Analysis of Xiaohongshu's competitive products

From sharing overseas shopping to establishing its own bonded warehouses, and then to turning "good things" into "good life", Xiaohongshu 's community content has shifted from items to lifestyles, enabling it to provide consumption decisions for more people.

It has a "grass-planting" gene, rich long-tail content, high search engine accuracy and user satisfaction, and a gradually enriched range of note categories. However, it is difficult to form a closed loop of planting grass and pulling grass, resulting in frequent obstructions in its e-commerce.

Through product experience, this article aims to understand how the Xiaohongshu community atmosphere is built, its current commercial logic and its problems, and its traffic distribution mechanism. Taking Taobao, Bilibili, Douyin, What’s Worth Buying, and Zhihu as competing products, this article explores the characteristics, advantages and disadvantages of each product, and focuses on the search-planting-purchase link, uncovers bottlenecks and makes suggestions.

1. Core Viewpoint

1. Product Overview

• Xiaohongshu's product positioning: lifestyle sharing platform, consumer decision-making portal, overseas product purchasing platform, and content marketing matchmaking platform.
• Profit model: In 2021, Xiaohongshu's revenue mainly consists of advertising and e-commerce, accounting for 80% and 20% respectively. In terms of advertising, Xiaohongshu launched the "Dandelion" content matching and trading platform, charging a 10% service fee from trader orders.
• Traffic distribution logic: The two core elements are content tag matching and social relationship chain recommendation. It has equal distribution, high cost performance and long tail effect.
• Grass-planting marketing logic: Through Consideration, Attention is integrated into Interest, Search, Action, and Share, and combined into the CAS model.

1) How to build a community atmosphere:

• For Xiaohongshu, the first thing is to have useful content. The community should meet user needs, such as consumption decisions, multiple perspectives, real life, and sharing, and provide solutions when users are troubled by areas they are not good at.
• The platform should create a friendly atmosphere. Xiaohongshu has launched a community convention, with "sincere sharing, friendly interaction" as its requirements, and proposed conventions such as respecting originality, declaring conflicts of interest when receiving sponsorship, avoiding showing off wealth, sharing scientifically proven content, and avoiding excessive modification.
• The user growth system promotes the production of high-quality content. At present, Xiaohongshu users still use the name XX potato, from Diaper Potato, Bottle Potato, Sleepy Potato, Bubble Potato, to Cultural Potato, Bronze Crown Potato, Silver Crown Potato, and Golden Crown Potato, to encourage users to post high-quality notes and gain likes and collections.

2. User needs

• User characteristics: The male-to-female ratio is 3:7, and users from first- and second-tier cities account for 90% in total. Six major population labels: Generation Z, new white-collar workers, urban trendsetters, single aristocrats, sophisticated mothers and hedonists.
• User needs: planting seeds, pulling seeds, browsing to kill time, self-improvement, interaction and sharing.

3. Search function experience

1) The reason why users recommend products on Xiaohongshu but do not recommend products on other platforms

There have been incidents involving counterfeit goods, and the authenticity of the products is questionable.

The product stores displayed at the front of the product page are not credible enough.

There is a demand for price comparison.

2) Optimizable

• Enhanced barrage operation: Barrage is not a feature of Xiaohongshu, but it is an interesting form of interaction. High-quality comments can be considered to increase exposure. In addition to the barrage form, you can also consider scrolling comments under the pictures in graphic notes.
• Search association words can be optimized: when users browse a product recommendation page for a long time and enter the search box, the search box may guess what you want to search for but sometimes no relevant search words are given. It should be more precise, especially when there are multiple products in one video.
• Increase store credibility: Unofficial stores have no endorsements, and self-operated stores have higher prices, so a complete store rating system can be established. You can add functions such as online color testing and VR skin testing to the store details page to reduce users' decision-making costs.

4. Competitive product analysis

Xiaohongshu's users are mainly young female users, and most of its content is related to exquisite and beautiful life. It has a first-mover advantage, rich long-tail content, and high search accuracy, but it has not formed a closed-loop chain of planting and pulling out grass, and fake notes reduce the credibility of the platform.

Taobao Shopping is a product for all the people. Backed by Taobao, it has a large number of reviews and buyer shows, the content is more authentic, and the consumption chain is shortened, but it lacks the ability to produce high-quality content on a continuous basis.

The average age of Bilibili users is 22.8 years old, and most of them are in the 3C field. They are medium-length videos with pure content recommendations without links, which are less efficient in user consumption decisions and have limited product categories.

Douyin is a product for all the people. It displays products in the form of short videos and live broadcasts, and directly shows purchase links. The purchase chain is smooth and the traffic is huge, but the user repurchase rate is low, the return rate is high, and the product supply is single.

