 180 countries across the world. These figures outnumber active members of many other popular messaging applications like Facebook Messenger, WeChat, etc.

WhatsApp- A Brief Background
WhatsApp- Business Model
WhatsApp- Modern Revenue Generation Strategy
Conclusion
FAQs

WhatsApp- A Brief Background

The men behind Whatsapp are Brian Acton and Jan Koum, who used to work in Yahoo. Jan Koum was the one who came up with the idea of Whatsapp. The journey began when he purchased the iPhone in January 2009. He instantly identified the potential of the app business on the App Store, which was only just several months old at the time. He intended to create an app that displayed user statuses beside their names. After discussing the concept with Acton, the two went to Alex Fishman for further information. They worked on the idea, created the iOS version, and established the β€˜WhatsApp inc.' in California. The idea behind the name to be β€œWhatsapp” was to make it familiar with what’s up. It is pretty catchy.

None of their friends and family liked the initial version because it was consuming battery, the app was crashing, and much more. When Apple launched its push notification update, most users found it fun which led to Whatsapp 2.0. The plan was to build an instantaneous messaging platform for everyone.

People were enthralled by the prospect of checking in with simply a phone number and sending texts to friends through the internet rather than through carrier SMS plans. Because rivals like Blackberry's BBM were just for Blackberry users, and G-Talk and Skype ask users to provide a unique ID to interact with others, consumers liked this WhatsApp, because it is free from such restrictions.

WhatsApp became a handy software due to its user base growing to 250,000 in only a few months. The software was initially released on the iPhone app store, and then after a few months, it was available for Blackberry. In December 2009, the ios version was updated to enable users to exchange photographs, and an Android version of the software was released in 2010. Both creators became billionaires without ever placing an ad on the app.

The application was first charged in the shape of a yearly fee or an initial installation cost, and many users were prepared to spend for it. Later, in 2013, the installation fees were eliminated, and the setup became utterly free. After that, a $1 yearly subscription charge was meant to be paid by members.

Facebook bought WhatsApp
Facebook bought WhatsApp

Furthermore, between 2011 and 2013, Sequoia Capital invested $60 million in WhatsApp, including $8 million in round one and $52 million in the subsequent round. In February 2014, Facebook bought Whatsapp for $19 billion, making it the company's biggest purchase deal. After that, further developments in App services came into existence. At the beginning of 2016, the $1 membership charge was eliminated.

WhatsApp Business Model

WhatsApp- Business Model

Now comes the question: what is the business model of WhatsApp, and how was the company earning in the starting year. Below are the pillars of the WhatsApp business model:

1. Value Proposition - Β WhatsApp has given its users a lot of value. The brand's core value proposition comprises its appealing and trustworthy characteristics and its accessibility, affordability, simplicity, low-risk element, and brand recognition. However, the very thing that attracted the customer was the plethora of features like sending message audio and video to friends without worrying about logging in and out. The best part was you can send messages for free all you need is a data pack that attracts the customer towards the platform. In addition, WhatsApp's security standards are robust, which minimizes the danger element. It sends encrypted communications and guarantees that each communication transmitted through the app has a distinct lock and key. This feature builds trust among the customer.

2. Customer Segments - WhatsApp's users are mostly smartphone users. It is used by everyone from teens to adults to the elderly. The app's intended audience is users who wish to interact with one another for personal or business reasons. This software is a valuable tool amongst international users since it allows them to connect with relatives, friends, and co-workers who are not in their own country. Business owners also use the app to communicate with their consumers and conduct promotional events.

3. Focusing on Partners - WhatsApp's team formed crucial connections with far more than 50 carriers worldwide. One of the most profitable relationships has been with Sequoia Capital, which provided a significant amount of funding to the brand and played a large part in its growth and career expansion. In addition, WhatsApp frequently forms strategic agreements with mobile firms to grow its services and user base. App shops, OS integrators, and various banks are among WhatsApp's other significant partners.

4. Focusing on Resources - The central part of the WhatsApp business model is focusing on resources. They have three types of resources which are physical, human, and organizational. The application's biological resources are mostly its software and hardware. WhatsApp has a fantastic group of engineers who make up an outstanding development team, representing the company's human resources. WhatsApp's unique software suite is the company's most important organizational resource, with over 2 billion people worldwide. These assets also include the brand's significant collaborators, such as telecom carriers, device makers, software engineers, and others, who helped the brand grow its user base.

5. Focusing on Aim - The aim played a considerable role in the WhatsApp business model, which is to be a reliable platform for people all across the globe; that’s why they work on enhancing support, providing security, privacy, and much more.

6. Channels - WhatsApp's main outlet is its smartphone app. The marketing materials used by the business to market its goods include social media postings and its site. Other options include Google Play, the App Store, and other portable devices.

7. Customer Relationship - Customer relationship plays a crucial part in app success, and WhatsApp keeps that in mind. The brand's website is set up to respond to a variety of commonly asked questions by visitors. In addition, personal support is given via built-in email assistance. Furthermore, WhatsApp's customer relationship includes a zero-ad policy, ethical use of social networks, truthful blog posts, and end-to-end encryption, among other things.

8. Revenue Generation - Watsapp was very clear about not displaying ads on the application. But to survive, it is essential to generate a source of money. As a result, in some regions, the company implemented a paid service in which consumers were obliged to pay a $1 yearly renewal fee.


Comparing Whatsapp and Whatsapp Business
Whatsapp Business App basically created with the best interest of small business owners in mind.

WhatsApp- Modern Revenue Generation Strategy

Following Facebook's takeover of WhatsApp in 2014, the company has devised a new revenue-generating strategy. The following are a handful of the company's brand recent income initiatives.

1. Whatsapp for Business - WhatsApp Business, an enterprise app, was introduced in January 2018 to help small companies. This app was created mainly for businesses to communicate with their consumers or shoppers. Further, WhatsApp Enterprise Solution was designed by Facebook for big companies with a worldwide customer base. Using WhatsApp conversation, they might provide e-commerce or customer care.

2. WhatsApp Payment Service - Whatsapp Payment, a payment processing service available exclusively in India only. By partnering with banks, WhatsApp will offer its customers the capability to make payments and financial transactions. For such solutions, the company will be able to receive a commission.

Conclusion

To sum up! This is all about the WhatsApp business model. The company is a familiar name to everyone. There is no contradiction in the point that this platform has revolutionized the way we communicate today. It has taken over SMS, MMS, and other services. The software is popular among all age groups, and with Facebook's control over it, we will see more WhatsApp in coming years.

FAQs

Who is the founder of WhatsApp?

Jan Koum and Brian Acton have founded WhatsApp in 2009.

When was WhatsApp acquired by Facebook?

Facebook has acquired WhatsApp in 2014.

Is WhatsApp business free to use?

Yes, WhatsApp Business is free to download and use.

Who pays for WhatsApp calls?

WhatsApp Caller and receiver, both parties pay data charges to call and receive a call from the network being used for the WhatsApp call.

Is WhatsApp payment available in India?

WhatsApp Payment service is now available for up to 20 million users in India. It has been designed on the National Payments Corporation of India's (NPCI) Unified Payment Interface (UPI) system.

Who funded WhatsApp?

WhatsApp is funded by Sequoia Capital.

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