Why Luxury Loves Virtual Red Envelopes

Overview:

It is an ancient Lunar New Year tradition for Chinese families to give and receive “Hong Bao 红包” (red envelopes) to friends and relatives. The red envelope consists of a monetary gift inserted into a sleeve adorned with red paper and offers good luck wishes to the recipient for the coming year.

And with the introduction of the electronic red pocket feature on WeChat, citizens can now send virtual red envelopes, which are especially useful for those who cannot physically meet during the season. It is an innovative way for luxury brands to adapt their strategies to local consumers.

What happened:

The convenience of electronic red envelopes has led to more locals sending online versions of this traditional gift. However, plain envelopes no longer satisfy home users, and users are now looking for glamorous graphics and decorations to personalize and beautify their envelopes as they do with their physical counterparts.

In 2019, WeChat officially launched its “personalized red envelope” feature for business users, allowing businesses to offer WeChat’s 1.2 billion users fancy red pocket covers to send to friends and family. . The following year, Gucci tested the feature and released Year of the Rat, limited-edition Mickey Mouse red envelopes. And in 2021, many luxury brands have followed suit with Gucci.

This year, brands are taking the platform’s customizable red envelope feature to the next level. Alongside exquisite and festive illustrations, the Maisons have added sophisticated and entertaining elements to these virtual red sleeves. For example, Hermès allows users to customize their red envelopes with animations and happy tunes. Meanwhile, jewelry brand Van Cleef & Arpels has created GIFs to download and embed in their pockets. Saint Laurent also allows users to play interactive mini-games to open their red envelopes.

Luxury brands show off tiger-themed red envelopes for 2022. Photo: Weibo

Why is this important:

The online platform charges ¥1 ($0.16) for each personalized red pocket posted. Therefore, if a million users download them, it would cost brands $160,000. “[The red pocket] is a relatively inexpensive way to generate buzz around the brand,” says Olivia Plotnick, Founder of Wai Social. “This is personalized, highly shareable and affordable content on one of the most valuable social media platforms for luxury brands in China.” Moreover, the initiative undoubtedly brings brands closer to local traditions – a strategy that fully mobilizes consumer psychology.

Today, many luxury brands are taking this initiative even further. Versace, Louis Vuitton, Fendi and others have elevated their marketing strategies with a strategic data collection move – offering limited daily coverage and requiring user insights or the compilation of surveys in exchange for access . “To some extent, this is a good CRM strategy for VIP customers or new fans,” notes Danni Liu, founding partner of iBlue Communications Europe & US office. But Liu warns that “if the limited red envelopes are bought and then resold by resellers [resellers]then the brand will no longer be able to obtain useful data.

The bottom line:

Personalized virtual red envelopes are common tactics adopted by luxury and fast-food brands. To differentiate themselves, Liu says, “Houses should give more importance to the design of the interaction mechanism, rather than its aesthetics.”

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