Xiaohongshu User Operation Strategy Analysis Report

Xiaohongshu is a representative example. There are many bloggers on Xiaohongshu, from celebrities to ordinary people. They often post on it to help others plant grass or pull grass. Among many products, how did Xiaohongshu occupy a favorable market and attract so many loyal users?

1. Product Introduction

1.1 Product Background

1.1.1 Field

Xiaohongshu is a social e-commerce platform that provides a way for young Internet users who love shopping and life to share, communicate and purchase. Users can discover good things from all over the world through the platform, browse product guides summarized by various experts, share their own experience of using products, and complete online shopping within the e-commerce platform.

Xiaohongshu was founded on June 6, 2013, with the information asymmetry of overseas shopping as its entry point. Since there were no products with a very similar positioning on the market when it was founded, Xiaohongshu became a dark horse at the beginning of its establishment. The number of users exceeded 15 million only one year after its launch. As of December 2020, the cumulative downloads of Xiaohongshu have exceeded 5.3 billion, and the number of users has exceeded 300 million.

1.1.2 Product Positioning

When Xiaohongshu was first founded, it was positioned as a tool-type product, mainly providing basic shopping guides for overseas markets. Later, by deepening its UGC shopping sharing community and continuously integrating content communities with e-commerce modules, it developed into the world's largest consumer word-of-mouth database and community e-commerce platform.

Currently, Xiaohongshu officially defines the Xiaohongshu APP as a lifestyle platform for young people, with "UGC content community" as its core. Users can record their daily lives through short videos, pictures and texts, share their lifestyles, and interact based on interests. They can also purchase high-quality products from all over the world with one click through the welfare club. It is an online shopping note sharing community and a self-operated bonded warehouse direct mail e-commerce platform.

1.2 Business Logic

1.2.1 Target Users

1) User characteristics

From the user portrait data of iResearch Consulting, it can be seen that female users account for nearly 80% of Xiaohongshu's users, and the number of male users is only 20%. This shows that Xiaohongshu's target users are mainly female, and the community sharing and e-commerce models are more in line with the shopping habits and user characteristics of female users.

Judging from the age distribution of users, the main users of Xiaohongshu are young people under the age of 30, and users aged 31-35 also account for a certain proportion.

Judging from the geographical distribution, Xiaohongshu users are mainly concentrated in economically highly developed coastal areas. Users in this region generally have a high standard of living, strong spending power, pursue quality of life, and have a certain demand for overseas shopping.

2) User portrait

User portraits can be roughly divided into the following categories:

• Student group: high school and college students, born after 1995, who are highly active, have plenty of time, pursue trends and fashion, are easily attracted by new things, and are willing to share and show their lives;
• Workplace group: white-collar workers and office workers, located in first-tier cities such as Beijing, Shanghai and Guangzhou, pursue quality of life, like to share their life status, like to shop for beauty products overseas, refer to KOL's notes before shopping, and are willing to share their own experience after purchase;
• Internet celebrities: KOLs and celebrities in vertical fields, who have a certain social influence and spontaneously share their favorite beauty products or toiletries through videos or notes, or cooperate with beauty brands to promote and advertise to earn income;
• Merchants and shops: Operators of shops such as youth hostels, Internet celebrity restaurants, cafes and bars, who are between 20 and 35 years old, pursue fashion and hot topics, and are good at using the Internet for publicity and packaging.

1.2.2 Demand Scenario

• If you have plenty of time, you can hang out, watch videos, take notes, browse the welfare club mall or other official flagship stores, check out the fashion trends, and kill time;
• Browsing with a purpose, intending to purchase products, experience services or learn skills, reading and learning the notes and experiences of KOLs;
• Willing to share life, want to share the new products they buy or the new services they experience on social media, gain appreciation and attention, and answer other users’ questions;
• Want to buy authentic overseas products, but lack the time or ability to shop overseas, and plan to buy products from welfare clubs or other overseas flagship stores;
• When preparing for cross-border/Hong Kong, Macau and Taiwan travel shopping, check the destination's selected shopping notes to find your favorite overseas products and make a list.

