SINGAPORE: Festive gift-giving is getting a digital transformation in China and becoming the new battleground for Chinese social media apps as e-commerce competition heats up.
Tencent’s WeChat has been testing out a new feature allowing users to browse, buy and send presents to friends and relatives, while Douyin, the Chinese version of TikTok, rolled out a similar gifting function back in January.
WeChat, a multi-functional platform that offers services from messaging to mobile payment and gaming, has more than 1.3 billion monthly active users, making it one of the most widely used apps in the world.
Its new “Send Gift” feature, added to its app store on Dec 19, allows users to “show appreciation” for their loved ones by searching for products priced at 10,000 yuan and below.
The feature is “being rolled out gradually”, WeChat said in a statement, and for now, is only available to a selected number of users in mainland China. “We are still working hard to gradually improve the relevant functions,” the company said.
Those able to use the function bought gifts like cosmetics and snacks and sent them on to their friends.
One user who went by the name Diana, shared her experience of sending makeup foundation worth 480 yuan to a friend, praising the “practicality” of the new service and saying it was useful for holidays like Christmas and birthdays.
She recalled her friend reacting with confusion upon receiving her WeChat gift.
“(She thought) she was sent a meme, but it was actually a Christmas gift,” Diana said.
The novelty of the new WeChat function also sparked discussion on the Xiaohongshu social media app, with some expressing excitement of being able to send gifts to friends and relatives quickly, with others commenting that they were eager for it to be rolled out on their accounts.
Some Xiaohongshu bloggers also shared step by step tutorials showing users how to send and receive gifts.
One user who went by the handle Momozi, expressed doubts, saying more improvements were needed and she did not see older app users trying out the gift giving function.
“Firstly, a gift should be a surprise. If not I’ll simply send a red packet,” she said. “Why not simply just send money?”
Irate users also left one star reviews on WeChat shop’s customer service platform, describing unfavourable experiences they had in dealing with unresponsive sellers and merchants who did not send out orders once placed, as well as the lack of refundable options.
How it works
The feature allows users to purchase products from WeChat stores and send them to other users through a virtual gift format.
Gifts are capped at 10,000 yuan, excluding jewellery and tutoring classes, with the option to hide prices from the recipient.
After selecting a product, users would then click on “send to friend” and complete payment.
There is also no need to include a recipient’s delivery address, WeChat said and gift orders will not contain buyer information or payment details.
Gifts are non-transferrable and users will not be allowed to cancel orders.
But if gifts are not accepted by the recipient within 24 hours, the order would then be cancelled and the money refunded to the sender’s accounts.
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RESHAPING THE GIFT-GIVING CULTURE
China’s e-commerce market is the largest in the world, generating billions in revenue and outpacing the United States.
Giving money and gifts is a huge part of Chinese culture and in 2014, WeChat introduced virtual red packets linked to its digital payment service.
The virtual red packets were a hit with users who received amounts of money in the form of transactions quickly and conveniently through their apps, and digitised a deeply-rooted Chinese tradition ahead of the new year.
It also gave Tencent the edge in the digital payment battle against e-commerce rival Alibaba’s Alipay system, industry experts said.
In 2017 alone, WeChat users exchanged around 46 billion digital red packets over the new year period in January.
Just as WeChat changed the way people gave out traditional red packets, can it do the same with its new “gift-giving” feature?
“Gifting is something deeply rooted in Chinese culture, just like red packets are,” said Li Jianggan, CEO of Singapore-based venture firm Momentum Works, adding that spending habits and gifting behaviour of younger Chinese differed substantially from elders.
Analyst Dave Xie from the Oliver Wyman global management consulting firm, called the new feature “a strategic move” on Tencent’s part.
“China’s e-commerce landscape has undergone significant transformations in recent years, driven by emerging platforms, evolving consumer behaviors and strategic adaptations by established players,” Xie told CNA.
WeChat’s “extensive” user base and established social connections could provide a unique advantage in driving e-commerce engagement, he added.
With more than 1.3 billion active monthly users, WeChat is a “powerful tool” and has something “none of the Chinese e-commerce platforms have”, Li said, a huge user network and trusted social map.
“As WeChat gradually gets deeper into social commerce and live commerce, there is a good possibility that the e-commerce competitive landscape (in China) will be reshaped.”
But it is still “hard to predict” if the new gift-giving function will be as popular and widely used among WeChat users as digital red packets, Li said, adding that it was “safe to assume” it would have a smaller use as compared to payment.
“That said, we believe that gifting is just one of the many attempts to effectively embed social commerce into the WeChat ecosystem.”
In line with government internet restrictions, app-associated services like Facebook marketplace and Instagram Shopping aren’t made available to Chinese users.
WeChat’s new gift-giving function is also not the first in the Chinese market.
Earlier this year, Douyin released a similar gifting function called “sui xin song” or “Gift as you wish” – allowing its users to send out gift vouchers.
It also ran a special Chinese New Year campaign allowing users to send gifts to their loved ones, with gifts worth over 40 million yuan sent.
Social gift giving “naturally” aligns with WeChat’s social DNA, Xie said, with the potential to “create unique social shopping experiences” for users on the platform.
But success will depend on being able to convert “social engagement” into sustainable sales growth.
One of the biggest challenges for the new gift-giving function would be how it functions and operates, Li said.
“What is the selection of products available… and how do you manage the user experiences and expectations? How (can WeChat) regulate the system so that it doesn’t get abused by illicit merchants and scammers?”
“This is something that Wechat can tap into if they find the right magic formula.”