Analysis of Xiaohongshu's e-commerce "Little Oasis" platform

Different from algorithm-driven interest e-commerce, thematic e-commerce is more like a lifestyle magazine or a boutique shopping guide. It relies more on human editing, focuses on different categories, selects goods, and recommends them to community users through large-scale topic planning. The formation of this model is related to Xiaohongshu's community atmosphere, crowds, content accumulation and consumers' grass-roots mentality.

After merging the community department and the e-commerce department into the "New Community Department", Xiaohongshu has made new attempts in e-commerce transactions and launched its own e-commerce project " Little Oasis ", focusing on outdoor products. It is managed by the self-operated team of the New Community Department and runs in parallel with the self-operated e-commerce "Welfare Club" launched in 2014.

At the beginning of this year, we observed that the main categories of "Little Oasis" included beauty, fragrance, fashion, and home furnishings. It also briefly appeared in the mall's product navigation, but the entrance was quickly cancelled.

In March, Little Oasis was transformed into an "outdoor lifestyle buyer's store", focusing on outdoor activities such as camping, cycling, lures, skiing, and surfing. Its products are mainly outdoor fashion wear and camping equipment, and most of them are niche brands, such as FILTER017 and DOD in the outdoor version. These brands have not yet opened Tmall flagship stores, but have long been popular in the sophisticated camping circle.

Therefore, Xiaolvzhou has also launched the "identify before delivery" authentication function to maintain the authenticity of the product.

The original "Little Oasis" (left) and the outdoor version of "Little Oasis" (right)

The two versions have significant differences, but both focus on lifestyle categories with interests, tastes, and aesthetic orientations. This is in line with Xiaohongshu's consistent thinking - starting from the community's advantageous categories, supplementing and supporting merchant supply, such as homestays, second-hand products, designer brands, and outdoor activities through small oases.

Xiaohongshu explained to us that Xiaoluoshu will launch different shopping themes at different time points and organize goods in the form of themes.

Introduction to two versions of "Little Oasis"

Unlike the welfare club, Little Oasis does not have a fixed mall entrance, but like third-party sellers, exists in a "account and store integrated" manner.

Comparing the official accounts of Welfare Club and Little Oasis, the former directly states that it is the official account of Xiaohongshu, while the latter is only certified as a buyer store, and users cannot perceive its connection with Xiaohongshu.

There are two types of content on the homepage of Xiaolvzhou’s account. One is direct product recommendations, with highly practical notes. The other is a micro-interview program "100 Kinds of Outdoor Life" in cooperation with Xiaohongshu bloggers, which shares outdoor experiences and outdoor life concepts.

Content published by the official account of Little Oasis

This reflects Xiaohongshu's consistent attitude towards transactions, which is to integrate into the community and advocate connecting users with content. In its recently released "Business Convention", Xiaohongshu also advocates that brands use notes to reach users and shape their brand image, so as to better maintain exposure in the community. From this perspective, Little Oasis also provides a model for other third-party sellers.

After launching the outdoor version of Little Oasis, Xiaohongshu launched the "Xiaohongshu Camping Season" event in April, providing a series of related content and services with camping as the theme.

The activity page for the camping season is divided into three sections, including the community’s camping guide notes collection, campsite reservations, and camping essentials. The shopping route for camping essentials is the Little Oasis.

"Little Red Book Camping Season" event

This thematic e-commerce approach has been running through Xiaohongshu’s centralized operations over the past few months. At different time points, Xiaohongshu has personally launched shopping themes such as "Anfulu Online", "Hao Te Bie Gift Shop", and "Cheers! Life", trying to connect the tonal content and non-standard transactions through manual editing, and explore the path and boundaries of community e-commerce.

Take "Anfulu Online" as an example. This is an event jointly created by Xiaohongshu this year with designer brands for spring new products with the theme of good design. It is managed by the Trend Group of the Content Department, which is also affiliated with the New Community Department. It pays more attention to offline connections, demonstrating the possibility of offline stores planting grass and transactions through Xiaohongshu.

"Anfulu Online"'s grass-growing notes and offline activities

"Narrow Broadcast" also noticed that Xiaohongshu Mall no longer classifies products by category, but organizes products in a content-based form.

Each entrance to the product navigation is a theme. The first row is a fixed category, including "New Trends", "Welfare Club", "Fun Street", "Trendy Wear", and "Live Exploration of Stores", covering home furnishings, trendy toys, independent design brands, fashion and other categories and products with Xiaohongshu characteristics; the second row is the product theme that is updated every day. The theme will reflect the style, trend or consumption needs of a certain circle.

Old version of the mall VS new version of the mall

Different from algorithm-driven interest e-commerce, thematic e-commerce is more like a lifestyle magazine or a boutique shopping guide. It relies more on human editing, focuses on different categories, selects goods, and recommends them to community users through large-scale topic planning.

Although its efficiency and scale are limited, the platform can edit content based on different time points and popular trends in the community to launch relevant shopping themes. Under each shopping theme, there are abundant recommendations and popular science notes, product purchase options, and even offline services or experiences.

The theme-based e-commerce approach is related to Xiaohongshu’s community atmosphere, crowds, content accumulation, and consumers’ grass-roots mentality.

The personalization and segmentation of consumer demand has changed the way e-commerce products are organized and marketed to a certain extent. In the past, consumption may have been viewed based on categories and brands, but now it is more based on interest circles. Many of the current hot consumption trends come from certain circles, such as fashion, wild luxury, etc.

