Analysis of Xiaohongshu’s operations: How do e-commerce companies build content communities?

The content community of Xiaohongshu has been very popular recently. The author has used Xiaohongshu for more than a year. It is almost monopolized in the e-commerce market, and has broken through the siege with " social + e-commerce". Therefore, this article is the author's specific analysis and insights on the product of Xiaohongshu.

1. Product Overview and Market Analysis

Product name: Little Red Book

Product version: 5.15

Product positioning: To build China's largest life sharing platform and an e-commerce platform for discovering good things from around the world

Product slogan: Find good things from all over the world on Xiaohongshu. Make friends with the most life-conscious people on Xiaohongshu

Market Analysis:

China's consumer market has entered a new round of consumption upgrades. The consumption structure has shifted from survival-oriented consumption to enjoyment-oriented and development-oriented consumption. Internet users have migrated from PC to mobile devices, and e-commerce is also seeking new growth channels . As consumption levels increase, people's consumption patterns have gradually shifted from traditional methods to overseas shopping, pursuing high-quality goods.

The current mainstream overseas shopping consumers have surpassed the stage of using "foreign goods" to show off in the past, and are now enjoying the actual improvement in their quality of life brought about by overseas shopping. However, it is precisely because of the pursuit of personal quality of life that consumers’ needs have become more personalized and differentiated, making the competition among apps in the overseas e-commerce industry increasingly fierce.

Xiaohongshu started out by providing cross-border shopping guides, which still had certain limitations in the market as more people were still in the domestic shopping consumption mode. Later, it slowly expanded its market boundaries, gradually turned to building a community, implementing the UGC model, and accumulating loyal users with long-term guaranteed output.

Currently, various women's e-commerce platforms are also shifting towards the "community + content + e-commerce" model. With the improvement of content quality, the number of users is also gradually increasing. In addition, Xiaohongshu's main goal is to share women's shopping experiences and overseas shopping. For third-tier cities with relatively weak consumption power, the number of people who can afford to buy overseas products on Xiaohongshu Mall is still much less than that of first- and second-tier cities, so the number of users still has a ceiling.

2. Competitive Product Analysis

2.1 Competitive product data analysis

(1) Total number of users

The above are the daily downloads of Xiaohongshu and Koala in the past year. The downloads of Xiaohongshu in the past year are about 33.97 million, and the downloads of Koala in the past year are about 15.70 million. The ratio is about 3:1. Both Xiaohongshu and Koala have very stable numbers without large fluctuations in growth rate.

Only in June of 2017, the growth rate of Xiaohongshu increased by more than 300,000. After checking the version records, it was found that Xiaohongshu held an anniversary event on June 6. The champion who invited friends to join could get a super large cash coupon with no threshold. This event led to a rapid increase in June. But after the event ended, the download rate returned to its original level.

Except for the continuous rise since April 2018, Koala has been in a stable state before that. Looking at the version records, it is found that in terms of product operation , the brand is promoted by advertising . The participating platforms include Running Man, Longing for Life , and Super Mom, all of which are currently popular variety shows, which increased the number of downloads by a large number.

In comparison, Kaola's download volume is still much less than Xiaohongshu's, and the product positioning is also the main reason for the huge difference in download volume. Xiaohongshu's positioning is: marking your life, mainly community, with large traffic flow; Koala's positioning is more than just simple selection and recommendation, mainly shopping mall, and the number of Xiaohongshu users has mostly grown with the celebrity effect of Fan Bingbing and others.

(3) Sales analysis

Data from iiMedia Research shows that in 2016, Kaola ranked first in the distribution of China's cross-border e-commerce retail import sales with a market share of 21.6%, while Xiaohongshu accounted for 6.5%.

From the sales share, we can see that there is still a big gap between the two. Kaola has invested more in e-commerce functions, logistics and suppliers than Xiaohongshu, and its product range is more complete. Compared with Xiaohongshu, which focuses on marking life products and finding good things all over the world, it is much weaker in e-commerce, so the sales volume is very different.

