From ancient custom to modern marketing tool: meet the e-Hongbao

From ancestral customs to modernity: meet the e-Hongbao

Where does this tradition come from?

Historically, Chinese people would thread coins on a string in order to ward off evil spirits. Indeed, the goal was to protect the next generation from sickness or death. This custom was then replaced by the red envelope. People would write blessings to give to their loved ones for special events like the birth of baby, a wedding, summer holidays, etc..

Today, this tradition is taking another dimension, and a new trend  was exploding in the digital universe as we switched to the Year of the Monkey (2016).

Tradition become digital phenomenon in China:

Nowadays, this tradition has become connected with Hongbaos which are sent for the Spring Festival. Chinese people are using Hongbaos to send their wishes to relatives and friends, this practice has now become digital.

The Chinese population can send a Hongbao via their smartphone: the ancestral tradition is respected and it is inconceivable not to send a “digital red envelope”.

Today, the country’s three biggest internet companies Baidu, Alibaba and Tencent are offering their own version of online red envelopes and dressing up the custom with games and giveaways.

Red envelopes can be sent by Wechat service too. In order to send gift money on WeChat, users need to click on a “red envelop” button in the main menu, then choose an amount and enter a gift message. Depositing money into each other’s WeChat pay accounts is quick and more convenient than withdrawing cash. A huge advantage is that several people can receive your red envelopes at the same time.

E-Hongbaos : a positive impact on the economy:

Since the start of this e-Hongbao trend, all of the biggest platforms in China (such as Alibaba or Wechat) are fighting each other to win the e-Hongbao market. This new kind of payment has huge potential with the opportunity to develop money games, e-commerce promotions or personalized content when people receive money. In addition, e-Hongbao is a new platform for advertisement: people could even be exposed to targeting ads via a Hongbao.

The e-Hongbao will never ultimately replace the traditional red envelope but it does offer a fantastic opportunity for savy marketers to target consumers via this medium.

Benji lives in Shanghai, China and specializes in digital marketing, e-commerce and social networking in the mysterious orient, for more information see his blog and website here.


Business Models or Lack Thereof

Ben Griffith of the LA Times has written a piece that unashamedly states ecommerce business model innovation is dead. And by virtue, Amazon is winner takes all. He writes:

When it became clear in 2012 that Groupon and Gilt would not live up to soaring expectations, copycats pivoted away from the model. But instead of focusing on the fundamentals (supply-chain management, say, or customer service), many of them simply latched onto the next hot strategy.

With such carnage, it’s puzzling that so many e-commerce entrepreneurs continue to chase buzzy new business models.

Why do ecommerce operators chase new business models? Griffiths goes further:

…the explanation is simple: As long as there’s an Amazon, there will be e-commerce fads. The Jeff Bezos-led behemoth has already won on price, selection and service. All that leaves is novelty.

We’ve written before about business models but is the author correct?

Whilst there’s ongoing evidence to the contrary, particularly in other markets e.g. in China or India’s Snapdeal, perhaps he’s right. Content, Subscriptions etc have all been tried (Net-A-Porter, Thrillist etc) and yet not a single IPO signalling a viable business.

Should everyone give up on the illusive IPO? If Zappos couldn’t do it, can If you’re running a store, what is your exit? Let us know in the comments.

China’s Luxury Goods Industry Set For Bright Future.

Retailers, investors and industry insiders believe China’s luxury goods industry, despite losses in 2015, is still headed for a brighter future, coasting on the momentum of double-digit growth in recent years. Bain & Co, a respected research institute recently confirmed such optimistic predictions. In 2015, Chinese consumers bought 46 percent of the luxury goods consumed worldwide whilst a staggering 78 percent of luxury goods were bought outside of China. This clearly presents a huge opportunity for western, luxury brands.

Chinese consumers of high fashion and luxury goods are becoming increasingly discerning. By buying and encouraging the best among the existing luxury brands, Chinese consumers are emerging to be powerful trendsetters, affecting the trajectory of the whole industry itself.

There have been significant developments with Shandong RuyiGroup, one of China’s leading textile producers, reportedly joining the bidders for French fashion group SMCP on Jan 20, according to a Bloomberg report.

SMCP is estimated to be worth more than $1 billion. The group owns affordable luxury brands such as Maje and Sandro, which have been enjoying surging popularity among China’s burgeoning middle class in the last few years.

Zhou Ting, director of the Fortune Character Institute said; “The (luxury) market remains one of the most lucrative for now and (shall remain so over) the next decade. This means, if Chinese companies and investors want a share, they should be more actively involved in every link of the supply chain, from designing and manufacturing to marketing and retailing.
Benji specializes in e-commerce, SEO and digital marketing in China and lives in Shanghai, for more information see his website/blog here.