The male to female ratio of users of What’s Worth Buying is 8:2. It provides real-time online shopping discount information and shopping guides. However, there are situations where the discounts are inconsistent after clicking on the links and delivery is not possible in the area. The platform directs traffic to other e-commerce platforms.

The male to female ratio on Zhihu is about 6:4, which has a greater influence on users' purchase of digital products, small appliances and other products, but the self-operated product categories are scarce and the e-commerce entrance is hidden, making it difficult to form a closed loop of planting grass and purchasing.

5. Operations

1) Operational events: 6.6 anniversary celebration, Red Friday, Hu Ge and Xiaohongshu’s three days and three nights, sponsorship of top variety shows, and Perfect Diary’s new product launch.

2) Why did Xiaohongshu cancel external links?

The official response is to hope that the content of the notes is objective and fair, to improve the quality of community content, and to require that the proportion of notes for authors' commercial cooperation should not exceed 20%.

3) Set up multiple official accounts to guide creators: including general, functional and official accounts in various fields, to guide creators and merchants to publish content or open stores.

6. Advantages, Disadvantages and Suggestions

1) Advantages

• User value is high, and Xiaohongshu users have high consumption willingness and consumption power.
• The content produced by creators is in line with the tone of refined life.
• The content is rich and can provide decision-making services for beauty, clothing and long-tail content demanders.
• It has a strong ability to incubate new brands, new makeup, new outfits, and promote new products.

2) Disadvantages

• False marketing incidents occur one after another. Although the platform has made great efforts to rectify them, the impact of the incidents themselves is lasting and user trust is reduced.
• It is impossible to form a closed loop of planting grass and pulling grass, and the source of income is single. In 2021, 80% of the income comes from advertising. Xiaohongshu had already planned successful marketing campaigns in 2015. The author believes that the immaturity of e-commerce is mainly due to shortcomings in logistics, supply chain, product SKUs, etc., which cannot be solved by operational activities.
• Because it cannot provide good commercial returns, bloggers are leaving Xiaohongshu.
• Breaking the circle will cause disgust among native users.
• There are many overseas shopping platforms and purchasing agents, and the competition is fierce.
• The authenticity of the welfare club’s products is questionable.
• Live broadcast operations need to be improved.

3) Suggestions

• Improve your own supply chain, provide sufficient SKUs, and establish price advantages.
• Raise the store entry threshold and establish a store rating system.
• Further strengthen supervision and avoid accidental injuries.
• The increase in content categories and the improvement in quality must continue.

2. Product Overview

1. Experience the environment

• Phone model: iPhone 12;
• System version: 14.6;
• Application version: 7.31.

2. Product Overview

1) Xiaohongshu slogan

• 2014 – Finding good stuff abroad;
• 2015 – Good things from all over the world;
• 2016 – Good life around the world;
• To this day – marking my life.

The change in slogan reflects that Xiaohongshu's positioning and development stage have undergone great changes. From the initial sharing of overseas shopping, to Xiaohongshu's establishment of self-operated bonded warehouses and overseas warehouses, and reaching strategic cooperation with many well-known overseas brands to ensure that users buy authentic goods, and then to "good things" becoming "good life", the transformation of community content from objects to lifestyles has also enabled it to provide consumption decisions for more people. "Tag My Life" has strong social attributes, encouraging users to become creators and produce content on the platform.

2) Development history and current situation

Xiaohongshu, which seems to have entered the short video market a long time ago, has recently started trial operation of a new product - Youqu Video. According to media reports, the main operating members of this new product also worked for ByteDance.

MAU: According to the "QianGua Data 2021 Xiaohongshu Content Marketing Data Insight White Paper", Xiaohongshu has 158 million monthly active users, 64.3% of whom are female, and the core age group is between 24 and 35 years old.

At the 2021 Xiaohongshu Business Ecosystem Conference, Xiaohongshu CMO Zhi Heng revealed that as of November 2021, Xiaohongshu already had 200 million monthly active users, 72% of whom were born after 1990, and half of them lived in first- and second-tier cities. Among all the top apps, Xiaohongshu's MAU growth rate is clearly in the leading position.

Usage time: The average daily usage time per person is 55.3 minutes, which is lower than short video platforms, Bilibili, and WeChat, but higher than Weibo.

3) Product positioning

Lifestyle platform and consumer decision-making portal.

• Help with decision-making: Xiaohongshu is a huge word-of-mouth database that has accumulated a large amount of consumer word-of-mouth in the community to help users make decisions.
• Share a real lifestyle: Provide users with a diverse and real lifestyle and promote online sharing and offline experience.
• Overseas product purchasing platform: Xiaohongshu established a bonded warehouse in 2015 and an international logistics system in 2017. It runs both brand authorization and brand direct sales models to provide users with authentic products.
• Content marketing matchmaking platform: from building momentum, cultivating grass to detonating, breaking the circle and posting orders, these are all precise ways for brands to reach out to Xiaohongshu influencers and user psychology at different stages.