1.2.3 Core Functions

Xiaohongshu’s slogan “Mark my life” defines the core function of the platform as the dissemination of tag notes - that is, the output of content culture. Users can record their daily lives, share their lifestyles, and interact based on their interests through short videos, pictures and texts.

E-commerce models such as welfare stores and limited-time purchases complete the closed loop of the business model and give users a better experience.

2. Product experience

2.1 Product Structure Diagram

Main functional structure:

2.2 Business process diagram

Main business logic:

The main business logic is divided into two major sections: e-commerce model and social model, and other functions serve these two sections.

The social model refers to core users (content producers) posting notes and sharing consumption experiences, while ordinary users receive recommendations based on their behavior records using algorithms set by the system. They can browse, like, and collect notes, and after following each other, both parties can send private messages for social interaction. The e-commerce model refers to users browsing notes and then becoming interested in products, purchasing them through welfare clubs or other means, and continuing to post notes after use, engaging in more "online sharing", thus forming a closed business loop.

3. Determine the life cycle

• Time perspective: Xiaohongshu was founded in 2013, and the APP was launched at the end of 2013, which means it has been in operation for 7 years;
• User perspective: The number of downloads exceeded 100 million in November 2017, and then grew at a rate of nearly 4 times. So far, the number of downloads has exceeded 5.9 billion, and the number of users has exceeded 300 million.
• Product perspective: The latest version of Xiaohongshu is 6.81.1, which has been updated 4 times in the past 30 days and once in the past 7 days. Through continuous version iteration, the basic and core functions of the product have been completed. The platform is mainly based on content sharing, and the content topics have covered various life areas such as fashion, skin care, makeup, food, travel, film and television, and the content range is getting wider and wider;
• Operational perspective: Xiaohongshu's core business is UGC content operation, which achieves a closed loop of user behavior through user operation and e-commerce operation;
• From a business perspective: Profitable operation, constantly seeking ways to integrate with e-commerce, and has completed the D round of investment led by Alibaba.

Conclusion: From the above, we can judge that Xiaohongshu APP is in its mature stage.

4. Analyze operational strategies

Based on the judgment of Xiaohongshu's life cycle, the following report will focus on analyzing the user operation strategies in the three stages: start-up stage, growth stage, and mature stage.

4.1 Start-up period (2013-2015)

In 2013, mobile Internet developed rapidly, smartphones were widely used, cross-border travel became a popular travel choice, and consumers began to pay attention to the purchase of overseas products. At the intersection of several trends and in response to users' demand for cross-border shopping, Xiaohongshu was established in Shanghai.

At that time, cross-border e-commerce was still a blue ocean market. Xiaohongshu accurately captured the target users and user needs, focused on the blank market of overseas shopping sharing, accurately captured people's pain points in overseas shopping, and targeted women in first-tier cities who tended to shop in overseas markets, thus gaining the first batch of users.

4.1.1 Get User

In October 2013, the PGC-based Xiaohongshu shopping guide came into being with the slogan "Put travel in your shopping bag". It is a basic shopping guide mainly for entry-level users, covering 8 countries including the United States, Japan, South Korea and many popular tourist destinations.

Users can download and read offline on PC or iOS platforms. It was downloaded 500,000 times in less than a month after its launch, successfully attracting a group of young women with overseas shopping habits. This also proved the user's demand for overseas shopping and accumulated the first batch of original users for the launch of Xiaohongshu APP.

4.1.2 Activate User

1) Transformation from a “shopping guide” to a “sharing community”: high-quality UGC content enhances Xiaohongshu’s social attributes

Considering that guide-based products are difficult to interact with users and form stickiness, the Xiaohongshu team launched the APP V1.0 version "Hong Kong Shopping Guide APP" at the end of 2013.

