Xiaohongshu product analysis report!

Xiaohongshu has accumulated a user word-of-mouth database by attracting users to share their shopping experiences. At the same time, by inviting celebrities and internet celebrities to join and establishing personalized push notifications, the conversion rate has been greatly improved. At the same time, Xiaohongshu has achieved a virtuous cycle of note browsing, product purchases, and experience sharing through brand cooperation and e-commerce traffic diversion. However, Xiaohongshu still has shortcomings in terms of overseas shopping supply chain and logistics, and needs to be optimized in this area.

Table of contents:

1. Product Overview

1. Experience Environment

Product name: Little Red Book

Experience time: 2019.1

Experience version: 5.38

Experience system: iOS 12.1

1. Product Introduction

Xiaohongshu is a UGC-based life-sharing community and cross-border e-commerce platform established in June 2013. In October of the same year, Xiaohongshu launched shopping guides for eight overseas shopping destinations, and in December launched an overseas shopping sharing community, namely Xiaohongshu v1.0.0. As the community grew and matured, users developed a desire to purchase the products discussed in the community, so in August 2014, Xiaohongshu launched the e-commerce platform "Welfare Club". Upgrade e-commerce from the community to complete the business closed loop.

From 2014 to 2016, Xiaohongshu's slogan changed from "Good Things from Abroad" to "Good Things from All Over the World", "Good Life from All Over the World", and then to the current "Mark My Life".

In June 2018, Xiaohongshu changed its category from shopping to social networking, and has remained in the top ten on the social rankings of various websites.

These indicate that Xiaohongshu has gradually transformed from an overseas shopping guide community into a lifestyle sharing platform, its social attributes have become increasingly strengthened, and its e-commerce brand has gradually expanded from overseas to overseas + local.

From 2017 to 2018, the number of Xiaohongshu users increased sharply due to effective operations and market operations.

As of January 2019, the number of registered users exceeded 200 million and the daily active users exceeded 10 million, making it the world's largest community e-commerce platform.

In terms of profit model, Xiaohongshu said that it currently only relies on e-commerce for profit. One part is the commission from store transactions on the platform, and the other part is the income from self-operated stores, each accounting for about half. The revenue of self-operated stores includes the revenue from the mall’s own independent brand products and the profits from the mall’s self-operated overseas products.

Xiaohongshu completed its Series D financing of more than US$300 million last year.

The following is Xiaohongshu’s historical financing situation:

• In October 2013, Xiaohongshu completed an angel round of financing worth millions of RMB, invested by ZhenFund.
• In March 2014, Xiaohongshu completed a multi-million dollar Series A financing.
• In November 2014, Xiaohongshu completed a US$10 million Series B financing round led by GGV.
• In March 2016, Xiaohongshu completed a US$100 million Series C financing round invested by Tencent, Yuansheng Capital and Tiantu Capital, with a company valuation of US$1 billion.
• In January 2017, Xiaohongshu received another million US dollars in funding from ZhenFund.
• At the end of May 2018, Xiaohongshu announced that it had completed more than US$300 million in Series D financing, and the company's valuation exceeded US$3 billion. This round of financing was led by Alibaba, and new and old investors including GSR Ventures, Tencent Investment, GGV Capital, Yuansheng Capital, Tiantu Investment, ZhenFund, and K11 Adrian Cheng all participated in this round of financing.

2. Market Analysis

1. Market environment

Market size and trends:

Source: iResearch

Although China's economic growth trend is slowing down, it is still in the growth stage.

As China's per capita disposable income continues to increase, consumers have more funds at their disposal. At the same time, the size of the online shopping market and the relatively stable growth of my country's import trade have provided a good market environment for the development of the cross-border e-commerce industry.

In 2017, the scale of China's cross-border import retail e-commerce market was approximately 111.34 billion yuan, with a growth rate of 49.6%. In the next few years, as policy fundamentals remain favorable, the import e-commerce retail market is expected to maintain steady growth.

The main consumer group in the market has gradually shifted to the post-80s and post-90s groups.

The economic conditions and consumption levels of this new generation of middle-class people have reached new heights. The purchase of items is no longer limited to basic needs, and the requirements for the quality of the goods they want are constantly increasing. At the same time, having grown up in a new cultural and market environment, they have more advanced consumption concepts and new demands for lifestyles that go beyond traditional cognition, which results in higher consumption needs.

Therefore, overseas shopping has become a trend as product markets are more mature overseas.

