How does Xiaohongshu implement its operational strategy?

It started out as a social platform and later developed into an e-commerce platform. Its scale has grown so much that it now has 25.6 million monthly active users and ranks 9th on the e-commerce list.

Who is this weirdo?

Yes, she is Xiaohongshu, and she is our protagonist today.

Xiaohongshu was created on June 6, 2013. Initially, it focused on sharing community content, starting with sharing beauty and personal care products, and later expanded to sharing content such as sports, tourism, home furnishings, travel, hotels, and restaurants, and guiding users to conduct transactions.

As of September 2018, its monthly active users have reached 25.6 million.

Ranked 9th on the e-commerce list.

To achieve such impressive results in the highly competitive e-commerce environment, there must be something different about it. So what is the difference of Xiaohongshu? Next, I will use the AARRR model to analyze it for you.

The so-called AARRR model stands for user acquisition (Acquisition), increasing activity (Activation), improving retention rate (Retention), spreading and sharing (Refer), and obtaining revenue (Revenue).

Acquisition

Xiaohongshu spends a lot of money to place advertisements in subways, Focus Media, TV dramas, variety shows and other channels, and then uses SEM to promote brand words to convert some of the users who conduct secondary searches. But these are just conventional methods of attracting new users. Although stable, they cannot bring about explosive user growth.

Therefore, Xiaohongshu has taken a different approach, using the characteristics of its own platform to invite celebrities who match the platform's positioning to join, such as Fan Bingbing, Wang Ziwen, etc.

You have to know that celebrities themselves are KOLs with huge traffic. Inviting celebrities to join the platform can directly convert some of the celebrities' fans into users, thereby attracting new users.

In addition to inviting popular stars to join the platform, Xiaohongshu is also good at taking advantage of hot topics. Whenever a variety show or TV series becomes popular, Xiaohongshu will definitely invite the main characters of the variety show or TV series to join the platform to attract a wave of traffic while the trend is hot. For example, we invited popular contestants from "Idol Producer" and "Produce 101" to join the platform, and we also invited Wu Jinyan from "Story of Yanxi Palace" to join the platform.

Although Xiaohongshu is very good at attracting new users by inviting celebrities to join the platform, it should be noted that the invited celebrities themselves must be able to bring up topics and be consistent with the platform's positioning. Just like Wu Jinyan from "Story of Yanxi Palace", sharing the concubines' lip makeup techniques on Xiaohongshu, wouldn't it attract fans of "Story of Yanxi Palace"?

Increase activity

We know that Xiaohongshu started as a community, so the "publish notes" module has always been a powerful tool for Xiaohongshu to increase its activity.

You should know that Xiaohongshu's user group is mainly female. Girls naturally like to share and record their lives, and the note-posting module just meets their needs for sharing. Think of Xiaohongshu as another circle of friends, where you can record and share every little detail of your life.

In order to make it easier for users to post notes, Xiaohongshu placed this entrance in the bottom center of the APP so that users can see it as soon as they open the software. This greatly optimizes the user experience, and it is natural that the activity level is high.

In addition, Xiaohongshu has set up a special growth system for users.

You can level up by liking other people's notes, collecting other people's notes, publishing your own notes, etc., and you will gain privileges corresponding to your level with each level up.

This undoubtedly increases user enthusiasm, and encourages users to complete tasks by killing monsters and upgrading. Once completed, they can upgrade and obtain higher privileges and more distinguished logos, thereby increasing product activity by stimulating users' vanity.

Improve retention

Xiaohongshu’s inherent social attributes have greatly improved user retention.

When we open the Xiaohongshu APP, the first thing we see is not the mall or the promotion, but the content.

Retain users through UGC and let users know that Xiaohongshu is not just a platform for selling things, it is also a social platform where they can see a lot of fun and interesting content every day.

The platform has also invited some celebrities to join. These KOLs often share some practical information, such as skin care, maintenance, makeup, etc.

