China leads the world in the number of Internet users, and Chinese enterprises deploy sophisticated e-commerce strategies. Among these, the digital Red Envelope is one of the most adopted and popularised strategies since the beginning of 2014. It plays a significant role in mobile payments and O2O services promotion, resulting in a wide mobile user base and diversified experiences.
Examining its development over time, we find that the digital Red Envelope drastically adds to the synergy of social media and e-commerce in China. In the market of great inclusiveness and potential, it also inspires companies with weak digital strategy to take part in online competition.
By analysing the invasive digital Red Envelope trend in China, we want to present the distinctiveness of Chinese internet users and the e-commerce market in order to help clients with international ambitions enter China’s market. Meanwhile, we can learn from the success of Red Envelope and understand how to unite capital, technology and user interests to create new market touchpoints that can be applied in other regions.
2. 2
Executive Summary
China leads the world in the number of
Internet users, and Chinese enterprises
deploy sophisticated e-commerce strategies.
Among these, the digital Red Envelope is one
of the most adopted and popularised
strategies since the beginning of 2014. It plays
a significant role in mobile payments and
O2O services promotion, resulting in a wide
mobile user base and diversified experiences.
Examining its development over time, we find
that the digital Red Envelope drastically adds
to the synergy of social media and e-
commerce in China. In the market of great
inclusiveness and potential, it also inspires
companies with weak digital strategy to take
part in online competition.
By analysing the invasive digital Red Envelope
trend in China, we want to present the
distinctiveness of Chinese internet users and
the e-commerce market in order to help
clients with international ambitions enter
China’s market. Meanwhile, we can learn from
the success of Red Envelope and understand
how to unite capital, technology and user
interests to create new market touchpoints
that can be applied in other regions.
WeChat is an instant messaging and social
networking app owned by
‣ It has an built-in social media platform
called Moments.
‣ Mobile payment feature is embedded.
Alipay Wallet is the app of Alipay. It is
powerful at mobile payment.
Alipay, owned by Alibaba, provides powerful
digital banking services.
Weibo is an online social media platform in
China. It works very similar to Twitter.
Names to know
3. 3
WHAT IS A RED ENVELOPE?
A red envelope or red packet is a monetary gift between friends or family
members during holidays or special occasions such as weddings, the birth of a
baby, or graduation.
4. THE CONNOTATION OF A RED ENVELOPE
4
It strengthens relationships. Always give one back. The more exchanges the better.
Red envelopes offer a decent and modest way of expressing best wishes and good luck. Therefore,
they inherently reflect the introverted side of Chinese interpersonal relationships. These
understated connotations span over hundreds of years, and are regarded as core elements when
introducing red envelopes to social networks in the modern digital age.
Red envelopes can be given among
acquaintances or even strangers. It is a
way to send wishes as well as maintain
relationships.
It is crucial to give back a red envelope to
the person who gave you one to show
politeness and respect, especially
between friends and colleagues.
It is better to keep a constant flow of
giving and receiving red envelopes. The
more exchanges, the more cheerful
and festive the atmosphere will be.
5. RED ENVELOPE IN THE AGE OF INTERNET
5
Red envelopes started being used online at the beginning of 2014 in China, and have enjoyed huge
popularity on the mobile Internet since then. Until now, it is undoubtedly one of the hottest trends to
bridge markets, services and customers.
Mobile
Payment
O2O Service
Product Promotion
Branding & AdvertisingSocial Network
6. THE FIRST TRY
6
Just a few days before the start of the Year of the Horse, on 26th of Jan 2014, Tencent made its first
move to the mobile payment market by launching the Red Envelope Service on WeChat, which has
over 500 million users worldwide at that time.
Send to a friend
Determine the amount in the
envelope and write a wish
Send an envelope
in a message
Send in a group chat
Determine how much it is and
how many people can have it.
Add a bank card
in WeChat
1
Click the message to open a red envelope by:
3
Winning in group chats:
The money is shared by the designated
number of people who first opened the
envelope. The amount everyone gets is
random.
Receiving in private chats:
Click the message in the chat to
find out the amount and see the
wishes.
4
Deposit in bank account
Users can easily transfer the money with a few clicks from their WeChat
accounts into their bank accounts.
2
7. THE FIRST TRY
7
Almost at the same time, the Red Envelope Service went online in the Alipay Wallet app.
WHICH is widely used for online and secure mobile payments by over 300 million registered users.
Since Alipay Wallet is not a social
networking based app, most users had to
add friends with mobile numbers, and then
wait for confirmation before sending or
receiving red envelopes.