Faced with information asymmetry and unfamiliarity with overseas brands, consumers are faced with the problem of not knowing "what to buy" and "where to buy" when purchasing overseas products. Xiaohongshu started as a community and eliminated the information gap for consumers.

With the maturity of the market and the introduction of new policies, we started cross-border e-commerce business and successfully opened up our own market.

Policy impact:

Source: iResearch

Policies have played a vital role in the development of cross-border e-commerce in my country and also determine the life and death of cross-border e-commerce platforms.

In July 2014, the General Administration of Customs issued two announcements - No. 56 and No. 57 - which recognized cross-border e-commerce and the bonded model at the government level.

This series of policy dividends directly stimulated the domestic cross-border e-commerce retail import industry to achieve explosive growth in 2015.

According to data from the General Administration of Customs, as of 2015, my country's cross-border e-commerce exports and imports had increased by 4.9 times and 16 times year-on-year respectively.

On April 8, 2016, in order to promote the healthy development of cross-border e-commerce, the new cross-border e-commerce policy was implemented. The policy stipulates that cross-border e-commerce channels will change from levying postal and express tax based on item categories to levying customs duties, consumption taxes and value-added taxes. At the same time, a positive list of cross-border retail import e-commerce was announced, and the categories of cross-border goods were restricted.

The new policy has led to a reshuffle in the industry. As the new policy has had a significant impact on bonded overseas shopping, many cross-border e-commerce companies using the bonded import model have gone bankrupt because they have large inventories but are unable to sell their goods, and they could not withstand the impact.

However, one month after the new policy was implemented, in order to stabilize the market, the General Administration of Customs notified 10 pilot cities to grant a one-year transition period for some policies and continue to supervise in accordance with the requirements before the implementation of the new tax policy.

The transition period was subsequently extended at the end of 2016, the end of 2017 and the end of 2018 respectively.

In general, the several extensions indicate that in the short term, the country still supports and protects cross-border e-commerce, the industry as a whole is in a period of favorable policies, and China's cross-border e-commerce industry will continue to grow without major policy changes.

User focus elements:

Source: iResearch

Due to cross-border information asymmetry and the relatively high consumption of cross-border online shopping, "authenticity guarantee" has become the most important factor for consumers when purchasing goods across borders.

41.2% of users clearly stated that they value authenticity the most, far more than price, delivery and other factors. “Price discount” ranks second, indicating that consumers are more sensitive to prices.

In addition, when choosing a cross-border e-commerce platform, the credibility and reputation of the website/APP is also one of the important factors that users value.

This is mainly because cross-border e-commerce platforms with good reputation tend to have better guarantees on authenticity. Xiaohongshu, which has been repeatedly exposed for counterfeit goods, is inferior to big brands such as Tmall Global and NetEase Kaola in terms of authenticity assurance, and its credibility and reputation are therefore relatively poor. This is indeed one of the reasons why Xiaohongshu's e-commerce development has stagnated.

1. Competitive product comparison

Sales comparison:

Source: Analysys Qianfan

In the cross-border import retail e-commerce market share data for the fourth quarter of last year released by Analysys International, Xiaohongshu ranked sixth with a share of 3.7%, far behind giants such as Tmall Global, NetEase Kaola, and JD Global Shopping.

In the comparison of independent cross-border import retail e-commerce companies, Xiaohongshu ranked second with a share of 11.1%, far lower than NetEase Kaola, which ranked first with a share of more than 70%.

Source: Analysys Qianfan

From the first quarter to the fourth quarter of last year, Xiaohongshu's cross-border e-commerce market share continued to decline - from 4.3% in the first quarter to 3.9% in the third quarter, and then to 3.7% in the fourth quarter.

Since the overall market is expanding, a decline in market share does not necessarily mean a decline in Xiaohongshu's transaction volume, but the continued decline in market share shows that Xiaohongshu is not competitive enough and is unable to compete with leading players such as Tmall and NetEase Kaola in the cross-border e-commerce market.

According to Analysys International’s analysis, the competition landscape of the cross-border retail e-commerce market has formed a head effect.

Tmall Global ranks first, followed by NetEase Kaola and JD Global Shopping in second and third place, and the pattern has become stable. The market share of other cross-border e-commerce platforms such as Vipshop International, Xiaohongshu, Suning Overseas Shopping, and Fengqu Overseas Shopping are all below 10%, and the market share is fierce.

On the one hand, Tmall Global and JD Global Shopping have their own huge traffic and have mature platform operation models in logistics and marketing. On the other hand, NetEase Kaola started with a differentiated self-operated model, strictly controlling product quality to win the trust of consumers, and its logistics are not inferior to those of old e-commerce giants such as Alibaba and JD.