(4) Retention rate comparison

Xiaohongshu’s seven-day retention :

Koala's seven-day survival:

Through the comparison of 7-day retention, the difference between the two is quite large. Xiaohongshu's retention rate has remained between 10% and 40%, but Koala's is basically within 5%.

As a vertical app, Xiaohongshu is better able to retain and attract users. Since Xiaohongshu focuses on building a community, its users’ needs are multifaceted. Based on the retention rate, it can be inferred that after users download the Koala app, there is a high probability that they only use it to use coupons or buy what they want, which leads to not using the app if they do not buy anything.

However, Xiaohongshu can use the users' various needs and fragmented time to encourage users to download the app even when they have clear needs of their own. Even if they don't have any needs, these shared guides will stimulate them to have needs, until users develop a habit of wanting to check out whatever they want to buy or check on Xiaohongshu.

This is the routine of content e-commerce, which is to attract users through high-quality content, and then slowly convert users into sharers and consumers, so that when users share their specific lifestyles, they think of Xiaohongshu instead of other apps.

2.2 Analysis of Competitive Core Strategies

(1) Product positioning

(2) Operational strategy

Marketing methods of Xiaohongshu:

1) In May 2015, Xiaohongshu stopped using the marketing method of young handsome men delivering express packages. This marketing method was once very popular. It targeted white-collar women. This bold marketing method successfully attracted attention while maintaining the brand image. Before the craze had passed, a marketing campaign called "School Prince Express" was held in June, which also caused a sensation among female college students.

Xiaohongshu coordinated its event marketing with the hot topics on Weibo. By purchasing some KOLs in the student community and leveraging the influence of the most handsome boys in 12 universities across the country, it dominated the screens of female college students for two days. Finally, the "School Prince Express" event ended perfectly with 52.977 million exposures and 47,000 discussions. It successfully increased the overall popularity in the post-90s circle, allowing more people to know about Xiaohongshu, and the product officially entered its growth stage.

2) Xiaohongshu regularly launches new community activities and new stickers at the same time , using community activities to guide users to develop the habit of posting photos, allowing users to follow the activities and make posting photos a habit.

Koala’s marketing methods:

As the name suggests, its brand also relies on NetEase’s large platform for promotion.

New members can receive a 1,000 yuan coupon, and there are a lot of discounts for new users.

Enter the field of variety show advertising investment to continuously bring products into the audience's sight.

In terms of the two marketing models, Xiaohongshu became completely popular in the eyes of users when Fan Bingbing joined Xiaohongshu and shared her life experiences as a tool , making fans feel closer to their idol. As a result, more celebrities have joined the platform and the quality of content has also been improved. More importantly, Xiaohongshu is a springboard for celebrities to become fashion bloggers. Most of these celebrities join the platform on their own initiative, serving each other and achieving a win-win situation.

As for Kaola's operations, it has natural advantages, including genuine self-operated products, overseas wholesale prices, a low-profit e-commerce ecosystem, etc., all of which are provided by the large NetEase platform.

2.3 Function Comparison

(1) Function comparison

(2) Comparative analysis of key functions

1) Community

Koala on the left, Xiaohongshu on the right

It is obvious from these two perspectives that Xiaohongshu values ​​the community, while Koala pays more attention to the mall. On August 30, 2017, Kaola launched the grass-planting community function in version 3.8.7, starting the trend of content operation . Compared with Xiaohongshu, which has been mainly engaged in content operation from the beginning, it still has many shortcomings. It does not have that much influence, and has not formed a business closed loop. The correlation between the grass-planting community and the mall is not enough, there is no private messaging function, and social interaction is almost only achieved in comments.

In terms of the influence of notes, Xiaohongshu uses the form of celebrities writing notes to provide fans with information about their idols' lives, attracting more downloads. In terms of functionality, Koala has more new features than Xiaohongshu. For example, in terms of question and answer, it meets the needs of users who have used multiple note and search functions but still have questions or cannot find the content they want.