Tmall also started to sort out circles of people last year. Projects such as "Tmall is popular" and "Shopping Cart Copy Homework" organize brands and products based on the consumption trends generated by circles of people; Douyin reaches circles of people through algorithms; Xiaohongshu extracts circle trends through "themes".

Lifestyle communities themselves are also more likely to discover and operate circle trends, because the platform itself has a group of users who are willing to try various new lifestyles. Xiaohongshu's long-tail traffic distribution mechanism can theoretically allow interests, styles, and lifestyles of all sizes to have the opportunity to grow. For example, niche designer brands, original design home brands, personal handmade businesses, etc.

After lowering the threshold for opening stores in 2021, Xiaohongshu took the initiative to contact some individual handmade merchants to open stores on Xiaohongshu. This group of merchants are also handicraft bloggers, illustration bloggers, and design bloggers. They originally posted content on Xiaohongshu, and Xiaohongshu's traffic mechanism is more conducive to their interaction and accumulation of fans.

With a magazine-like operating model similar to "boutique shopping guides", through thematic e-commerce, Xiaohongshu has the opportunity to get closer to vertical industries by building a full range of ecosystems including content, marketing, and transactions.

However, Xiaohongshu’s current attempts at thematic e-commerce are still at the level of marketing and content attributes, and are still far from standard e-commerce operations.

The difference can be clearly felt by comparing it with the e-commerce activity page of Dewu, which has a stronger transaction mentality. Xiaohongshu’s e-commerce activity page will have grass-planting notes to help merchants gain exposure; it will also guide users to post relevant topic notes in the community. The activity page of Dewu contains more products and various e-commerce methods related to the discount mechanism.

It can also be seen from the topic planning of the camping season that the "small oasis" and camping reservations that carry the function of transactions are more like one of the solutions to the camping lifestyle together with community notes, and the importance of transactions is relatively weakened.

A brand founder who participated in "Anfulu Online" said that his goal of participating in the event was not transaction, but exposure and communication. In the live broadcast of the "Manager Cafe", he did not want to talk too much about the products, but hoped to communicate the brand concept with consumers. "Selling goods is done by live e-commerce platforms on other platforms, but we don't want to do a one-time deal on Xiaohongshu."

Moving from marketing to real transactions places high demands on the supply chain's expansion capabilities. Previously, Xiaohongshu had explored self-operated e-commerce several times, such as its own cross-border e-commerce "Welfare Society" and its own brands "REDelight" and "RED Home", but except for "Welfare Society", all of them ended in failure. The reason was nothing more than that the balance between grass-planting content and e-commerce transactions needed to be corrected, and Xiaohongshu's current capabilities could not cope with the complexity and intensity of competition of self-operated e-commerce.

As mentioned earlier, theme-based e-commerce has the opportunity for Xiaohongshu to find its own industrial closed loop.

But the objective situation is that compared with handmade merchants and niche designer merchants with relatively limited market size and business efficiency, whether it is luxury goods, second-hand luxury, trendy toys, or the upcoming non-standard categories such as outdoor, there are greater business opportunities, which also means more intense market competition. Platform-level players such as Taobao and Douyin, as well as vertical platforms such as Chaowanzu, are actively involved. Xiaohongshu has not yet demonstrated its own business closed-loop operation capabilities in these categories.

Take niche designer brands and luxury brands as an example. Judging from the crowd and community atmosphere, Xiaohongshu can develop in depth in these categories.

But the issue that needs to be considered is that the core competitiveness of luxury e-commerce comes from supply chain response efficiency and product category depth, which requires newer and wider sources of goods rather than traffic. The decline of many luxury e-commerce platforms is due to this problem. At present, it is difficult to see the corresponding supply chain expansion capabilities and e-commerce infrastructure capabilities in Xiaohongshu.

Second-hand luxury goods are also Xiaohongshu’s advantageous category, but Douyin is also developing this category. The ROI can reach a ratio of dozens or even hundreds. Larger second-hand luxury goods platforms and sellers are all flowing to Douyin. Another example is the trendy category. Although the Xiaohongshu community also has trendy genes, Dewu, which started out as a transaction, is stronger in product supply, e-commerce infrastructure, and consumer mentality.

The outdoor market that "Little Oasis" targets provides Xiaohongshu with an opportunity category. Because the complete outdoor ecosystem covers multiple aspects of food, clothing, housing and transportation, Xiaohongshu has relevant content and products, but the market is still in its early stages. How much strategic determination Xiaohongshu has and whether the size and resources of Xiaolvao can support it to tap into more supply and gain a foothold in the market remain to be verified by time.

At present, there is a clear trend that Xiaohongshu’s commercial focus is shifting from e-commerce transactions to advertising marketing. Some analysts pointed out that Xiaohongshu’s e-commerce business revenue in 2021 only accounted for 10% of Xiaohongshu’s overall revenue, and 90% came from advertising.

Since 2021, Xiaohongshu has gradually built and improved the advertising platform "Dandelion", and has also established a more complete commercialization team. The recently released "Business Convention" also emphasizes the need to conduct advertising through the Dandelion platform.

From this perspective, the value of trying new things at Little Oasis has been raised to a higher level. Combined with the accelerated listing node and commercialization, the "themed e-commerce" represented by "Little Oasis" is likely to be replicated and expanded, thereby helping Xiaohongshu to move from simple marketing and creating trends from scratch to a business path that connects vertical industries and achieves closed-loop development. This directly determines the competitive barriers and commercial value of Xiaohongshu, which is being watched by many competitors.

Author: Yang Yiqi

Source: Narrowcast