Analyzing the secrets behind "Xiaohongshu live streaming"

What secrets are hidden behind Xiaohongshu’s live streaming? The author breaks down the business logic behind the Xiaohongshu plan and analyzes and explores Xiaohongshu's operational strategy from four aspects.

Xiaohongshu announced last week that they were going to do e-commerce live streaming. This is a very big business move. For KOLs who are good at content in the industry, every new business direction or product function added to the platform means new traffic and business opportunities.

Xiaohongshu tried out a new "Brand Partner Platform Upgrade Instructions" plan in May this year, blocking creators who had not signed MCN contracts; at the end of July, it was required to be removed from official channels, which affected its growth over a two-month period, with DAU (daily active users) falling by about 2 million each month. In fact, these two node events have a huge impact on the commercialization progress of Xiaohongshu.

But the product scale has reached this stage, and commercialization is definitely an important strategy for Xiaohongshu in the future. Next, I will gradually analyze the business logic behind Xiaohongshu’s e-commerce live streaming and the release of a series of creator plans.

01 Why Xiaohongshu?

Old readers who are familiar with me know that the blogger has always paid close attention to the product Xiaohongshu. As early as the beginning of 2018, when Xiaohongshu's DAU was less than 2 million, I began to monitor their product growth curve.

In less than two years, we have seen them grow from one million DAU (daily active users) to over 20 million DAU. It took only about half a year to grow from 2 million to over 10 million. From the perspective of Internet products, this is impressive growth data.

In addition to daily active users, an important indicator to measure whether a product is good or not is retention rate. Xiaohongshu's over 50% next-day retention rate and high frequency of opening rates are the result of users voting with their feet; the positive significance of content on user stickiness has become a common consensus verified by the industry.

So today we can see that all e-commerce products are starting to work hard to create content including pictures, texts, and videos in their products. Because from the perspective of user mind, e-commerce is a "shelf", but Xiaohongshu is a "book". People don't browse shelves frequently, but they can often flip through books.

02 Why does Xiaohongshu want to offend KOL?

For any mobile product, when its product volume develops to a certain stage, the product will definitely drive business. This year's Xiaohongshu just stands at this crossroads.

In May 2019, Xiaohongshu released the "Brand Partner Platform Upgrade Instructions" plan. This plan stipulates that all KOLs who connect to brand promotion through the platform must sign a contract with an MCN agency. This has resulted in many influential individual creators being unable to receive promotion through official channels. On the other hand, some creators who want to receive promotion through official channels must find an MCN to sign a contract and are unable to maintain their independence. These rules and thresholds keep some KOLs out.

Failure to enter the platform’s cooperation plan means it will be difficult to obtain ideal commercial traffic. This is also the reason why KOLs made a lot of noise when the new platform was announced in May; Xiaohongshu’s traffic distribution mechanism is closely related to the quality of its content. Only KOLs and content judged as high-quality by the platform can gain more exposure. Many new KOLs who missed the platform traffic window have not achieved competitive exposure and fan accumulation, but they also want more traffic and opportunities.

Xiaohongshu is courting KOLs

The “Creator 123 Plan” launched by Xiaohongshu last week can be understood as a revision and in-depth supplement to the “Brand Partner Platform Upgrade Instructions” in May. The reason why the former is facing so many challenges is not only that it affects the enthusiasm of primary kols, but also that there is a fatal problem : it only sets a high threshold but does not tell the core users the rules and paths for rising.

This time, they obviously completed this logic. Comparing the two detailed rules, the lowering of the fan requirement and the inclusion of independent creators in the scope of brand cooperation have greatly lowered the threshold, and more kols will benefit.

These strategies show that Xiaohongshu is trying to show its favor to KOLs:

They want to retain the best creators on the platform through a series of product designs and operations. The newly launched Creator Center provides content creators with many tool-like functions. Help KOLs understand platform content trends and fans, thereby improving content production efficiency.