By inviting experts from various fields and promoting in communities, Xiaohongshu encourages women who have the habit of shopping overseas to start sharing their shopping experiences on it. By producing high-quality content through UGC, Xiaohongshu has accumulated a large number of middle- and high-income female users, and its stickiness has made a qualitative leap. More and more users are willing to share their shopping experiences, thus completing the acquisition and activation of early seed users.

Over several version iterations, Xiaohongshu has continuously strengthened its social functions and content publishing tools, effectively improving user engagement and activity.

Based on the high-quality content community, in October 2014, Xiaohongshu upgraded from a content community to "content + e-commerce", and launched the "welfare club" module. A closed business loop was finally formed. Xiaohongshu clarified user needs and product development direction, and became a one-stop platform for women's overseas shopping community e-commerce from content planting to mall ordering. The slogan was changed to "Find good things abroad."

2) The first global awards event, where millions of users voted for the best things in the world

At the end of 2014, Xiaohongshu held its first global awards event. Within 20 days, 1.87 million people participated in the voting, which was very popular. The products and stores it launched once became a benchmark for outbound shopping.

This event was entirely voted on by users, using the most popular H5 method to attract more people to participate, and eventually formed fashion lists, cosmetics lists, furniture lists and other lists. The discussion enthusiasm of users in Xiaohongshu increased significantly, which brought high popularity and activity to Xiaohongshu, and also acquired a group of new users for Xiaohongshu. Since then, the global awards event was held for three consecutive years in 2015 and 2016, further expanding its influence.

4.2 Growth period (2015-2017)

For a product that has passed the start-up phase, the core goal is to achieve rapid user growth. Xiaohongshu has verified user needs in the start-up phase, and then began to attract more and more users by updating product functions and holding creative activities, quickly occupying the market. At the same time, the slogan was changed to "The best things in the world."

4.2.1 Get User & Activate User

1) "Anniversary Fresh Meat Marketing" to acquire new users - Fresh Meat Video, Fresh Meat Express, School Prince Express

Before its anniversary celebration in 2015, Xiaohongshu started to run video ads for promotion. The content of the video was a shirtless foreign male model demonstrating Xiaohongshu's slogan "Find good things from abroad" through scenes.

On the anniversary day, Xiaohongshu hired a group of foreign male models in Shanghai SOHO to deliver express packages to customers with their upper bodies naked and provided "princess hug" benefits, which made the female users at the scene excited and accurately reached the target users. This campaign brought 3 million new users and 50 million yuan in sales to Xiaohongshu. Judging from the data, daily active users and new users have doubled, successfully attracting new users.

In September 2015, Xiaohongshu struck while the iron was hot and held a marketing campaign called "Campus Prince Express" in 12 universities in five cities across the country, which once again set off a trend among female college students.

Finally, the "School Prince Express" incident ended perfectly with 52.977 million exposures and 47,000 discussions, successfully increasing the overall popularity in the post-90s circle. During the entire anniversary period, Xiaohongshu APP ranked fourth on the Apple App Store's overall list, with 15 million users.

2) “Star Girl” Lin Yun and other female celebrities and KOLs have joined Xiaohongshu

In April 2017, Xiaohongshu invited "Star Girl" Lin Yun to officially join Xiaohongshu. Later, female celebrities and vertical field KOLs such as Fan Bingbing, Ouyang Nana, and Qi Wei successively joined Xiaohongshu.

Firstly, celebrities themselves have their own traffic, and by participating in activities, they can increase the number of users and improve user retention. Secondly, when celebrities publish their life notes, their fans will be able to see the celebrities’ daily lives, narrowing the distance between fans and celebrities. At the same time, celebrities bring with them elements such as fashion, popularity, and dressing, which can arouse topics and effectively increase user activity. In addition, the fan effect of celebrities can also be used to promote some products and increase profits.

4.2.2 User Retention

1) Refined operations

During this stage, Xiaohongshu began to focus on optimizing community functions. The page was revised many times, the product underwent multiple functional iterations, and the recommendation algorithm was also updated.