Small and medium-sized cross-border e-commerce platforms such as Xiaohongshu are dwarfed by giants such as Tmall Global and NetEase Kaola, and it is very difficult to seek a larger market share in such a competitive environment.

App usage comparison:

Source: Analysys Qianfan

Among cross-border e-commerce apps, Xiaohongshu ranks first in daily active users and average daily usage time per person, and its daily active users are far higher than NetEase Kaola, which ranks second, and other overseas shopping products.

Thanks to the accumulation of notes on the use of overseas shopping products in Xiaohongshu's early community content, the accumulation of these high-quality notes has attracted users to stop in Xiaohongshu to browse, collect, and discuss, ensuring the high activity of the community.

Source: Analysys Qianfan

As a cross-border e-commerce platform, Xiaohongshu's main competitors include Tmall Global and JD Global Shopping, so Xiaohongshu is also compared with Tmall and JD.

Data shows that even compared with e-commerce giants like Tmall and JD.com, the average daily usage time of Xiaohongshu is still very high, and its social + e-commerce characteristics are unique.

Although Xiaohongshu's daily active users are lower than those of Tmall and JD.com, its growth trend is obvious, more than doubling in one year.

The above data is as of the second quarter of 2018. In January 2019, Xiaohongshu’s daily active users reached 10 million. According to the trend in the above figure, it should have surpassed Tmall.

In general, as a life sharing community and e-commerce platform, Xiaohongshu's e-commerce retail performance is mediocre, but as a community and social application it has great advantages.

Xiaohongshu community has grown rapidly in the past few years. According to iResearch, Xiaohongshu ranks second in the list of secondary category comprehensive communities, second only to Baidu Tieba. The number of active users far exceeds Zhihu, Douban, etc., which shows that the community has become a strong fortress for Xiaohongshu.

However, as an e-commerce platform for overseas shopping, Xiaohongshu has a low degree of recognition, and most users are only active in the community but do not purchase in the mall. When people need to shop overseas, they turn to platforms such as Tmall Global and NetEase Kaola, making it difficult for Xiaohongshu to develop in the cross-border retail e-commerce market.

3. User Analysis

1. Crowd portrait

Source: Analysys Qianfan

From the above data, we can conclude that the user distribution of Xiaohongshu has the following characteristics:

In terms of gender distribution, women make up the vast majority, while male users only account for 12.76%.

When the Xiaohongshu community was first established, most of its users were women who shared shopping experiences with each other, and its marketing and operational activities in the middle and late stages were also centered around female users.

From traditional commerce to today's Internet industry, women's social attributes give them higher purchasing power, so it is wise for Xiaohongshu to target women as its user group.

In terms of age distribution, users under the age of 30 account for nearly 70%, and are the main population of the product, among which users under the age of 24 account for about 40%, and users aged 24-30 account for about 30%.

In terms of consumption capacity distribution, among Xiaohongshu users, medium and upper-middle consumers originally accounted for a large proportion, but recently the proportion of low consumers and lower-middle consumers has increased rapidly.

It is speculated that Xiaohongshu, as a platform for overseas shopping and sharing overseas shopping experiences, has accumulated many middle- to high-spending and older target users for overseas shopping.

Recently, Xiaohongshu’s advertising in variety shows and the participation of celebrities have attracted many younger students with lower spending power.

From the provincial distribution, it can be seen that Xiaohongshu users are mostly concentrated in economically developed coastal provinces, among which Guangdong Province has the largest number of users.

Compared with second- and third-tier cities, first-tier cities have the largest number of Xiaohongshu users, accounting for 40.94%.

To sum up, it can be concluded that the main user group of Xiaohongshu is young women living in big cities.

1. Usage scenarios

Strong purpose, special browsing

Xiaohong, female, 24 years old, works in an Internet company in Hangzhou.

Her skin care products were almost used up, and she wanted to switch to other brands, but she didn’t know which product was more cost-effective and more suitable for her skin type, so she first went to Xiaohongshu to look through the notes. Based on other people’s reviews, I decided to buy Clinique’s lotion and lotion set. I happened to see it was on sale in the Xiaohongshu mall, so I placed an order.

analyze:

Users with clear browsing goals browse corresponding products or categories of interest based on their goals, and judge whether the products are worth buying or what products can be purchased under this category based on the notes of other users.