4) Profit model

According to the "2021 Xiaohongshu Brand Research Report", Xiaohongshu's revenue in 2021 mainly consists of advertising and e-commerce, accounting for 80% and 20% respectively.

In order to prohibit "private transactions" between brands, advertisers and influencers, the platform has no income. Xiaohongshu launched the "Brand Partner Platform" in January 2019. Brands, content agencies, and bloggers trade on this platform, which is equivalent to a content matchmaking and trading platform for both parties. In January 2021, the platform was renamed "Dandelion". According to the agreement, Xiaohongshu will charge a 10% service fee from the trader's orders.

5) Content category ratio

In addition to its traditional strengths in beauty, fashion and other areas, Xiaohongshu will focus on two areas: pan-entertainment and pan-knowledge . Pan-entertainment includes film, television, music, dance and games.

General knowledge includes finance, technology, education, and reading. Video and live streaming are two content forms that are focused on.

The number of categories has always determined the height of the ceiling of the search tool.

Food notes account for 9% of the total market, ranking first. The content of the notes mainly includes food tutorials, restaurant visits, food pairing, sharing, etc. Beauty notes are still an important part of the Xiaohongshu community. In the past year, the number of notes accounted for 7%, second only to food notes. The main contents of the notes are beauty tutorials, product recommendations, makeup sharing, etc.

In the past six months, the categories with the highest month-on-month growth in the number of notes are games, pets, education, mother and baby, and home furnishings, with growth rates of 28%, 22%, 21%, 9%, and 9%, respectively.

6) Traffic distribution logic

Xiaohongshu’s traffic distribution mechanism is similar to Kuaishou’s – decentralized . There are two core points in traffic logic: content tag matching and social relationship chain recommendation.

Content tags mean that after the content is published, it will be tagged with a series of tags by the platform to recommend it to people who may be interested. The keywords, geographic location and other information extracted from the notes are the key keywords of the tags.

After pushing notes to some users, the platform will score the notes based on the amount of interaction and decide whether to continue recommending them to other users. This scoring system is called CES (community engagement score) within Xiaohongshu.

This highlights Xiaohongshu’s three major traffic distribution advantages: equal distribution, high cost-effectiveness, and long-tail effect .

7) Marketing logic

Different from the AISAS integrated marketing model of traditional platforms, Xiaohongshu integrates Attention into Interest, Search, Action (purchase), and Share through Consideration, and combines them into a CAS model .

3. User Demand Analysis

1. User characteristics

• Female-oriented: Xiaohongshu is the stronghold of female users, and women are the absolute main force in the consumer market. But at the same time, in recent years, the content of Xiaohongshu has gradually extended to the fields of food, fitness, automobiles, sports, etc. As male celebrities and KOLs have joined Xiaohongshu, the proportion of male users has increased, and the ratio of male to female users has risen to 3:7.
• Younger: Xiaohongshu covers a wide range of age groups, with young users aged 18-30 being the main group, accounting for a total of 69%.
• High-tier cities: From the perspective of regional distribution, the majority of Xiaohongshu users are from first- and second-tier cities, and young high-spending groups continue to empower the platform. As of March 2021, Xiaohongshu users in first- and second-tier cities accounted for a total of 90%.

Xiaohongshu summarizes the six major group labels of platform users: Generation Z, new white-collar workers, urban trendsetters, single aristocrats, sophisticated mothers and hedonists.

2. User needs

• Planting grass: There are too many products in the same category, which increases the time and energy consumed by users in making purchase decisions. Users need a platform that can efficiently search for products that are suitable for them.
• Shopping: After finding your favorite products, goods, and experiences, you need to purchase products with authenticity guarantee online and experience some popular check-in spots and foods offline.
• There is a demand for content related to a better life: Users have a strong demand for vertical content such as beauty, food, travel, sports and fitness, etc.
• There is a demand for long-tail content: High-quality, substantial, and fresh long-tail content cannot be found in search engines, let alone people with similar interests. Xiaohongshu has rich long-tail content, such as finding vinyl, niche recipes, and tile selection.
• Self-improvement: Today’s users are driven by the times and flock to the hottest learning areas, but they often only dabble in them. When users conduct "general knowledge learning", they will quickly understand the currently popular unknown fields from a certain perspective, and then make a judgment on whether it is suitable for them to go deeper.
• Interaction and sharing needs: After users publish content as creators, they hope to gain respect and encouragement from others, and want to gain attention, likes, comments, collections, etc. On the other hand, users can gain inspiration from interactions and improve the quality of their creations.

