How WeChat Pay took off with digital red envelopes - Matthew Brennan

Matthew Brennan

When Tencent started during the 2014 CCTV New Year show to promote giving red envelopes online, few realized it was the successful kick-off what is now known as WeChat Pay, says WeChat expert Matthew Brennan to the JingDaily. Some luxury brands did not like the concept though: "The idea of a discount communicates value and is generally not an incentive that luxury brands want to be associated with."

The JingDaily:

“It was a very important moment when red envelopes became popular because it is not an exaggeration to say that WeChat Pay itself was built upon the success of ‘lucky money’ or ‘red envelopes’ on WeChat,” said Matthew Brennan, a known WeChat expert and co-founder of China Channel. “Without lucky money, WeChat Pay wouldn’t have the adoption that it has today.”... 

There have been a number of other ways brands have adopted the concept of the red envelope in their daily marketing schemes through cooperation with WeChat Pay. After buying something in-store using WeChat Pay, consumers may, for instance, receive a red envelope with a surprise discount. Sometimes, payees are also prompted by the brand to send ‘lucky money’ to a friend, helping the brand expand its customer base. In most cases, Brennan says, the participating companies are consumer brands because the idea of a discount communicates value and is generally not an incentive that luxury brands want to be associated with. 

However, as WeChat and Alipay race to find ways to retain users for their mobile payment ecosystem, they continue to explore ways to incentivize shoppers and even promote various new technologies. Last year, on the tail of the global Pokemon Go phenomenon, Alipay included red envelopes in an augmented reality (AR) game where users could give the app access to their cameras and locations in order to see digital hongbao floating in front of them. Brands have gotten involved by teaming up with Alipay and “hiding” AR red envelopes in their stores or among their products, promoting online to offline (O2O) engagement among followers. WeChat has also empowered retailers to tap into O2O gamification using red envelopes, working with a mall to incentivize shoppers with a hongbao scavenger hunt. 

Luxury brands such as Hermès are already using mobile games as a marketing channel. In place of offering discounts, they can instead reward engagement with exclusive products or access to events. 

Alipay and WeChat Pay present significant new opportunities for brands operating in China. 

“There’s an intense war to protect those payment platforms and also to integrate increasingly more with offline payments, merging online and offline retail experiences,” Brennan said. ”From the backend, this also means utilizing data better and improving logistics as the expectations of the consumers in China are increasing.”

More in the JingDaily.

Matthew Brennan is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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