1 Add contacts
2
Send and receive
envelopes
Send one back
Envelope List
3 Ask for envelopes
Users could ask for red
envelopes by sending messages
to contacts in Alipay Wallet.
8. THE INCREDIBLE NUMBERS
8
$32
million
in total has been exchanged through envelopesenvelopes40
million
8
million
users
First Week After New Year’s Eve
$1.60 in each envelope
on average
First Week After New Year’s Eve
WeChat Alipay Wallet
25,000 envelopes sent within 1 minute
Peak Time
9. 9
The rise of TencentSharing Brand new culture about money
A significant influence on mobile payment.
While enjoying the thrill of sending and receiving digital red envelopes, mobile
internet users in China are getting used to dealing with money over their smart
phones.
Thanks to the great success of
digital red envelopes, millions of
users added bank accounts within
their WeChat app; hence Tencent
gained a large share in the mobile
payment market over one week'.
Not only receiving but
also sharing and giving.
The current era of mobile payment is
deeply rooted in social media.
Exchanging money over mobile
phones is no longer a serious
concern, as it now includes a social
and entertaining purpose, which
users can talk about publicly online.
The culture of digital red envelopes
has formed.
Take quick action
Small amount Hooked in
As a brand new popular model, its characteristics are
rather distinct.
As soon as a red envelope
appears, click on it asap
to win a share.
The amount of money
exchanged through red
envelopes is usually very
small.
Continuously looking for
red envelopes across
different chats.
Learnings
10. RED ENVELOPE REWARD 1.0: PROMOTING O2O SERVICES
10
Since the beginning of 2014,
O2O service platforms in China
started their transition from the
web to mobile. The 2 Red
Envelope Reward model has
been widely used for promoting
new apps and bringing in new
users.
The expense of red
envelopes is usually paid
for by the owner of the
apps.
Download
App
Register
with
contact details
Pay for
service
one to use later
one to share on
social networks now
2 RED ENVELOPES
REWARD
The red envelope can only be
opened by a limited number of
people. The amount of each
portion is random.
Social Network
The red envelope reward
encourages the online word-of-
mouth and hunger marketing
strategies, which then deliver a
recurring surge on social networks.
The reward method helps
to bring in new customers
and increases user loyalty
of existing customers.
11. 11
Red envelope was shared as a
post on Moments by a user
after manicure service.
“Here is the red envelope from He Li Jia,
quickly grab your portion before it’s gone”
Launched in March 2014, He Li Jia is a mobile platform that connects users with
manicurists. It provides a brand new model where service is booked and consumed
outside its usual sphere. The manicurists are booked to come to customers’ doors with
essential tools and products in a suitcase. He Li Jia gave its customers a red envelope
reward after the services were complete.
“Sorry, the red envelope is
gone, be quicker next time!”
“You got the red envelope!
Click to find more details.”
He Li Jia is one of the most successfully promoted
O2O apps of 2014. It managed to reach $150
million net worth, and build stable user traffic,
which reached 4,000 orders per day by the end of
2014 in four first tier cities in China.
A Closer Look
He Li Jia
‣ Anyone who clicked on the post might get a red
envelope with voucher to He Li Jia.
12. RED ENVELOPE REWARD 2.0: MARRYING ADVERTISING & BRANDING
12
The reward 1.0 got so popular that
apps providing similar services
started to compete for customers
by giving out bigger and bigger
rewards in red envelopes. The
phenomenon was quite visible in
the intense competition between
two taxi hiring apps, DiDi
(meaning: Taxi Taxi) and KuaiDi
(meaning: quick taxi). It didn't take
long before the investors of the
apps realised that the game was
becoming more and more
expensive. An updated version of
the red envelope reward emerged
to shift expenses onto third
parties.
‣ The voucher in the
red envelope
‣ Link to download
DiDi
‣ ‘view the
lookbook for the
new season.’
‣ ’’50% off at H&M
retails stores.’’
‣ Button: share
this red envelope
to friends
For DiDi
For H&M
The red envelope interface
became a platform for
advertising.
DiDi had over 2.2million users and
350,000 average daily orders at
the beginning of 2014. For each
order, DiDi gave back 20~30 RMB
($3.0~4.7) for the red envelope
reward. The total sum of these
rewards reached hundreds of
billions of dollars within 2 months.
To the right is an example of the
red envelope reward 2.0 of DiDi.
The background of the interface of
red envelope is used for
advertising an H&M new season
offer. H&M, in return, paid part of
the expense on the reward.