3. Solution

Core functions: It has high-quality content in many categories to help users make decisions; it provides purchasing channels; it allows users to have a platform to publish content that is in line with the tone of a better life; and it matches business between users and brands.

Visual interaction: The top tag bar is divided into three tags: Follow, Discover, and Local; the bottom tag bar is Home, Shopping, Messages, and Me; the circle icons in the upper left corner include Release, Daily Life of People Nearby, Daily Check-in, Interesting Moments, Mood Diary, and Text Records. The total number of clicks by users should be low. It was found to be a double-row staggered waterfall flow. One page can display 4 cards, and the covers are mostly vertical. Comments on the video are in the lower right corner, and comments on pictures and texts are in the lower right corner and at the bottom of the page.

The "Follow" mode uses a single-column large picture display, which is available in both horizontal and vertical screens. It is not sorted by time and displays two lines of text description and two lines of comments.

The local page is a double-row staggered waterfall flow, with both horizontal and vertical cards on the cover, and the horizontal screen ratio is higher than the discovery page.

There are 8 diamond positions above the shopping page, and the card display positions are double rows of fixed waterfall flows.

4. User usage scenarios

If you want to buy something, go to Xiaohongshu to check out the functions, suitable groups, and cost-effectiveness of similar products.

When girls are going on a date or attending an important event and need to put on appropriate makeup, they will look for instructional videos or pictures on Xiaohongshu.

When I feel bored and need to kill time, I will browse the discovery page on Xiaohongshu.

If you want to go out for a trip, you need to choose a city and attractions to visit. You will search the name of the city on Xiaohongshu to find popular check-in spots/niche check-in spots. When I need to make a choice about attractions, I will search the name of the attraction and see what bloggers recommend.

If I want to make my own delicious food, I will look for recipes and guides on Xiaohongshu.

When I hear from friends that there is delicious milk tea/food somewhere, I want to see if it is worth buying and search for reviews on Xiaohongshu.

4. Product Analysis

1. Product structure diagram

2. User flow chart

60% of Xiaohongshu’s traffic comes from the search page, so this chapter focuses on the search function experience. It can be seen that after users enter the product page, they are likely to exit Xiaohongshu and go to other platforms to compare prices or purchase products. The reasons may be:

1) The authenticity of the products on the platform is questionable

Xiaohongshu ensures that consumers buy high-quality products by implementing brand authorization and direct sales, and has established overseas warehouses in more than 20 countries. However, there are endless reports online about Xiaohongshu selling counterfeit goods, and it has been repeatedly complained by consumers.

2) The product store displayed at the front of the product page is not authoritative enough

Taking the air fryer as an example, its first card store is called "Home Goods Store". Although the product details page is beautifully made, the store name may discourage a wave of users. The other three card stores are Yidunpu flagship store, MODONG flagship store, and shy rabbit 88 store. In addition to giving users an unofficial feeling, there is no well-known brand.

3) There is a need for price comparison

If you don’t know the prices on other platforms, you need to find the same products on Taobao, JD.com, Pinduoduo and other platforms for price comparison.

3. Functional experience analysis

1) Search for people you are interested in

After searching for "person", the page you enter first displays the person's Xiaohongshu account, followed by the sorting method, comprehensive, hottest, and latest. The default is comprehensive. You can also filter videos, pictures and texts.

Taking Gu Ailing as an example, the labels below the sorting method include All (default), Photos, INTJ, Encounter, Figure, Amnesia, Skiing and Painting, Dad’s Divorce, Private Clothes, Self-discipline, Wallpaper, Model, Animation, and Anxiety, which make the character very full.

Regarding pure content display, I think Xiaohongshu does a more complete job.

2) Product search

Search for "lipstick" to enter the note page, where the notes are displayed in a double-row staggered waterfall flow. What's surprising is that the video can have multiple nodes, so users can directly scroll to the product explanation they are interested in, and the video can also be played at twice the speed. However, very few creators used the node setting function, indicating that there is still room for improvement in creator teaching guidance.

4. Optimizable aspects

1) Enhanced bullet screen operation

Although Xiaohongshu has placed an entrance for inputting barrage, there are almost no barrages in the header content, which shows that users of the platform have not developed the habit of posting barrages, but instead write comments. There are some interesting interactions in the comments, such as whether they support what the blogger said, but users cannot perceive it unless they click on it.

2) Labels are mutually exclusive

During the browsing process, some labels will be interspersed in the double-row waterfall flow to make users more clear about the type of product they are looking for. However, it can be seen that "lipstick suitable for spring and summer" and "summer lipstick" are partially overlapping, and the display area is limited. It would be better to have mutually exclusive label settings.