Secondly, we launched the paid note promotion tool "French Fries". It is like extending an olive branch, giving novice KOLs the opportunity to increase their skill points: this promotion tool is a bit similar to Toutiao Haowai, and can be used to accurately target custom groups of people, help analyze the results of the delivery, and provide sufficiently detailed delivery data analysis.

Capable teams and individuals still have the opportunity to enter Xiaohongshu from 0 to 1 even after missing the platform traffic window. But the team that will have a chance to come out in the end must be one with strong content and operational capabilities.

03 Can Xiaohongshu do live streaming well?

Although retention data and user stickiness are far better than traditional e-commerce, the high-threshold funnel from community products to e-commerce will greatly reduce the conversion rate of paying users. This is also one of the reasons why Xiaohongshu’s e-commerce has not performed well enough in the past few years.

They have opened their own platform called "Welfare Club" and introduced a large number of official flagship stores of well-known brands; in terms of supply chain and brand appeal, Xiaohongshu still has a lot of say. This confidence should come from the KOLs on Xiaohongshu who are good at promoting products accurately. Sometimes when you are looking for niche products of big brands, you often cannot find them on the entire Internet, but finally you find them on Xiaohongshu.

But another fatal problem is also looming over Xiaohongshu. The cost of acquiring customers for e-commerce is getting higher and higher. Teams like NetEase Kaola that seem to be making money are actually losing money on every sale at the operational level, and finally they sell to stop losses.

For content communities like Xiaohongshu, its self-operated platform and deep-funnel traffic conversion path mean that the cost of user acquisition and conversion is extremely high for content-based platforms to engage in e-commerce. It is impossible for Xiaohongshu to be very profitable through self-operation. Their most important assets, on the contrary, are the highly recognizable KOLs on the platform who are able to produce good content.

However, since they made a high-profile announcement last week that they would start live streaming, we can almost infer that, at a strategic level, Xiaohongshu’s KOLs will have the opportunity to obtain new traffic distributed by the platform. KOLs are important nodal figures in this wave of business strategies, because the platform obviously wants to build trust endorsement between the platform and users through live streaming, an online interactive product with a high penetration rate.

According to the official announcement of Xiaohongshu last week, the number of video notes in the Xiaohongshu community increased by 265% in a single month. The exposure rate and fan growth rate of video notes were 2.4 times and 2.3 times that of picture and text notes respectively.

Product designers and operators want to promote products through KOL live streaming. The live streaming product form takes up a lot of users' time. Kol is a node figure with appeal on the platform. As the length of Kol's content increases, the length of time and stickiness of users will also increase accordingly.

In terms of platform resources, Xiaohongshu's community temperament, user mentality and kol's ability to promote products give them sufficient resources to do live streaming. But it is worth mentioning that short videos and live broadcasts are really two completely different product forms.

Are the fairies on Xiaohongshu down to earth?

The personal labels of Xiaohongshu’s creators are still quite heavy. Many top creators know their heavy users very well. Their content releases are relatively vertical and are steadily directed at specific vertical groups of people.

Fans have some obvious preferences and preconceptions about the content of the KOLs they subscribe to. This is the advantage of sticky communities. Of course, the limitation also lies here. The personal label of the KOL will limit the categories of products that can be promoted. For KOLs, it is necessary to consider the matching degree between commercialization and personal labels.

For Xiaohongshu, the problem that may need to be solved is : Can the KOLs on the Xiaohongshu platform, who are good at sharing pictures and texts and making short video content, seamlessly switch to being anchors?

Live streaming is a product form that has relatively high requirements for anchors. Every anchor who can sell goods through live streaming is a top salesperson. They need to have a very good understanding of the product and the needs of their core fans, and while fulfilling their mission, they must also provide users with a series of emotional values. Can the graphic, text and short video bloggers on the Xiaohongshu platform really roll up their sleeves quickly and seamlessly switch to becoming anchors?

How to solve user mental problems?

The live streaming product itself is actually not that complicated. On the contrary, there is more work to be done at the operational level. For example, how will Xiaohongshu allocate traffic between live streaming and its original content business?