At this point, the community needs to have enough reliable and comprehensive reviews to share. From product selection to ordering and payment in the mall, and from search to results page in the community, the interaction should be smooth and convenient. The items sold must be guaranteed to be authentic.

Weak purpose, random browsing

Xiaoduo, female, 27 years old, works in a public institution in Jinan and has a stable income. On the subway on the way to work, she felt a little bored, so she opened Xiaohongshu to check the notes recommended by the system. When she saw something that interested her, she clicked on it to browse.

analyze:

Users who do not have a clear browsing purpose browse products randomly in their spare time, such as on their way to and from get off work, during lunch break, etc.

Users in this scenario have already established strong stickiness and trust in the product. At this time, it is necessary to use precise algorithms to recommend content that users are interested in, or to recommend content that has been viewed a lot and discussed a lot recently.

Social Psychology

Keke, female, 21 years old, studying at a university in Shanghai.

I had afternoon tea at an internet-famous coffee shop and took a lot of beautiful photos, so I opened Xiaohongshu and posted my consumption. After publishing several high-quality notes, Coco accumulated a large number of fans, attracted the attention of businesses, and began to take advertisements to subsidize her living expenses.

analyze:

Users share their lives in the hope of gaining recognition, satisfying their sense of accomplishment and a little vanity, and highlighting their unique attitude in the eyes of others.

The product should take into account the user hierarchy, stimulate the user's desire to create, and encourage users to become experts in the community. At the same time, you should avoid publishing too many commercial notes, which will affect other people's community experience.

other

Various businesses, including brands, internet celebrities launched by MCN agencies, individual overseas shopping agents, etc., hope to bring Xiaohongshu's traffic into their own pool to make profits.

4. Product Analysis

1. Product structure diagram

(Continued from the previous picture)

1. Functional analysis

The following is an analysis of Xiaohongshu’s login and registration/login-free usage functions, community functions, and e-commerce functions.

Login registration/login-free use function:

In order to increase registered user growth indicators, earlier versions of Xiaohongshu forced users to log in immediately after entering the app, otherwise they would not be able to continue using the app.

However, Xiaohongshu has recently cancelled this setting. By default, unregistered users can directly enter the browsing process after filling in their personal interests, and are only required to register when using advanced functions such as posting notes and interacting with users.

This change reduces the steps for new users to open the app and start using it, reducing user churn.

The personal interests and information filling part reflects Xiaohongshu's excellent personalized recommendations. Each step is optimized based on the information filled in the previous step, so that the page users see after entering Xiaohongshu is more in line with personal needs.

For example, when selecting content of interest, users of different ages and genders see different content.

On the interest selection page for 20-year-old men, the top items are men's matching, men's hairstyles, music and games; while on the interest selection page for 30-year-old men, the top items are music, home decoration, cars and sports; and on the page for 30-year-old women, the top items are hairstyles, fashion wear, celebrities and skin care.

After entering the app, Xiaohongshu’s guidance for new users is also very clear, which can greatly improve user stickiness and conversion rate.

On the discovery page, there is a prompt to "Click on the premium content". After clicking it, there is "View related notes" at the bottom of the page.

Then “Try double-clicking to like” will appear in the middle of the note details. After clicking the "like" button, interesting encouraging words will appear on the page, such as "Guess what will appear next time you like" and "Thank you for your likes", and the prompts will be different each time to encourage user interaction.

If the user has turned off notifications on Xiaohongshu, Xiaohongshu will ask the user whether to allow push notifications after a few likes to increase the user's possible usage frequency.

These also reflect Xiaohongshu's high control over details.

Community Features

The homepage of Xiaohongshu is the community, with three tabs to choose from: Follow, Discover, and Nearby.

In addition to Tab switching, there are two main modules: Search and Feed, of which Feed occupies most of the space.

This is also consistent with the user scenarios analyzed previously, namely: community users are mainly divided into active and passive browsers. Active browsers search after coming to the homepage, while passive browsers obtain information by reading the feed flow.

The following analysis is conducted from three perspectives: home page, search page, and note details page.

Home page analysis – No clear browsing purpose

Among the three tabs of Follow, Discover, and Nearby, the Discover Tab and Nearby Tab are displayed in a waterfall flow format, while the Follow Tab is displayed in a normal feed flow format similar to Weibo and Moments.

This is mainly because the notes recommended to users through intelligent algorithms in the Discovery and Nearby tabs require users to obtain more information in a short period of time. The waterfall flow can just meet this demand. At the same time, the staggered layout of pictures allows the line of sight to flow freely, which can also relieve the user's visual fatigue.