Based on machine algorithms, Xiaohongshu will make personalized recommendations based on users' interests and user portraits, successfully realizing the "content finds people" concept. This shows that the Xiaohongshu team attaches great importance to user experience and needs, and through refined operations, it retains more users without clear browsing purposes, thereby increasing daily active users and user usage time.

In order to ensure longer-term user retention, Xiaohongshu encourages users to post, share, like, collect, comment, etc., and has set up a ten-level user growth system. Each level has corresponding social attribute task requirements. Completing these tasks will allow users to grow to the next level, thereby encouraging users to use Xiaohongshu more.

In the process of upgrading and fighting monsters, it is also unknowingly encouraging users with creative abilities to become new UGC, produce more high-quality content and disseminate it on the platform, forming a positive cycle of incentives.

4.2.3 Convert users

1) Red Friday

In November 2015, Xiaohongshu transplanted the "Black Friday" event to China and launched the "Red Friday" promotion, covering more than ten categories including skin care, cosmetics, etc. Selected overseas products are less than 50% off, and all overseas direct shipping products are free of charge.

The gameplay is novel and the sense of scene is strong, which paves the way for holiday promotions. Users can see the "Red Five" logo everywhere in the APP and click to browse and purchase their favorite products, which increases the daily activity of users and is also an important means of achieving profitability.

2) 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. The precise artist matching + close-to-life advertising recording, as well as the Weibo warm-up before the launch, successfully created a big topic on Weibo, raising the popularity of Xiaohongshu to a higher level, and the new user growth rate reached 100%.

This collaboration with Hu Ge once again accurately captured the female users of Xiaohongshu. The hashtag #胡歌代容小红书# created by fans on Weibo received more than 7 million reads in total.

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. The entire event released a large number of topics, guided user participation and dissemination, increased user activity while increasing the mall's sales, and allowed users to experience the full charm of Xiaohongshu in a closed loop.

4.3 Mature stage (2017 to present)

Through the operations in its growth stage, Xiaohongshu has already possessed a large number of users and a relatively stable position, established a brand image, and lowered the user tone. Its slogan was changed to "Mark my life". During this stage, Xiaohongshu paid more attention to the operation of the content community, carried out special planning, and was guided by user activity, retention rate, commercial monetization and user dissemination.

4.3.1 Activating and retaining users

• Idol Producer & Produce 101

In January and April 2018, with the expansion of the fan economy, Xiaohongshu sponsored two phenomenal variety shows, "Idol Producer" and "Produce 101". The two top variety shows brought Xiaohongshu extremely high exposure, and Xiaohongshu users entered a stage of blowout growth.

In addition to program announcements, interludes, and logos in the two programs, Xiaohongshu also invited trainees to post notes on Xiaohongshu and opened a voting channel in the APP. Judging from the data, the traffic diversion effect of the program broadcast for three consecutive months has been extremely obvious.

The audiences of the two variety shows are actually also potential users of Xiaohongshu, especially women who are keen on celebrity hotspots and fashion trends. Xiaohongshu has successfully acquired this group of potential users through precise variety show delivery. This group of users is of high quality and high activity. They post on Xiaohongshu to share their idols and complain about the competition system, which has increased the overall activity.

At the same time, posting and sharing in the voting rules can increase the number of votes, which actually improves user activity and retention rate.

After the event, the trainees continued to use Xiaohongshu to record their lives and post daily news, which continued to attract fans. Fans would like and comment on the trainees' notes and buy the products recommended by the trainees, which increased the activity and retention rate of Xiaohongshu.

4.3.2 Convert users & user communication

1) Differentiated e-commerce live streaming

With the explosive popularity of Taobao's e-commerce live streaming, hosts such as Li Jiaqi and Viya have continued to set new transaction records. Xiaohongshu has also begun to focus on e-commerce live streaming, trying to obtain the platform's latest traffic dividends in the live streaming track.