3) Search for associated words can be optimized

The ads on Xiaohongshu are inserted very natively, and there will be an "advertisement" label in the lower right corner, and they can be purchased directly.

After browsing a lipstick video for a long time, since the blogger is not directly linked to the Xiaohongshu store, if you have the desire to buy, you can only enter it in the search bar and click the search bar. At this time, the search bar does not give the lipstick brand and color number mentioned in the video just browsed. If the user forgets the product he wants to buy, he needs to re-enter the video.

4) Unofficial stores have no endorsement and self-operated stores have higher prices

After entering the brand and color of the lipstick, the first page displayed is still the note page. After clicking on the product page, the four stores on the first page are all overseas stores or other unofficial stores, and the official welfare club appears on the second page when you swipe up.

Overseas stores have no endorsement, and only the store name is displayed on the product page. There are no medals such as gold sellers and crowns given by Taobao stores. The store’s experience star rating needs to be seen when the store is opened. The weighted calculation of its five indicators does not match the total experience star rating given (taking Shipping King’s overseas store as an example, its total experience star rating is 4.5 stars, but when broken down, the product experience, transaction disputes, etc. are all below 4 points, and the weighting method is unclear).

The prices in self-operated stores are higher than those in overseas stores, so users are more likely to choose other platforms to purchase.

5) Online color testing, VR skin testing and other functions can be added

Currently, whether it is the entire page or the product page, the product neither provides live broadcast or edited usage videos, nor does it provide online color testing, VR skin testing and other functions. The user's decision-making cost is still relatively high. An online color trial entrance can be designed on the product details page. This function can be activated for beauty products such as lipstick, foundation, eyebrow pencil, blush, eye shadow, etc., and can be gradually expanded to try on clothing and footwear categories.

5. Market and Competitive Product Analysis

1. Development trend of content e-commerce

Content e-commerce is in a period of explosive growth, and the Internet dividends have been exhausted. The sub-sectors dominated by content and social networking have become a breakthrough for the development of e-commerce, with a CAGR (compound annual growth rate) of about 60% in the next five years.

The logic of content e-commerce is different from that of traditional e-commerce. Private domain + public domain traffic, richness of the content pool, and trust in the platform and content have all become indicators that determine GMV.

2. Competitive product analysis

Currently, Internet companies are trying to achieve a complete closed loop of planting and pulling grass for private domain traffic on the site through roughly three models.

• The first is community first and e-commerce later, represented by Xiaohongshu and Douyin;
• The second is e-commerce first and community second, as represented by Taobao;
• The third is to focus on both e-commerce and community represented by Meituan.

The current Internet is seriously isolated, which means that the content characteristics of different software determine their search scope. On Xiaohongshu, life knowledge, beauty, and shopping are the main search areas, while food, knowledge Q&A, movies, etc. are dominated by apps such as Meituan, Zhihu, and Douban.

The competitive product analysis here only considers the grass-planting attributes, and hopes to cover multiple types, so Taobao, Bilibili, Douyin, What’s Worth Buying, and Zhihu are selected as competitors.

Xiaohongshu has been deeply involved in vertical fields such as beauty and fashion for many years. It has rich content and many KOL resources, and is quite different from these platforms.

6. Problems

1. The community itself faces three contradictions: commercialization, content quality and circle, and creator loyalty

1) There is a natural conflict between community and commercialization

• Advertising : It is the simplest and most direct way to monetize traffic, and is also the largest source of income for content communities. However, it is difficult to transform the income structure, and the expansion often exceeds the boundaries, which is highly destructive.
• E-commerce : Online demand is difficult to achieve a closed loop within the community after it is planted; offline demand is easily converted into offline private domain traffic, and the secondary conversion rate of the community is low.
• Games : Content is concentrated in the majority, user engagement is low, and the habit of paying for downloads has yet to be developed.

2) There is a contradiction between content quality and breaking the circle

The community’s entry threshold and screening mechanism ensure the quality of content and circle atmosphere, but at the same time, it creates obstacles for the community to find new growth and break out of the circle for content/users.

3) The community faces the risk of losing content creators in vertical fields

When vertical KOLs have enough fans to be commercialized, the higher volume, size and incentives of large platforms can more easily help creators monetize efficiently.

2. Problems faced by Xiaohongshu

1) False advertising and false marketing

"Photo fraud incidents" occur from time to time, but the core of the problem is that there is a huge deviation between who Xiaohongshu thinks it is and who users think Xiaohongshu is. A unified understanding has not yet been established between users, creators and the platform.

There is a new brand communication formula circulating on the Internet: "5,000 amateur Xiaohongshu notes + Wei Ya and Li Jiaqi's live broadcast rooms + 1,000 Zhihu questions and answers", which can successfully attract the attention of the outside world.