2) Mall

Koala on the left, Xiaohongshu on the right

In terms of shopping malls, Kaola is obviously better than Xiaohongshu. It supports more functions and more categories than Xiaohongshu, and its display is different from other e-commerce pages. , fewer products are displayed on one screen, and one product occupies an entire horizontal screen, and is displayed as a single product or album.

This has both advantages and disadvantages:

The advantage is that it has more scalability for users. For example, when a user is browsing the homepage, he sees a product that he is very interested in, and he wants to know more about this kind of product, so Koala provides similar functions and provides multiple products in the album.

The disadvantage is that the "limited time special offer" logo that attracts users is placed in the user details. If the user is not curious about the product, he will keep scrolling down and see fewer products in the same period of time. Xiaohongshu's mall model is similar to the traditional e-commerce model, and it pays more attention to brand and reputation, which makes it clear at a glance.

NetEase's search function is more comprehensive, and keyword recommendations reduce user input and improve user experience , while Xiaohongshu's keywords are relatively single, giving users the intuitive feeling that the categories are single. It is recommended that Xiaohongshu can enrich keywords and reduce user search costs.

Summary of competitors: Xiaohongshu has benefited from a high-quality content-sharing community, which has brought users closer together, increased the relevance between users and products, and maintained its No. 1 ranking in downloads; NetEase, on the other hand, has established its own self-operated model under the influence of NetEase and achieved No. 1 in sales in the industry. In fact, Koala can now consider improving user stickiness, increasing publicity for the community function, and reducing the sense of distance between users and products.

3. Target Users

3.1 User Distribution

(1) Gender distribution

From the perspective of gender distribution: women account for 90% of users, and the target population is more inclined towards women (the data from iResearch Qianfan in September 2017) From November 2016 to September 2017, the proportion of women has steadily increased from 87% to 90%.

So why are shopping communities so popular among women?

Women are a group with purchasing potential and desire. Moreover, the current consumption level is getting higher and higher. Users have money but don’t know what is worth buying . What should they buy?

Therefore, there is a greater need for a platform to give users advice and satisfy their vanity and sense of accomplishment, so women make up the majority of users.

(2) Age distribution

From the perspective of age distribution: the highest volatility and usage rate are in the 0-30 age group. From November 2016 to September 2017, the 0-24 age group decreased by about 10%, and then started to grow continuously from 24-30 years old. It can be seen that most of the 0-30 year olds are at the age without children and family responsibilities, and they are relatively young and fashionable, so there are more users in this age group.

(3) Consumption capacity

In terms of consumption capacity: middle-class consumers account for a large proportion. From 2016 to 2017, low consumers and middle-low consumers have been growing slowly from 0, and consumption levels are also improving. Therefore, Xiaohongshu's user positioning is the female group with high education and high income in second-tier cities and above, especially corporate white-collar workers and young and fashionable young people.

3.2 User Usage Scenarios

Buyers want to buy authentic overseas products and tend to prefer overseas brands.

Users want to share their lives through apps to increase their fame and satisfaction.

Users record their lives by taking notes.

Watch notes and socialize through private messages.

If users want to buy products with the same functions but don’t know what to buy, they can go to Xiaohongshu to check out recommendations for sweet potatoes.

Users have a desire to buy, so they just want to browse around and see if there is anything suitable for them, and then buy it directly, which is more convenient.

Some micro-businesses can vigorously recommend their products by writing notes, turning Xiaohongshu into a channel for product monetization and achieving the purpose of attracting traffic .

4. Product logic analysis

Xiaohongshu initially wanted to solve the problem that users wanted to buy goods in overseas markets, but there was a lack of high-quality and authentic information in China, so it launched a section for overseas shopping guides. But later I found that just making a guide is completely static, cannot provide complete information, and has no interactivity. Therefore, the current closed business loop from community to store is used to solve the problem of being able to see but not buy.

From ordinary users who view notes, to those who purchase products, and then like the products and want to share them, thus creating more notes, the entire Xiaohongshu process forms a closed loop to increase user stickiness and improve the purchase rate of the mall.