The content is fun and interesting, and with the addition of useful information shared by idol celebrities, the user churn rate is naturally low.

Refer

People naturally like to share fun, interesting and useful content.

Therefore, the essence of Xiaohongshu's guidance for users to actively share is still content. When users see content they like, they can directly share it to social platforms such as QQ, WeChat, and Weibo.

This will indirectly bring traffic to the platform, and because users are attracted by content, their sense of identification with the platform will be stronger and the churn rate will be lower.

Revenue

Xiaohongshu's main profit source is e-commerce, and I don't need to say much about this, everyone knows it.

However, the difference is that in addition to regular sales, Xiaohongshu also uses content to stimulate users' desire to buy and plant seeds in users' minds.

For example, some KOLs will share their experiences in using products, skin care, makeup, etc.

Pictures speak louder than words, so users can easily immerse themselves in the content. Stimulated by the content, they will easily buy products recommended by KOLs. In this way, KOLs can achieve profitability and Xiaohongshu can also get a piece of the pie.

In addition to making profits through e-commerce, Xiaohongshu's other profit point lies in its membership system.

There are three price levels for membership: 199 yuan annual card, 55 yuan quarterly card, and 19.9 yuan monthly card.

Obviously, from the overall price point of view, the 199 yuan annual card is more cost-effective, equivalent to only 16.5 yuan per month, which is suitable for users who use Xiaohongshu for shopping for a long time.

Quarterly and monthly cards are for users who use Xiaohongshu for short-term shopping. Joining the limited-time membership is nothing more than using the "scarcity psychology" to inform users that if they don't buy, the price may increase, prompting users to make up their minds to purchase membership.

It is not enough for the price to be reasonable, the membership value of Xiaohongshu must also be worth the money.

So when we open the membership menu of Xiaohongshu, the first thing we see is not the purchase price, but that membership can save users 3,865 yuan, which directly addresses the user's pain point. When users see that they can save so much money, they will definitely click on the details to see the purchase price and what privileges and discounts they can enjoy.

In this way, seeing that membership only costs 19.9 yuan per month (annual membership is even cheaper), the value brought by the membership is simply too cheap, so once there is a need, most people will purchase a membership.

By breaking down the AARRR model, we will have a much clearer understanding of Xiaohongshu's operating model. But this is only the front-end operation of the product. If a product wants to be successful, it needs support from the back-end as well as the front-end.

We know that Xiaohongshu mainly deals in overseas shopping and sells imported goods. Imports are taxed and the express delivery is slow. It takes at least ten days to half a month from the time the goods are purchased to the time they reach the user. This would greatly affect the user experience, and Xiaohongshu would not be as successful as it is today.

Therefore, Xiaohongshu’s success today is also inseparable from the back-end operations and its bonded warehouse of more than 50,000 square meters.

Wait, what is a bonded warehouse?

Simply put, a bonded warehouse is a place used to store imported goods after they have been approved by the customs. Taxes do not have to be paid first, and taxes will be paid after the goods are sold.

With the support of bonded warehouses, purchasing imported goods is no longer so troublesome. It used to take ten days or half a month for overseas purchases to arrive, but now it only takes 2-3 days. It used to be impossible to return defective products purchased through overseas shopping because it was too troublesome, but now you can return them within one month.

Therefore, the user experience has improved a lot. When purchasing imported goods, people naturally prefer Xiaohongshu, which is not only fast but also safe and secure.

Summary: Xiaohongshu’s success is not due to e-commerce, but to content. This is what makes it different from other e-commerce platforms and the key to its ability to stand out in the fiercely competitive e-commerce field. In addition to the success of front-end operations, Xiaohongshu's back-end support is also very good, greatly optimizing the user experience.

Therefore, if a business or a product wants to be successful, it needs the mutual support of the front-end and the back-end, just like a person’s hands, neither of which can be missing.

Source: Xinmo Marketing