According to Xinbang data, from January to June 2021, the number of business notes on Xiaohongshu increased by more than 149%. It is foreseeable that when commercialization and user experience cannot be balanced, Xiaohongshu will lose its advantage.

The public account "IQ Tax Research Center" once wrote an article "When will the platform harvest the poisonous weeds? Users are fed up with it. From promoting new products to secretly stepping down on competitors, professional writers and those who pretend to be internet water armies have formed a one-stop industrial chain service.

2) The conflict between men and women is tense

In the past six months, more and more men have been "arguing" about marriage and love issues and social news, and the environment for friendly communication in the comment section has also deteriorated.

Xiaohongshu has caused controversy in March, July, and December 2021 due to its involvement in soft pornography involving minors, and the content recommended on the homepage for male users is often more explicit.

3) Failure to form a closed loop of planting and pulling out weeds

In August 2021, Xiaohongshu cut off external links such as Taobao and Tmall, and closed all platform connections embedded in sales notes.

Xiaohongshu’s official restrictions on soft advertisements and product links are probably intended to maintain its grass-seeking attributes. Live streaming is far more important to e-commerce than other forms of content, but if traffic and manpower are tilted towards the live streaming end, it is likely to cause dissatisfaction among old users.

Xiaohongshu has a strong ability to incubate popular products and brands, but its e-commerce path is still unclear.

3. User Reviews

According to user reviews from the app store from March 25 to April 5, 2022, a large number of users are dissatisfied with the platform's support for male authors. Other issues and valuable suggestions are as follows:

• Add comments and likes to record guidance;
• Strengthen content review;
• The location in the note is below the account number in the upper left corner, which is not very obvious;
• Add iPad horizontal screen version;
• The video push should show that it is a video;
• People of interest should be categorizable;
• Support multi-device login;
• Unable to create a group.

There are also comments such as adding browsing history, etc. The platform has been improved.

VII. Operation

1. Operational events

1) 6.6 Anniversary Celebration

The 6.6 anniversary celebration will start on May 25 and end on June 10. It will continue to operate in different time periods through methods such as full discounts, special coupons for the first hour, daily limited coupons, and deposit inflation deductions.

A surprise box game interaction was also launched, and keyword guidance was added to the search entrance, allowing users to play games to obtain no-threshold coupons or other prizes. For example, the grand prize on June 6 was a one-year use right for the new Land Rover Range Rover Evoque and a limited edition lipstick given by Li Jiaqi.

At the same time, we will carry out community topic guidance and recommendations, such as the official account's must-buy list, money-saving guides, and good product recommendations.

2) Red Friday

In November 2015, Xiaohongshu launched the “Red Friday” promotion. In addition to the highest discounts that only happen once a year, all overseas direct mail products are also free shipping.

During this event, Xiaohongshu also launched offline activities such as one-yuan luxury bags and Xiaohongshu buses, as well as a 30-day no-reason return and exchange policy that allows users to shop with peace of mind.

3) Hu Ge and Xiaohongshu's three days and three nights

In April 2016, Xiaohongshu invited Hu Ge and planned the "Three Days and Three Nights with Hu Ge and Xiaohongshu" event, preheating the event on Weibo before going online, and the new user growth rate reached 100%.

At the same time, Xiaohongshu planned a promotion for the "Same Style as the One in Hu Ge's Advertisement" category in the welfare club, and launched the "Spend 699 or more and get the same Captain Potato doll as Hu Ge" activity.

4) Sponsor top variety shows

In January and April 2018, Xiaohongshu sponsored "Idol Producer" and "Produce 101" respectively. The two top variety shows brought Xiaohongshu extremely high exposure.

In addition to the program announcements, interludes, and logos, the trainees were also invited to post notes on Xiaohongshu and a voting channel was opened in the APP.

5) Internal testing of e-commerce live streaming and new product launches

In 2019, Xiaohongshu launched an internal test of e-commerce live streaming, and Perfect Diary, a model enterprise account, launched its new product on Xiaohongshu’s live streaming.

In the past two years, Xiaohongshu has launched activities such as "Creator Open Day", "Creator 123 Plan", "Campus Big Player" campus tour, and launched the "Million Creators Support Plan" for creators who love to share their lives.

2. Why did Xiaohongshu cancel external links?

Starting from August 2, 2021, Xiaohongshu will close the external link permission of products in the sales notes, including Xiaohongshu Mall and Taobao Tmall product links. The external link function of live streaming sales remains unchanged.

Xiaohongshu's move is to ensure that the content of notes is objective and fair, to improve the quality of community content, and to require that the proportion of notes related to authors' commercial cooperation does not exceed 20%.