On the contrary, in the focus tab that distributes notes in a subscription mode, users only see the content that interests them and need to see the details of the notes at a glance, so the waterfall flow is not suitable.

After Xiaohongshu received its Series D financing in May 2018, it stated that this round of financing would be used to increase investment in product technology, especially the construction of facilities for algorithm distribution.

Xiaohongshu's personalized recommendations are becoming more and more perfect on this basis. Whether the user likes or collects notes, or simply clicks into the note details page and then returns, the background will record it and recommend related notes accordingly.

For example, after clicking to play a dance video of "Pipa Xing" on the discovery page, you can refresh the page to see other versions of the dance video of "Pipa Xing" added to the push.

By creating pages based on users' personal usage, Xiaohongshu has been benchmarking Douyin in the community section, striving to achieve "one thousand faces for one thousand people" and provide users with information that they are truly interested in.

For a long time, Xiaohongshu's discovery page listed 17 types of notes to choose from in addition to search, feed and tab switching functions, including videos, beauty, fashion, film and television, etc. This feature has been removed in the latest version, presumably because we don’t want the note types to limit users’ expectations for push notifications.

However, I personally think that although this note filtering function does not have to be presented in the original way, it is still necessary.

In the current version, Xiaohongshu’s personalized recommendations are sensitive to user operations but are imperfect. Notes that users are interested in but have not been discovered and pushed are buried among millions of notes, and there is a lack of an additional reminder system for users to see them.

Xiaohongshu has a tendency to become more entertaining, but as a lifestyle sharing community, it is not interesting enough. Many users use Xiaohongshu because of its practicality in shopping scenarios.

Based on the existing topic function of Xiaohongshu, it is recommended to add a topic subscription tab to display the feed flow of subscribed topics, allowing users to view the required information more effectively.

Search page analysis – with clear browsing purpose

After entering text in the search box, the page automatically enters Figure 2 above.

The first two items in the search term list are searching for products and searching for notes, and the third item onwards is the completion of the input text. Users can choose at this step - do they want to view related notes or shop in the mall? There is no need to jump to the result page after clicking search, and the interaction is simpler and smoother.

In the search results page, in addition to the traditional filtering function, Xiaohongshu also has related topics and related keywords functions to help users find the notes they need most.

• Click on a related topic to enter the topic page, where you can browse notes, follow topics, post notes under this topic, or click to enter other related topics.
• Clicking on related keywords will filter the original search results.

The search results page still uses a waterfall layout, with images accounting for a much larger proportion than text. Although beautiful, it does not meet the original intention of users to search for information.

Therefore, it is recommended that Xiaohongshu add a function to switch the layout of the search results page and increase the proportion of text content in another layout.

In addition, Xiaohongshu mainly determines the ranking of note search results based on the number of likes and collections, and it is easy for merchants to post advertisements and obtain higher result rankings by means of brushing likes, etc. You can even find many discussions among merchants on the Internet about improving the ranking of Xiaohongshu search results.

This proliferation of advertising has reduced Xiaohongshu’s credibility in the minds of ordinary users. It is recommended that Xiaohongshu crack down on the practice of brushing likes and modify the ranking logic of the result page to reduce the impact of advertising on the community.

Note details page analysis

Xiaohongshu notes are divided into two types: ordinary notes (picture notes) and video notes.

Click on a normal note in the waterfall flow to enter the picture and text details, and swipe up to enter the related picture and text note feed flow. The information is relatively clear at a glance, and the page interaction is similar to Moments and Weibo.

Click on the video note to enter the video playback window, and swipe up to enter the next related video. The experience is more immersive and entertaining, and the page interaction is similar to TikTok.

In the playback window of the video note, click on the text part to enter the same page as the ordinary note details page, but no feed stream is displayed when you swipe down.

In terms of the specific functions of the note details page, video notes are not much different except for the addition of pause and play functions.

The functional modules of the note details page include: traditional likes, collections, comments, shares, follows, topics, as well as Xiaohongshu’s special features - tags and product links within notes.

• Product link function: divert traffic to Xiaohongshu Mall. If users are interested in the products in the notes and Xiaohongshu happens to sell them, they can click the link to enter the mall and place an order.
• Label function: Make the information conveyed by the picture more clear at a glance, and interesting custom labels make the notes more playful and cute. Can the tag content be the brands that have settled in Xiaohongshu, the stores and products in Xiaohongshu, prices, geographical locations, topics or user-defined content?

In the note details page, the image occupies the largest area of ​​the page. If the text is too long, it will be compressed and you can only see the full text by clicking to expand it.