Red Envelope Reward 2.0
13. THE BLOCKBUSTER MOMENT
13
Since February 2014, the red envelope business model has continued to be
refined. It reached an unprecedented pinnacle of usage during the 20 days of
the 2015 Chinese New Year vacation.
Friendly CompetitionMassive EngagementDiverse Patterns
There are various updates to the
interactions and content, which
effectively enriched the excitement and
expectations of the game.
With so many new players heavily
investing in the game, engagement
through sending and receiving became
ubiquitous.
Tencent and Alipay found a way to be
both competitive and harmonic this
year.
14. DIVERSE PATTERNS
14
QR Code Shake Shake Face to face Guess how much
The code could be
scanned from televisions,
webpages, or even printed
flyers.
Shaking phones to get a
lucky red envelope. This
was the most used
method in the 2015
Chinese New Year.
When gathering with
friends, people shared and
received red envelopes on
phone by sending and
matching a sound wave.
Users are asked to guess
how much money is in the
red envelope and then
share with someone else
until the correct amount is
figured out.
Serial number
Users need to type a 8
digit serial number in
Alipay wallet ASAP after
seeing it.
Innovative Interactions
Apart from messaging
conversations, or use on
mobile social networks, red
envelopes were shared and
received in many different
ways this year.
The designs of red envelopes
this year included factors such
as face to face interactions,
multiple screen crossovers and
so on.
15. DIVERSE PATTERNS
15
Increased thrill
This year, what made red
envelope more entertaining to
users was that the content
(money or voucher) and the
amount of money were not
fixed at all. They were based
on chance. Users had no idea
what or how much they could
get from a red envelope. It was
the anticipation that increased
the thrill of the entire
experience.
Difference in each share
The amount I get
The person who send
the red envelope
List of people who get
the red envelope and
how much each share is.
A red envelope with ¥200 ($32) for 10 people, the biggest
share might reach ¥40 ($6.4) while the smallest share
could be less than ¥1 ($0.16).
Diverse content
Other than money, vouchers for services and discounts
could also be found in the red envelopes by chance.
‣ ¥3 for mobile phone
balance
‣ Test drive a Tesla ‣ ¥100 ($16) off for air
conditioners at suning.com
16. 16
Shake Shake
A Closer Look
Shake Shake is a feature on WeChat for looking
for new friends on your mobile. It unveiled a
new function for the Chinese New Year: shake
to win a red envelope while watching TV.
Watching the celebration party on China Central
Television (CCTV), the predominant state
television broadcaster in mainland China, has
been a conventional activity for over 30 years.
The party usually has more than 650million
viewers. The red envelopes pool was opened
according to the order of the TV presenters.
Each time there were millions of red envelopes
containing money or vouchers available in the
pool for the audience to win by chance.
Shake Shake became a nation-wide topic over
the New Year’s Eve. Millions of viewers
throughout China sat in front of the TV with
family, holding phones in hands and longing for
the moment to start shaking their phones.
1.01billion
red envelopes were sent and received during
the CCTV celebration party over 5.5 hours
11billion
attempts of shaking in total
over the 20 day vacation
810million
attempts of shaking within one minute at
22:30pm on the New Year’s eve
There were also hot discussions and viral videos
about how to shake in order to increase your
chances of winning. Apparently, Shake Shake
managed to deliver a perfect user context for
red envelope on the NYE that merged
excitement with entertainment on social
networks, TV, web and mobile media,
equaling massive success.
17. MASSIVE ENGAGEMENT
17
Companies and enterprises
There are hundreds of companies
with various backgrounds, that
heavily invested in red envelopes in
2015 for promotion purposes,
some of whom did so as a joint
venture.
Weak
Digital strategy
Strong
Digital strategy
Age
1
Diary & Wine
Production
2
High
Technology
Companies that spent over 10million on red envelopes on NYE 2015
3
O2O, P2P,
E-Commerce
The chart on the right displays the
brands that spent over 10 million
(CNY) on the red envelopes. They
can be easily categorised into three
divisions based on digital strategy
maturity and relative age. Very
young companies with strong
digital strategies driven by revenue
gains from internet-based business
competed with much older
companies without digital
strategies.
innovative bank
E-commerce / O2O
O2O
Insurance
E-commerce / O2O
P2P Finance
18. MASSIVE ENGAGEMENT
18
Public figures
Weibo encouraged celebrities and public
figures to publish red envelopes with
new year wishes to their followers.
Before long, Weibo became a platform
where celebrities competed on how
much they gave out.