In 2019, Xiaohongshu conducted an internal test of e-commerce live streaming. Perfect Diary, a model enterprise account, launched its new products on Xiaohongshu live streaming. The new products were quickly sold out, and the number of fans increased by 100,000 within a week of the live streaming. The live broadcast was officially launched in April 2020 and became open to all creators on the platform.

The next day, Xiaohongshu announced a 3 billion traffic and targeted support plan at its second creator open day, hoping to make live streaming a normal practice. Xiaohongshu, which has always been particular about style and quality, is also pursuing a differentiated live broadcast format. The live broadcast is based on its core advantage content notes, and is mainly based on sharing and chatting, and the atmosphere of bringing goods is more inclined to emotional attributes.

On the one hand, live streaming can be used to increase user activity and conversion rates, thereby realizing monetization for the platform. On the other hand, it can also be used to retain excellent creators.

2) "Creator 123 Project" & "Campus Big Player"

In the past two years, Xiaohongshu has launched activities such as "Creator Open Day", "Creator 123 Plan", "Campus Big Player" campus tour, and "Million Creators Support Plan" for creators who love to share their lives, aiming to help content creators improve the quality of notes and production efficiency. It hopes to cultivate and retain excellent content producers through various incentives, so that creators and content can release greater influence, accumulate private domain traffic for creators, and provide diversified commercialization paths.

At the same time, it attracts more users to join Xiaohongshu and achieves the goal of user word-of-mouth communication.

5. Advantages & Disadvantages Analysis

After the above analysis, we will analyze the advantages and disadvantages of Xiaohongshu from three aspects: content operation, event operation, and user operation.

5.1 Content Operation-Advantages & Disadvantages Analysis

In terms of content operation, high-quality UGC content dissemination and community communication are the key to Xiaohongshu's success.

Currently, Xiaohongshu already has tens of thousands of notes on various hot topics such as fashion, skin care, travel, fitness, food, film and television. The note list pages made by high-quality creators give people the most direct aesthetic enjoyment through exquisite filters and designed photos or short videos.

Xiaohongshu guides topics based on hot topics and user preferences, encouraging users to discover new content. Users can browse and share their life experiences on Xiaohongshu, and can also complete a one-stop shopping experience from planting grass to placing orders.

But on the other hand, the entry of more and more celebrities and KOLs has led to various commercial implants and soft articles appearing on Xiaohongshu. The original intention of content creators to publish notes is no longer to recommend good products, but has become commercial promotion. Therefore, users have gradually become cautious about notes and have developed certain doubts about the authenticity of the content.

As for ordinary content creators, many people are also worried that the entry of a large number of celebrity KOLs will subtly change the positioning of "Little Red Book", and the style will gradually become a competitive trend such as "showing off wealth". Therefore, creators and Little Red Book staff need to have stricter control over content review and set more precise algorithms.

5.2 Activity Operation-Advantages & Disadvantages Analysis

Xiaohongshu's achievements are largely due to the creativity of its activities. Currently, Xiaohongshu has established two festivals with its own labels - "6.6 Anniversary Celebration" and "Red Friday". In addition, the platform often combines hot spots or creates its own hot spots to carry out creative event marketing such as fresh meat express delivery, joint talent shows, etc.

Both online and offline activities received a good response, and the daily activity and new registrations during the event were quite impressive. The next step for Xiaohongshu will be to launch cross-border cooperation with the tourism industry. We also look forward to the next explosive point created by Xiaohongshu.

5.3 User Operation-Advantages & Disadvantages Analysis

In terms of user operations, Xiaohongshu's users are mainly divided into two categories: content producers and ordinary users.

For ordinary users, Xiaohongshu has established a user growth level system, encouraging users to share the fun of life, post notes, engage in social exchanges within the platform, and become creators to produce high-quality content, thus forming a virtuous cycle;

For content producers, the platform's creator training system allows users to continuously produce high-quality content, while bringing huge traffic and hot spots to the platform. Users can then cooperate with brands to realize traffic, thereby ensuring the operation of the platform.