In 2021, Xiaohongshu officially implemented the "account and store integration" mechanism. The most obvious change is the adjustment of the community account system. Xiaohongshu community uses two types of accounts, "professional accounts" and "ordinary accounts" to identify themselves.

Different from the previous "Enterprise Account" certification system, the "Professional Account" certification scope not only covers interest orientation and professional identity, but also includes large, medium and small business identities such as coffee shops, B&B owners, and beauty brands. All account entities in the community can apply. After completing the certification, they can open stores, launch ads, and carry out various commercial cooperation with the platform.

Under this system, the links between users and merchants in community interaction and conversion will be further shortened.

The form of cooperation has also undergone earth-shaking changes. For all advertisements, the platform forces bloggers to declare the cooperation with the brand at the end of the note. Users can not only easily distinguish which note is a cooperation, but also use @ to enter the store, thereby directly contacting the brand concept and image.

3. Set up multiple official accounts to guide creators

Xiaohongshu has set up general official accounts, such as Captain Potato and Potato Butler; functional official accounts, such as Creator Assistant, Xiaohongshu Video Account, Xiaohongshu Creation Academy, Potato Store Manager, Enterprise Account Assistant, etc.

As well as official accounts in various fields, such as Daily Shu and Life Shu for life and maternal and child care, and Beauty Shu and Beauty Intelligence Bureau for beauty and skin care, they provide guidance and answers to creators and merchants.

8. Conclusion

1. Advantages

1) High user value

Among the top 100 popular products in the sub-industries of Xiaohongshu, skin care products account for the highest proportion of 28% among the products with a unit price of more than 1,000 yuan, showing the high consumption willingness and consumption power of Xiaohongshu users.

The price preference for cosmetics products is concentrated between 100-500 yuan, accounting for 41% (Qiangua Data 2022 Xiaohongshu Active User Portrait Report).

2) The content produced by the creators is in line with the tone of exquisite life

Xiaohongshu has designed convenient content publishing tools to help users create content through auxiliary tools such as filters, labels, and stickers. It continuously improves user experience and lowers the threshold for UGC by beautifying images. At the same time, it guides non-professional users to produce content by formulating content standards and setting specific topics.

3) Rich content, can provide decision-making services for beauty, clothing and long-tail content demanders

In terms of total volume, Xiaohongshu has generated approximately 360 million notes in the past year, of which food, beauty, and entertainment categories have the largest number of notes. The weight of games, education, and pets in the market has increased in the past six months.

The "home furnishing and decoration" industry is becoming a rising star on Xiaohongshu. The proportion of amateur notes in sectors such as maternal and child products, pet products, medical health, technology and digital products is much higher than the overall market and is more credible.

4) Have strong ability to incubate new brands, new makeup, new outfits, and seed new products

The commercial value of Xiaohongshu cannot be underestimated, especially driven by the national consumption upgrade, "her economy" and healthy living. Various emerging consumption scenarios such as "mask makeup", "new tea drinks" and "home fitness" are fermenting in the content ecology of the Xiaohongshu platform, and diverse product demands and strong consumer demand have exploded.

2. Disadvantages

1) False Marketing

Take the first seven months of 2019 as an example: In March, Xiaohongshu was exposed that it only cost a few dozen yuan to write and post a fake recommendation note, and you could get a popular recommendation by paying.

In April, Xiaohongshu was exposed to have a large number of tobacco-promoting soft articles; in May, Xiaohongshu was caught up in the "KOL cleansing" incident (Key Opinion Leader, specifically referring to Xiaohongshu's brand partners), removing more than 13,000 KOLs at one time and being denounced by a large number of KOLs.

In June, Xiaohongshu was ordered by the Shanghai Jiading District Market Supervision Administration to correct its violations of Article 19 of the "E-Commerce Law" by bundling goods and services; in July, it was removed from the Android App Store.

“False promotion” has spawned a complete industrial chain. Grass-planting platforms such as Xiaohongshu are just part of the fake marketing industry chain of "ghostwriting and posting". The brands that issue demand orders and third-party order-taking intermediary platforms represented by "Crab Notice", "Red Notice" and "Micro Media Notice" are more critical links.

After banning 29 brands suspected of illegal marketing in the first batch, Xiaohongshu recently banned 39 consumer brands, offline institutions and merchants suspected of false marketing.

2) It is impossible to form a closed loop of planting and pulling out grass, and the income source is single, mainly relying on advertising

In 2020, advertising revenue accounted for 80% of Xiaohongshu’s total revenue, and its source of income is very traditional and too single.

Xiaohongshu, which focuses on customers who prefer a refined lifestyle, has the opportunity to convert the value of traffic through e-commerce in certain specific segments, but its scale should be difficult to compare with existing e-commerce platforms.