Here I would like to focus on the business logic of the community part. The most important thing for a community is to have good content and a large number of users who can output high-quality content, so that the community can grow slowly.

Therefore, Xiaohongshu has its own internal operating logic. It maintains a steady stream of content output from these users by exploring users, creating a reward system and posting rules, and then conducts quality control and distributes rewards. In fact, this is a result that requires operators to spend a lot of time and manpower to screen and maintain, in order to ensure that users continue to output high-quality content.

5. Product architecture and interaction analysis

5.1 Functional Framework Mind Map

5.2 Interaction Analysis

(1) Home page function

The home page includes first-level title , search, category, and note flow.

There are two types of note streams: one is a video that can be up to 1 minute long, and the other is a picture-type note, with a maximum of 9 pictures. The note stream on the homepage mainly uses pictures and videos as the main visual, which is simple and clear.

In fact, the homepage has the same "appearance" as many short video apps, including Follow, Discover, and Nearby, which shows that Xiaohongshu is more inclined to UGC, builds a content community, and supports originality. The notes that appear in the Discover column are recommended by an algorithm (users' clicked notes, liked notes, and related comments) to find notes that they may like.

The classification function on the homepage does not have more options. Instead, the most popular categories are selected and presented on the homepage. Of course, there are more than just a few types of Xiaohongshu notes. This is in line with the idea of ​​allowing users to "discover" and keep scrolling down to discover new notes, rather than just being limited to categories. This reduces the complexity of user functions and increases the time users stay on the interface.

(2) Note-taking function

Matching the notes on the homepage, when writing notes, you can choose to upload them in three ways: album, photo and video. There are also built-in filters and beauty options to choose from, which are in line with Xiaohongshu's target users - a relatively large proportion of female users who like to use filters and beauty.

There is also a tag function, which increases the fun and allows users to join hot topics, actively participate, and improve communication between users. In addition, the background can also recommend related notes based on the tags you frequently use.

In general, the process of posting notes is relatively simple and easy to understand, without too many restrictions. In order to encourage users to post more notes, Xiaohongshu will make requirements and restrictions on the number of notes to be posted when users upgrade their levels, to encourage users to upgrade to "Baby Potato" and so on.

This is a kind of group identity. Users voluntarily label themselves in this way, which means that they recognize this product from the bottom of their hearts. Users who recognize and fit the positioning of this product will naturally form a sense of group identity, which is very conducive to the creation of a product atmosphere.

There are also corresponding rewards, which are some camera stickers and emoticon packs unique to Xiaohongshu. Xiaohongshu does this to form a closed loop of posting notes - upgrading - getting cute tags - liking these tags, wanting to show off and satisfying oneself, and then starting to post notes again.

The process is roughly as follows:

suggestion:

1) The video is played in full screen. After the video is finished, the next one will be played. This does not provide a good user experience. If the user walks away for something else while watching the video, the video will continue to play. Or if the user wants to watch the video again, if the next one is played, the user will be asked to perform some additional operations. It is recommended to keep playing the current video after the video is finished, which improves the user experience.

2) Gray arrows of the note flow

It is recommended to long-press the note flow on the home page, which will give you two options: Dislike and Favorite. Currently, these two functions are in a gray arrow on the right side of the title, which is not very obvious. The user's attention will still be focused on the picture, and it will be difficult for them to notice the gray logo next to the text. Moreover, most users are still accustomed to long pressing to select the behavior they don’t like, so it is recommended to also long press.

(3) Search function

After searching for relevant notes, three modules will appear: All, Products, and Users. The current interaction is that the user swipes upwards, and this part of the module is hidden. You need to click back to the top to switch between the three modules. It is recommended to be able to switch by swiping left and right like the homepage, and not hide it, so that users can operate more conveniently and have more choices.

Mall Home

The difference between Xiaohongshu's mall and other malls is that: in the product name, it is noted which country the product is from, and the product also indicates the brand, which shows the difference from domestic malls. It sells overseas products, pays more attention to self-operation and brands, and the classification is also based on the main products. The first one is beauty and personal care, and at the end there is a more, click to display all categories.