Live streaming is a business that has a lot of demands on scenarios, requiring users to have large blocks of time and relaxing scenes; and Xiaohongshu's original pictures, texts and short videos can all be consumed in fragmented time. In addition, if we suddenly engage in a live broadcast business with a completely different mindset, how can we ensure that different content reaches the right users accurately?

The least thing to worry about here are the kols. But they will also be anxious because they are more concerned about whether the new traffic strategy can cover themselves. And whether you can find your own position and reap your own benefits in the commercial closed loop actively built by this wave of platforms.

04 What is the secret behind Xiaohongshu’s series of operations?

Judging from Xiaohongshu’s latest release, its business ambitions go far beyond live streaming. Because they have launched three products including live streaming very intensively: brand cooperation platform, good product recommendation platform and interactive live streaming platform.

The official statement is that the brand cooperation platform and the product recommendation platform are both commercial updates based on picture and text notes, while the live streaming platform is Xiaohongshu's new attempt in the video field. That's right. But if you think about it more deeply, Xiaohongshu has a bigger ambition:

Sharing risks and rewards

This means that as a platform, you will formulate rules and participate in them, and play together with brand merchants, kols, and users. This new product launch series also means that brand merchants, kols, and brands and teams that are about to become kols will stand together with Xiaohongshu in business and share risks and benefits.

Xiaohongshu has built their own people, goods and venues. Allow several types of customers with different needs (brand owners, KOLs and third-party MCNs) to choose the products and services they need. In addition to creating good content, KOLs can also choose to pay to highlight their own content and test conversions based on their own judgment and confidence in the content. Brand owners can purchase KOLs and related services on the Xiaohongshu platform to bring better exposure to their brands.

These all give Kols and brands reasons to stay on the platform.

Some time ago, I wrote an article titled "Xiaohongshu: A Big Profit Business", in which I analyzed in detail the growth curve and business model of Xiaohongshu over the past few years. According to public information at the time, the commercialization level was limited to the platform manually helping brand owners and KOLs to bring products.

Now it seems that their underlying operating system has been upgraded to be more three-dimensional and intelligent. Users at every stage can actively use product components to obtain and meet their needs.

Latest data performance

After Xiaohongshu announced its latest strategy, I immediately checked its latest data. After they were taken off the shelves on July 31, the data showed a decline, but the stickiness is still good, the activity rate has increased slightly, and the user loyalty is still good.

We obtained the data trends before and after the products were removed from Xiaohongshu. Although the removal affected their traffic and overall growth, there was no steep drop. During the three-month period of loss of growth, the retention rate actually increased.

Xiaohongshu’s daily active data in 2019 (data source: QuestMobile)

After Xiaohongshu was launched on October 15, the data showed a zigzag rise, with a sense of steady pace. This shows that the delisting some time ago still has some impact on the product. However, the data trends they are presenting now also show that in order to ensure the quality of traffic, they have not made large-scale, pan-channel campaigns that would dilute users. It seems that Xiaohongshu's growth team is still relatively restrained.

I am paying close attention to the data performance of Xiaohongshu after the product changes. In addition to the fact that this is a big move in product design and operation, it is also because it is a huge adjustment at the strategic level. At least from this wave of series releases, it can be clearly seen that Xiaohongshu, like Taobao Live, Douyin and Kuaishou, has joined the live broadcast army.

Taobao’s live streaming can create new peak data every year on Double Eleven . The top traffic platforms + the top celebrity anchors + the top well-known brands are all far ahead of the rest; and Kuaishou’s live broadcast has directly brought goods outside the Fifth Ring Road. The down-to-earth anchors and loyal fans have proved that the relationship between the old friends is really "strong" with their explosive sales and high repurchase rates.

Douyin’s live streaming, traffic, and user time data are all enviable, but the product designers and operators soon discovered that the rich and handsome men and beautiful women in first-tier cities love to watch Douyin but don’t like to place orders on it. They then began testing live streaming sales in the lower-tier markets, and the data is much better than that in first-tier cities.

Xiaohongshu, which owns many big brands and top KOLs, can they take another path?

Author: Tingting's Brave World

Source: Official account: Geometry Miss (ID: jihexj)