Bingbing Fan, Chinese actress and movie producer,
posted a red envelope with ¥434,451 ($69,000) on
Weibo. It was consumed by 434,232 people within a
few minutes.
Jack Ma, founder and CEO of Alibaba, sent 999,999 red
envelopes on Weibo. With a five-day ongoing self-
promoting process (shown on the right), he successfully
raised the attention of the entire internet in China, and
brought in billions of visits to Weibo and Alipay Wallet.
Announcement
List of Details
Riddles
Serial characters published as in a riddle
15/02
16/02
17/02
18/02 Explanation process
He announced on Weibo that he’s going to publish
999,999 red envelopes, and followers need to use a
serial number and Alipay Wallet to receive it.
Riddles were posted for users to guess for a serial number.
Some details are revealed: there are going to be six types
of envelopes, with content ranging from ¥4,999 ($796)
to ¥0.01.
He posted clear instructions with graphics to explain
how to use a serial number and the app Alipay Wallet.
19/02
00:19 He published another riddle that contained the connect
serial numbers. The 999,999 red envelopes were
consumed within 2minutes 36 seconds.
30million
users attempted to answer the riddle
100million
wrong answers to the riddle were tried
19. MASSIVE ENGAGEMENT
19
World-wide participation
China has great diversity in culture and
development. Digital red envelope
overcame all of these differences and won
the appetite of the entire country this
year. The trend spread extensively: as far
as users staying abroad during the New
Year, and as deep as users in 3rd tier
cities who rarely tried mobile shopping or
mobile payments before.
The comprehensive flow
This year, the exchange of digital red envelopes among friends and within the public sphere is
still flourishing and extremely active. The usage of digital red envelopes is so pervasive that it can
occupy the vacation time of users, from the first thing in the morning to late into the night.
FRIENDS
FRIENDS OF FRIENDS
TV
BUSINESS
PUBLIC FIGURES
PRIVATE SPHERE PUBLIC SPHERE
20. FRIENDLY COMPETITION
20
The entire system of red envelopes is built
on the mobile payment system of Alipay
and WeChat. In terms of the social media,
WeChat used its own app and Alipay
united with Weibo.
The entire experience with WeChat is
based on its own messaging system and
Moments, meaning the interactions mostly
happened within users’ friends circle.
Meanwhile, Alipay focused on creating
traffic in the public sphere, for instance,
with the red envelopes from brands and
public figures.
In terms of the service that they provided
to companies: Shake Shake on WeChat did
draw a lot of attention, but it only worked
on mobile. Additionally, because the
envelopes were available to any user,
WeChat’s advertisers couldn’t use targeted
messaging.
In comparison, Weibo works on both web
and mobile. Although Weibo had smaller
audiences, it guaranteed a relatively more
concentrated flow because the red
envelopes went to followers of different
brands.
Some users, in order to get more red
envelopes, kept switching between
WeChat, Alipay Wallet and Weibo during
the entire vacation. Some companies also
invested in both sides to have more
media exposure and cover more users.
This was not a competition that could
have been judged by figures.
Undoubtedly, the efforts that all the
participators spent made a great impact
to the consumer market and achieved a
win-win situation for mobile payments
and social media engagements in China.
1billion
red envelopes were sent and received
On New Year’s Eve day,
The entire cash flow on WeChat is
more than 20 times what it was in
2014 during the Chinese New Year
vacation.
$489million
vouchers were sent in red envelopes
On the New Year day,
200million
bank cards were added within a few days
before New Year’s Eve
21. FRIENDLY COMPETITION
21
683million
red envelopes were sent and received
On New Year’s Eve day,
$640million
of money flow in total
$9.5on average was in each red envelopes
The entire system of red envelopes is built
on the mobile payment system of Alipay
and WeChat. In terms of the social media,
WeChat used its own app and Alipay
united with Weibo.
The entire experience with WeChat is
based on its own messaging system and
Moments, meaning the interactions mostly
happened within users’ friends circle.
Meanwhile, Alipay focused on creating
traffic in the public sphere, for instance,
with the red envelopes from brands and
public figures.
In terms of the service that they provided
to companies: Shake Shake on WeChat did
draw a lot of attention, but it only worked
on mobile. Additionally, because the
envelopes were available to any user,
WeChat’s advertisers couldn’t use targeted
messaging.
In comparison, Weibo works on both web
and mobile. Although Weibo had smaller
audiences, it guaranteed a relatively more
concentrated flow because the red
envelopes went to followers of different
brands.