Comparing purposeful and non-purposeful browsers, purposeful browsers can obtain product comparison information from texts, and at this time texts are more valuable than pictures; while for non-purposeful browsers, pictures and videos are more eye-catching and entertaining.

From this point of view, Xiaohongshu's page design takes aimless viewers into consideration, which is indeed more reasonable. Since purposeful viewers will leave the platform after completing their goals, retaining purposeless viewers can bring Xiaohongshu higher daily activity and average daily usage time per person.

Currently, some fonts in notes are not editable. Although users can make notes more readable by inserting emoticons, long paragraphs of text are still not easy to read.

It is recommended to add text editing functions, especially bolding and underlining, to make it easier for readers to find the key points in long paragraphs.

In addition, the search result details pages for videos and pictures are currently not connected to each other. It is recommended to add video notes to the feed stream of the picture note details page to increase the exposure of the video notes.

E-commerce features

The layout of each page of Xiaohongshu Mall is similar to other shopping platforms such as Taobao Mobile.

The following is an analysis of the special features in the mall page and product details page.

Mall Page

What is more distinctive is that in the product waterfall flow, the traditional product names are downplayed. Instead, the name of the country where the product originated is used, and the product features are described in six to eight words, such as "the same Korean water cup as celebrities", "the hand cream for high-value girlfriends" and "one set is enough for my skincare routine".

Such descriptions help users to quickly understand the products at a glance, and are also warmer, meeting the emotional needs of Xiaohongshu community users.

Product details page

In the product details page, the more distinctive features are the little red card function and the product-related notes function .

Little Red Card: It is a membership service established by Xiaohongshu for its own stores. Buying Little Red Card can enjoy six benefits including price reduction, free shipping, and tax inclusion for cross-border goods.

The details page of the goods sold in the self-operated store will show the member-exclusive price of the product after purchasing the card. The more expensive the product, the greater the price reduction, up to 100 yuan, to encourage users to become Little Red Card members.

The little red card system improves user stickiness, similar to Amazon's prime membership function.

Product-related notes: Allow users to quickly and easily see other people in the community’s experience with the product.

Compared with traditional shopping reviews, notes are more valuable to users in terms of information richness. However, the products in the notes are not necessarily purchased by the blogger on the Xiaohongshu platform. Users in the mall actually need to know other people’s comments on the products sold on Xiaohongshu. At the same time, the number of notes is limited, and there are advertisements in them.

Therefore, it is recommended that Xiaohongshu add a post-purchase evaluation function for users.

1. Interaction and interface design analysis

The main color of Xiaohongshu is red, which echoes its name. At the same time, red is popular among young women, which is consistent with the user portrait of the product. The designs also focus on cute and fresh styles that women love.

Xiaohongshu has designed a cute cartoon character named Little Red Potato for its vertical official accounts (Fashion Potato, Entertainment Potato, Campus Potato, etc.), and the Little Red Potato emoticon package created for users also uses this image.

The overall interface of Xiaohongshu is simple and easy to use.

For example, the homepage has only three main functional modules, and the user operation path is clear. The five tabs of the bottom navigation are clearly classified and do not interfere with each other. Commonly used functions can be found quickly, and infrequently used functions are placed in the sidebar to save page space.

Xiaohongshu once said that it does not make a profit from the community, and the note feed does not currently contain any advertisements or other irrelevant information. Users can directly face the content they want, and the experience of using it is good.

The response speed of clicking to switch sections and loading pictures is also fast.

5. Product Iteration Analysis

Source: Analysys Qianfan

1. Introduction period: V0-V1, 2013.10-2014.07

Explore whether the demand for overseas shopping sharing and interaction exists, and the product form gradually develops from a static shopping guide to a dynamic overseas shopping sharing community.

In October 2013, the Xiaohongshu team launched its first product: the founding team found shopping experts to compile shopping guides for 8 countries or regions, which users can download for offline reading through PC and iOS platforms.

The guide provides cost-effective products, tax refund and discount information, and merchant introductions from different countries, and also summarizes popular shopping areas into special topics.

Three months after its launch on the Apple App Store, the number of downloads has reached hundreds of thousands. It not only verified the user needs and pain points, but also accumulated seed users for the subsequent launch of the Xiaohongshu shopping community.

But such guides are similar to reference books, the information is static, the frequency of use is low, and there is a lack of user stickiness.

In December 2013, Xiaohongshu launched a shopping sharing community called "Hong Kong Shopping Guide", which is also the 1.0 version of Xiaohongshu.