Currently, Xiaohongshu Mall only has 9 product categories including beauty, fashion, accessories, and skin care. The narrow product categories have restricted the development of Xiaohongshu's e-commerce business to a certain extent.

3) Due to the inability to provide good commercial returns, bloggers left Xiaohongshu

Once vertical KOLs have enough fans to be commercialized, the higher volume, scale and incentives of large platforms can more easily help creators monetize efficiently.

In the early days, merchants and influencers on the Xiaohongshu platform were "smuggling", but now it has become an open secret in the industry that MCNs and KOLs bypass Xiaohongshu and cooperate privately.

Many bloggers post content and promote products on Xiaohongshu, while at the same time they open small shops, hang window displays, and do live broadcasts on Douyin in order to seek more ways to monetize.

4) Breaking the circle triggers resentment among native users

• The influx of male users has caused the community atmosphere of Xiaohongshu to become tense.
• The male content on Xiaohongshu lacks stability and uniqueness, making it difficult to achieve sustained traffic.
• The inherent impression of Xiaohongshu as a "female community" will create resistance to the natural influx of male users.
• Communities such as Bilibili, which has achieved some success in generalization, and Hupu, a "male recommendation" community, are both strong rivals for Xiaohongshu on its road to breaking out of its circle.

5) There are many overseas shopping platforms and purchasing agents, and the competition is fierce

In addition to NetEase Kaola, Yangmatou and other apps that focus on overseas shopping, platforms such as Taobao and JD.com also provide overseas shopping products. Price wars are inevitable, which increases the pressure on Xiaohongshu's e-commerce business.

Xiaohongshu's e-commerce business is self-operated. Although it has full control over the supply chain, logistics and other aspects, its "overseas warehouse + bonded warehouse" model is also overwhelmed. Although it also has advantages in cost savings, it is ultimately no match for purchasing agents.

6) The authenticity of welfare club products is questionable

7) Live broadcast operations need to be improved

There is "Live Broadcasting Shop" on the shopping page. After clicking, an empty live broadcast screen appears. There are only stores and no one in the screen, which makes the user experience poor.

3. Development direction

1) Improve your own supply chain, provide sufficient SKU, and establish price advantages

Xiaohongshu's SKU is relatively thin. Judging from the shopping channel, there are currently only a few categories: daily new products, welfare clubs, spring good designs, craftsmen, live shop exploration, four-piece sets, trendy toys, videos, beauty makeup, and sun protection. Others need to be searched.

Xiaohongshu should think as soon as possible whether it wants to do e-commerce by itself or become a simple grass planting platform, and reach cooperation with major e-commerce giants.

Compared with other e-commerce platforms, Xiaohongshu has no price advantage, which is the decisive factor for whether a large number of consumers buy it.

You can tag products with volume, such as "low price across the entire network", "limited time and special", "lowest price in the past 30 days", etc., and display it on the shopping page.

The author believes that becoming a simple grass planting platform may be an easier choice, with higher user satisfaction, and advertising under strict regulatory conditions will not reduce user stickiness.

Vigorously developing e-commerce is more costly and difficult to stand out among many overseas shopping platforms.

2) Improve the entry threshold for stores and establish a store rating system

Strictly review the applicant's self-made products and select high-quality merchants to settle in. Establish a complete store rating system so that users can clearly understand the credibility of the store, rather than be full of doubts. Control counterfeit and shoddy products from the source and establish a third-party quality inquiry platform.

3) Further strengthen supervision while avoiding accidental injuries

Xiaohongshu is also willing to rectify the phenomenon of uneven quality on the platform, but the results of its frequent actions are often not satisfactory.

In September 2020, Xiaohongshu launched a "Woodpecker" campaign aimed at cracking down on false promotion, but the most immediate result was that "Xiaohongshu's mislabeling compliance notes" was pushed to the hot search on Weibo.

The balance of content ecology is subtle. The blogger believes that there is no problem with adding filters to their photos with good weather. However, ordinary users artificially believe that this is false marketing. The essential reason is that both parties have different understandings of the platform. At this time, it is not appropriate for the platform to stand completely on either side. The rules should be refined and the creator should be reached.

4) The increase in content categories and quality improvement must continue

Moreover, Xiaohongshu is indeed improving the types of notes, and the user volume structure has also changed.

The author believes that increasing the upper limit of content categories is conducive to the long-term development of the platform, and it is understandable to support creators in certain fields. For example, in 2020, Xiaohongshu launched the "10 billion traffic upward plan", focusing on video creators, live broadcast creators, and creators of general knowledge and entertainment categories for targeted support.

However, when it comes to supporting male creators, you should be cautious. From the comments on the app store, this gender-oriented support will cause dissatisfaction among a large number of old users.