Despite this, Xiaohongshu still faces pressure in user conversion. Creative activities can often bring short-term profits to the platform, but once the popularity wears off, the platform's sales will return to previous levels.

Although Xiaohongshu's "community + e-commerce" model has achieved a closed loop of user behavior, its commercial monetization is not satisfactory. Its popularity and fame do not seem to match its market share. The root cause is that users have not changed their shopping pattern of "planting grass on Xiaohongshu and pulling grass on other platforms". In particular, the "fakes" that have emerged in recent years have had a certain impact on Xiaohongshu's reputation.

At the same time, with the increasing number of competitors in the social e-commerce track in recent years, the market expansion space is limited. Many apps with overlapping functions have gradually been launched, such as Douyin and Kuaishou, which focus on short video social networking, and NetEase Kaola, a community shopping app that integrates sharing and shopping. Their rise has caused a large-scale shift in users' attention, which will cause Xiaohongshu to lose a group of users to a certain extent. How to complete traffic construction and user retention in an industry full of giants will be the focus of Xiaohongshu's consideration.

6. Summary & Suggestions

According to data from October 2020, Xiaohongshu ranks first in the community dating APP sector of iResearch Data, and the number of independent devices is still rising, ranking first in the industry.

Xiaohongshu has gradually developed from a PDF travel and shopping guide to a comprehensive community + e-commerce platform, with the number of users exceeding 300 million. The content of Xiaohongshu's "book" has become richer and richer, and the number of users has increased.

As one of the earliest community + e-commerce products, Xiaohongshu identified its target users from the very beginning and fully met their needs. Through marketing activities, it successfully integrated two modules that seemed to have weak correlation, achieved logical consistency of the product and a closed loop of user behavior within the product.

6.1 However, Xiaohongshu still has some problems that need to be solved

• The e-commerce industry is already in a fierce competition. Users do not seem to be buying into Xiaohongshu's e-commerce platform, and there is still a lot of room for improvement in traffic monetization capabilities.
• Faced with the rise of similar content communities or social e-commerce apps, how can Xiaohongshu maintain its position and maintain its relationship with users?

6.2 Facing the above problems, Xiaohongshu may be improved in the following two aspects

6.2.1 Strengthen the connection between content and e-commerce, and continue to explore the integration of content communities and e-commerce platforms

Realize the intercommunication between sellers’ comments and notes, place product links at appropriate places on the note page, or attach sharing notes from celebrities and KOLs to the product page to enhance users’ impression and trust; invite official flagship stores to settle in and improve product categories.

On the basis of the original REDelivery international logistics system, a mature supply chain system and a complete management system are established to support its e-commerce platform to ensure the authenticity of the goods. At the same time, a supervision and audit mechanism is established to conduct regular spot checks, remove inferior products in a timely manner, and provide good after-sales service for goods.

6.2.2 In terms of user retention, we should adhere to the tonality of the product itself and ensure the high quality of the core content.

Add a reward function for high-quality content, and provide a more direct way to prove creative ability and obtain more financial incentives for high-quality content; establish a hot list of Xiaohongshu similar to Weibo hot searches and Zhihu hot lists to inform users of current trends, increase user immersion time, and thus increase user stickiness.

New user incentive mechanisms have been added, such as daily sign-in rewards, live broadcast viewing time rewards, shopping rewards, sharing rewards, etc., so that users can not only be motivated spiritually and emotionally, but also from material benefits. These rewards can be used for cash deductions in e-commerce sectors such as welfare clubs, thus forming a cycle.

Xiaohongshu took only 6 years to develop from an unknown APP into a national-level software. Behind this is the creativity and hard work of the founding team. As Premier Li Keqiang said, "30% depends on innovation and 70% depends on hard work." In the future, Xiaohongshu will surely provide more interesting community gameplay to meet more user needs. We look forward to Xiaohongshu writing its own wonderful stories.

Author: Dandan Big Baby

Source: Dandan Big Baby