This version of Xiaohongshu enables users to share basic shopping experiences. The embryonic form of the community emerges, and the application has basic functions such as commenting, collecting, liking, and searching by category.

At that time, the amount of content in the community was still relatively small, and the content shared by users was mainly organized into themes by editors.

In terms of time selection, Christmas and Chinese New Year are the peak periods for outbound travel. In terms of location choice, the number of mainland shoppers going to Hong Kong is large and the frequency is high, and Hong Kong is the number one destination for Chinese outbound travel.

Therefore, we chose to launch the shopping guide for Hong Kong at the end of the year. It can be said that we hit the pain points at the right time and place, quickly accumulated the first batch of users, and the number of users exceeded 10,000 within half a month of going online.

Starting from version V1.3, Xiaohongshu was officially renamed "Xiaohongshu Shopping Notes", expanding the shopping destinations from Hong Kong to eight countries or regions around the world.

During this iteration, Xiaohongshu gradually improved the construction of the shopping community, from introducing influencers to recommending followers, to adding new user levels and @reminders and ##topic functions.

In V1.3, Xiaohongshu added a new expert tab. On the one hand, it highlights the existence of "people" to enhance sociality, and on the other hand, as part of the user incentive system, it encourages users to share their shopping experiences.

V1.6 adds a new region tab, focusing on the region module originally in the discovery tab, which is more in line with the scenario where users use the app when traveling and shopping abroad.

In addition, to encourage users to share and interact, Xiaohongshu has added filters, stickers, and homemade sweet potato emoticons.

Although in the early days Xiaohongshu focused on creating product content, there were not many marketing activities. But in March 2014, just over three months after its launch, Xiaohongshu accumulated 100,000 seed users from 0 to 100,000, and received millions of dollars in Series A investment in the same month.

Judging from the iterations over this period, the Xiaohongshu community has basically matured.

Recently, some people have commented that Xiaohongshu is the overseas shopping version of Zhihu.

1. Growth period: V2-V4, 2014.08-2017.05

The product positioning of e-commerce + life sharing community has gradually stabilized and become more friendly to aimless browsers.

In July 2014, the state recognized the cross-border e-commerce business model from a policy perspective.

So in August of the same year, taking advantage of the policy, Xiaohongshu began to test the waters of e-commerce with the "flash sale" model, selling the best-reputed products in the community, solving the problem of users "seeing but not buying".

In the beginning, in order to ensure that the products sold were authentic, Xiaohongshu only adopted the form of direct sales and called this e-commerce section a "welfare club."

Under the careful operation of Xiaohongshu, the GMV of the Welfare Society has increased at a rate of more than 70% per month, and the Welfare Society has gradually changed from a sub-module in the search tab to a separate tab at the bottom.

From 2014 to 2016, when Xiaohongshu first entered the e-commerce field, the product categories and quantities it provided were still relatively small, and there were also certain problems with its supply chain, logistics and after-sales service. However, the team actively cooperated with brands to expand SKUs, and put into operation self-operated bonded warehouses in Zhengzhou and Shenzhen in early and mid-2015 respectively, and launched the Redelivery international logistics system in May 2017.

In May 2015, with zero advertising, Xiaohongshu Welfare Club achieved sales of over 200 million in just half a year. During this period, Xiaohongshu's target users are young women with medium to high spending power, and its target market is the sales area of ​​overseas mid-to-high-end women's products.

While actively expanding its e-commerce business, Xiaohongshu has not relaxed the iteration of its community part.

It has revised its structure many times, updated the homepage, discovery page, and personal page, and pushed more and more experts and topics that are in line with users' interests to users.

The application homepage changed from content classification in V2.6~3.1 to popular tags + feed flow push in V3.2~4.4, and finally to pure waterfall flow in V4.5.

In such iterations, Xiaohongshu becomes more and more friendly to users who have no clear browsing purpose. This echoes Xiaohongshu’s shift in positioning from “finding good things” in the early days to “community and lifestyle” in the later stages.

1. Maturity stage: V5, August 2017 to present

In terms of product form, more emphasis is placed on comprehensive penetration and integration into life.

The star effect and entertainment marketing have brought about an explosive increase in the number of users.

Between social media and e-commerce, the trend is gradually leaning towards social media.

From 2007 to 2011, the compound annual growth rate of Chinese consumers' overseas purchases was about 40%.

Since 2009, China has replaced the United States as the world's largest consumer of luxury goods.