Xiaohongshu now adopts a self-operated model and has two bonded warehouses in Zhengzhou and Shenzhen to ensure authenticity and quality. There are advantages and disadvantages to building your own channel:

The advantages are: through its own channels, the cost of goods obtained is lower, and Xiaohongshu can select goods for stock through notes, so the inventory pressure is reduced, and the quality and authenticity are guaranteed for users.

The disadvantage is: without large financial support and supply chain optimization, it is difficult to maximize the mall's profits, and its competitiveness with the apps of other cross-border malls is obviously weaker.

suggestion:

1) There are only three editorial recommendations, which cannot be dragged horizontally. The recommended content is too little. It is recommended to increase the number of topics. It can be dragged horizontally. This can make the products more structured and regular, attract users' attention, and give users a chance to look at recommendations when they are confused and don't know what to buy. Therefore, the editor's recommendations should be within 5.

2) Mall categories

In the category, select the left side, the background color on the left side turns gray. It is recommended to change it to a bright color, such as dark gray, which can be somewhat different from the background white. It is now in light gray, and when the screen is very bright, it is actually a little difficult to distinguish. In order to have a clear left-right visual correspondence, it can be made into a dark gray, which has an obvious visual difference from white and a simple and clear visual effect.

3) Product related notes

In product reviews, clicking on a note suggestion will directly link to that note, and clicking on the likes and favorites in the upper right corner also has corresponding functions. Currently, the related notes in the product are not clickable and can only be viewed as comments. It is recommended that both "comment viewing mode" and "note viewing mode" be used.

This will make it easier for users to collect notes, better connect notes and products, form a closed loop, and reduce the complexity of the process for users.

VI. Development Forecast

1. The community is more structured and personalized

From the version iteration, we can see that Xiaohongshu is constantly adding tags in each version to improve the tag function. It wants to structure the content in the community through tags, and recommend notes and products more accurately by recording user usage behavior, and record user behavior.

For example: which notes are liked, which notes are collected, and the length of stay. You can attach personalized "labels" to each user's different behaviors, so that you can more accurately cater to their preferences and recommend notes and products to users.

1. Improve the supply chain and increase shopping categories

Xiaohongshu still needs to find a channel that suits itself. Direct cooperation with overseas brands may be a good way. In addition, with the current policy reforms and the emergence of competing products, it should find a channel that suits itself to improve user loyalty and user experience.

1. Derivative services of business model

I have also mentioned above that I hope Xiaohongshu can transform from small and beautiful to large and comprehensive, add some additional derivative services, and consider developing one-stop services or cooperating with overseas brands, such as some tax refund functions. However, these are also functions that need to be discussed and still need to be considered from many aspects.

Xiaohongshu's community can develop horizontally, from a vertical community to a comprehensive community, expand the user base it serves and then look for room for growth, and slowly grow from small and beautiful to large and comprehensive. Its unique model will be loved by more users, so it is still optimistic overall.

It is obvious that Xiaohongshu's future development is not just in cross-border e-commerce. As long as women have the desire to buy, the community will exist. Coupled with the reward mechanism and high content output, Xiaohongshu will develop better and better in its mature stage.

VII. Conclusion

With the rapid development of communities on the Internet , Xiaohongshu has become a mature product with the help of UGC. The content attribute seems to be a major reason why it can cut scenes from horizontal communities (the content is very rich), that is, the user's own tone, which makes users think of Xiaohongshu when sharing their specific lifestyles.

Xiaohongshu belongs to a deeper vertical classification. It is an extension of the vertical community. It is Xiaohongshu's e-commerce model, which currently has a ceiling (as can be seen from sales volume).

Moreover, Xiaohongshu has stronger content attributes and is relatively weak in e-commerce. Its commercial monetization comes from its own shopping mall. Although its monetization rate is still very low now, it can still generate commercial monetization with low sales.

Source: ho!