Some users, in order to get more red
envelopes, kept switching between
WeChat, Alipay Wallet and Weibo during
the entire vacation. Some companies also
invested in both sides to have more
media exposure and cover more users.
This was not a competition that could
have been judged by figures.
Undoubtedly, the efforts that all the
participators spent made a great impact
to the consumer market and achieved a
win-win situation for mobile payments
and social media engagements in China.
22. 22
Learnings
Enriched User Base
Thanks to the overwhelming red envelope wave,
there are large number of users, many of whom
had never tried e-commerce before, receiving
vouchers to be used online or on their mobile
phones, setting them up for their first online
consumer experience. The user base expanded
to both older and younger ages, as well as to
less developed cities and areas. It’s possible
that various online products and services with
more focused scenarios and target users will
emerge in the market in a very short period of
time in order to access these user bases.
Mobile Paying Dependency
It only took 20days for the users to realise how
playful and convenient it could be to spend
money over phone, and, as a consequence, to
develop a dependency on mobile payments.
Users are embracing mobile payments with
complete trust, and this dependency is a solid
support of a promising future for e-commerce
and O2O business in China.
Multiple Screen Strategy
On NYE in millions of families across China
people sat in front of the TV, watched the count
downs for the red envelope pools to open,
refreshed Weibo pages on laptops to win
money and vouchers, and also exchanged red
envelopes actively over WeChat on their smart
phones. It was the first time in China that the
three major screens formed a comprehensive
ecosystem for so many users. It brings about
New Era for e-Commerce and O2O In China
both huge possibility and challenges to service
design and product innovation for seamless
experiences that are sustainable over time in
China.
Side by Side With Social Media
Without a doubt, the growth of e-commerce in
China will be deeply associated with the
increasingly adopted social media applications.
It overcomes the limit of location, culture, and
education, and brings together users of diverse
backgrounds with one touchpoint. A distinctive
touchpoint can go viral on social media and
quickly lead to huge business success. Also,
brands will have more liberty to build up and
refine their online identities.
23. 23
Learnings
Redefined Archetypes
Users Social Media Context & Experience
‣ Now a distribution channel
Users are immersed in their social media and
online friends’ circles, and so users no longer
represent the end of an information chain.
Instead, each user stands at the beginning of
a network with motivation to participate.
‣ O2O Dependency
As users get used to constantly switching
between online and offline worlds, their needs
for O2O services will inevitably grow, as will
their demand for highly customised services.
‣ Social media will be highly compact and
modularised for networking, promoting,
service booking, payment, and so on.
‣ The multi-sensation approach - hearing,
seeing, gestures(shake shake) - will be applied
to additional contexts and services.
‣ Social media will continue to connect users
to resources like e-commerce opportunities.
‣ The divisions among WeChat, Weibo and
other platforms will get more and more
distinct.
‣ Seamless and across screens
‣ The experience is no longer a story-based
process. Gradually, it will be able to cover
end-to-end and online-offline scale.
‣ It will encourage cooperation among users,
and among brands, channels and capital.
24. 24
Learnings
The future of P2P
The concept of P2P is to directly connect
resources to where they are needed. Clearly the
platform and technology to connect people is
mature, hence P2P will have a promising future
in China.
Bank
In 2014, financial-services consumers are
turning to computers, smartphones, and tablets
more often to do business with their banks,
while visiting branches and calling service lines
are used less frequently. The rise of digital
financing has been accelerated notably by the
rapid increase in Internet and smartphone
adoption and growth in e-commerce. Both have
helped demand for digital financing move from
early adopters to a broad range of customers. It
is worth noting that most of the digital financing
services are provided by companies like Alipay
that come from an Internet background. For the
incumbent banks, apart from building up online
platforms and digitalised services, the priority
lies in cooperating with other business and
industry to provide end-to-end services and
experiences of high customisation.
Retail
Traditional retail stores in the digital age still
have the advantages of having actual products
to provide tangible experiences and spaces to
build face-to-face social interactions. Retailers
and online platforms will not stand as enemies,
but need to look for new touchpoints for a
shared career to balance mobility and
consistency, high speed and high quality.
Chances and Challenges for Conventional Business
Other consumer-faced business
Alipay set up a motion picture studio earlier this
year in order to empower movie production
with P2P lending. It is predictable that new
business models like this will emerge often in
the future. Innovative cooperations between
conventional business and Internet companies
may be a primary approach to survive. Only
when both resources and experiences are
pointed to the consumers will businesses bring
in consistent profit.
25. For questions or suggestions:
Cecilia (Si) Chen
si_chen@me.com
THANK YOU
VISIONS OF CHINA