But in 2015, Chinese consumers' purchases of overseas luxury goods began to stagnate, and in 2016 they were even close to negative growth.

This means that users are gradually upgrading from ostentatious consumption to experiential consumption.

Following this trend, Xiaohongshu’s slogan has changed from “global shopping community” in V2, to “find good things from abroad” in V3, to “good things from all over the world” in V4, to “good life from all over the world” in V5, and finally to the current “mark my life”.

Completed the transformation from shopping notes, to community, to lifestyle sharing. The focus of the community and shopping malls has gradually expanded from overseas luxury brands to brands of all price ranges at home and abroad.

Starting from the end of November 2017, Xiaohongshu has successively invited celebrities such as Lin Yun, Fan Bingbing, and Zhang Yuqi to join the platform.

In 2018, Xiaohongshu spent tens of millions of yuan to become the second sponsor of two popular variety shows, "Idol Producer" and "Produce 101", and allowed contestants to share their beauty and skin care experiences on the platform.

The effects of star effect and entertainment marketing are very significant.

It can be seen from the data of iResearch Qianfan that the number of active users of Xiaohongshu has increased sharply since the beginning of 2018. Since users who follow celebrities and entertainment variety shows are relatively young, most of Xiaohongshu's new users are born after 1995. The overall user base has gradually shifted from working women and housewives with middle to high spending power to college students who lead individual trends.

In addition, with the popularity of short videos, during this stage, Xiaohongshu supported the posting of video notes and made multiple iterations, gradually migrating from a picture community to a video community.

Recently, Xiaohongshu changed the default setting for users to post pictures to post videos, and also cancelled the long note function that contained a lot of text information.

At the same time, the discovery page also pushed more video notes than the actual proportion.

Although picture notes still make up the majority of the total volume, it is speculated that short videos will become the mainstream on the Xiaohongshu platform in the future. This may be because short videos can better improve user stickiness and have brighter commercial prospects.

In June 2018, Xiaohongshu changed its category from shopping to social networking, and in August, news came out that the e-commerce department had made large-scale layoffs. It is speculated that Xiaohongshu, as a social + e-commerce platform, is gradually leaning towards the social direction.

Nowadays, the traffic and scale of the cross-border retail e-commerce market are increasingly concentrated in the hands of giants, and Xiaohongshu is not competitive in comparison.

Xiaohongshu's sales in 2017 were 6.5 billion yuan, and it plans to reach 12 billion yuan in 2018. However, some media reports said that its sales in the first half of 2018 were the same as or even lower than the same period in 2017.

Under such circumstances, it seems inevitable to cut e-commerce business and shift profits to the community.

VI. Conclusion

The following is a summary of Xiaohongshu from the perspective of advantages and disadvantages.

1. Advantages

Xiaohongshu is currently the world's largest community e-commerce platform.

Hundreds of millions of users share their shopping experiences and lifestyles on Xiaohongshu, forming a powerful database of real user word-of-mouth. At the same time, the personalized push provided by the fan culture of Internet celebrities and algorithms brings higher conversion rates.

On the one hand, mature communities themselves have great value, and Xiaohongshu can make profits through advertising, brand partner platforms, etc.; on the other hand, the community can also attract traffic to Xiaohongshu e-commerce, and users can achieve a good cycle of browsing notes, purchasing goods, and sharing notes.

In addition, it is said that at the end of 2018, Taobao mobile phones will be connected to Xiaohongshu, and merchants can decorate Xiaohongshu content related to current products in the background.

It can be seen that under the trend of e-commerce contentization, Xiaohongshu has great advantages and has great potential to cooperate with other players in the ecosystem.

1. Disadvantages

In terms of e-commerce, although the strong community traffic makes Xiaohongshu a leader among independent imported retail e-commerce, it is still much inferior to competitors such as Tmall International and NetEase Overseas Shopping.

Due to shortcomings in supply chain and logistics, it is not attractive to upstream suppliers. Xiaohongshu is difficult to keep users who are growing grass in the community and continue to place orders in its malls, and users have turned to other e-commerce platforms to purchase.

In terms of community, many businesses look at the huge value of Xiaohongshu’s fan culture to marketing. The advertising fee exceeds 10,000 yuan is used to invite Internet celebrities to publish soft articles for products on the platform.

However, consumers are blinded by it, not knowing which notes on the platform are soft articles and which notes are real sharing.

In order to maintain the tone of the platform's life sharing community, Xiaohongshu also needs to strengthen the screening of notes to avoid excessive commercialization of the platform.

Source: essie H