Xiaohongshu product analysis report!

Since its establishment in 2013, Xiaohongshu has overcome many difficulties and achieved many successes. This article details Xiaohongshu’s product overview, market analysis, product features, core functional experience, business model, and exploration of future development paths. Friends who are interested can read it together!

1. Product Overview

1. Product Introduction

(1) Product Introduction

Xiaohongshu is a lifestyle platform for young people, founded by Mao Wenchao and Qu Fang in Shanghai in 2013. Xiaohongshu’s mission is to “Inspire Lives, share and discover the wonders of the world”. Users can record their daily lives, share their lifestyles, and interact based on their interests through short videos, pictures and texts. As of October 2019, Xiaohongshu’s monthly active users have exceeded 100 million, 70% of whom are born after 1990, and the number continues to grow rapidly.

(2) Product name

The product is named Xiaohongshu, and its logo is white text on a red background. The red background corresponds to the "red" in Xiaohongshu. At the same time, the white text "Ice and Snow Appointment" on a blue background and the snowflakes in the logo follow the current trend - the Winter Olympics and the Winter Paralympics. The slogan is "Mark My Life" and aims to provide users with a community platform for recording life details, sharing lifestyles, and forming interactions based on interests.

2. Comparison of product longitudinal data (time as cross section)

(1) Application data

According to Qimai data, from February 10, 2022 to March 10, 2022, Xiaohongshu remained in the top three in the free social list except for the first few days.

(2) Downloads

According to Qimai data, Xiaohongshu has maintained a relatively high download volume in the past two months, with an average of about 920,000.

(3) App ratings and reviews

According to the app rating data, in the past month, Xiaohongshu's rating has remained at a high score of 4.93, with 9,548,464 users rating it 5 points, accounting for 96.57% of the total number of users who rated it. (Data source: Qimai Data)

(4) Monthly active users

From January 2019 to November 2020, the number of monthly active users of Xiaohongshu remained at a base of tens of millions, but it has slowly declined from 18.7137 million to 12.3219 million. Xiaohongshu still has a lot of room for improvement.

3. Horizontal comparison of product data in the same industry (industry competitors are cross-sections)

(1) Market share in the same industry

According to the following figure "Distribution of Usage of E-commerce Platforms for Shopping Guides by Chinese Consumers in 2020", it can be seen that the e-commerce platform most used by Chinese consumers in 2020 is Xiaohongshu, reaching 70.6%. Fanli.com ranked second, accounting for 49.8%. It can be concluded that Xiaohongshu has captured most of the market share of shopping guide e-commerce platforms.

(2) User usage frequency

According to the "Frequency Distribution of Shopping by Chinese Consumers Using Shopping Guide E-commerce Platforms in 2020", Taobao is undoubtedly the king of e-commerce, with 19.42% of users using it to shop for almost every online shopping product. What is surprising is that Xiaohongshu surpassed JD.com to rank second on the list. This shows that the frequency of use of Xiaohongshu has gradually surpassed that of traditional e-commerce platforms. Although Xiaohongshu lacks the richness of products as an e-commerce platform, most users will still choose to buy products that are not available in the Xiaohongshu mall on traditional large e-commerce platforms such as Taobao and JD.com.

4. Product History

(1) Business process

• In June 2013, Xiaohongshu was founded in Shanghai. In December of the same year, Xiaohongshu launched an overseas shopping sharing community
• In December 2014, Xiaohongshu launched an overseas shopping sharing community and released the first global awards list.
• In 2015, Xiaohongshu's self-operated bonded warehouse in Zhengzhou was officially put into operation in March, and Xiaohongshu's self-operated bonded warehouse in Shenzhen was officially put into operation in June. During the anniversary celebration on June 6, Xiaohongshu APP ranked 4th on the Apple App Store's overall list. The number of users reached 15 million.
• In January 2016, Xiaohongshu changed its manually operated content into machine distribution. In July, Xiaohongshu was rated as one of the "Internet + Top 100 Practice Cases" by the National Development and Reform Commission and promoted nationwide. In the second half of the year, Xiaohongshu expanded third-party platforms and brand merchants, and all-category SKUs grew rapidly.
• In 2017, in May, REDelivery’s international logistics system was officially launched, and in August, Xiaohongshu established its global technology headquarters in Wuhan.
• In June 2018, Xiaohongshu's first offline retail store REDhome opened in Shanghai, and it completed a round D financing of more than US$300 million, with a valuation of more than US$3 billion and more than 100 million users; in October, Xiaohongshu's users exceeded 500 million.
• In 2019, the number of Xiaohongshu users exceeded 200 million in January and the brand partner platform was launched. In March, Xiaohongshu officially launched the brand account function. In July, the number of Xiaohongshu users exceeded 300 million and the monthly active users exceeded 100 million.
• In January 2020, Xiaohongshu Creator Center was officially launched

(2) Financing history

5. User analysis

(1) Gender and age

Based on the data from iMedia Research, it can be concluded that women are the majority of Xiaohongshu users, accounting for about 77.34% of the total number of users. The main reason is that women generally have a stronger desire to shop than men and like to share their lives, while men are mostly the "silent majority." Based on the age ratio, it can be concluded that young users make up the majority of Xiaohongshu's users, with about 60% of users being under 24 years old and 26% of users being between 25 and 30 years old.

(2) Income

From the income perspective, users with a monthly salary of less than 5,000 yuan account for 62.49%. This is also related to the age of users to a certain extent. Young women under the age of 24 generally do not have very high incomes. Through analysis, it is concluded that the main users of Xiaohongshu are generally young women with relatively low incomes.

2. Market Analysis

1. Industry status

Xiaohongshu adopts the model of content platform + e-commerce = content community shopping guide platform. Shopping guide e-commerce is born out of trading platforms and has the function of assisting users in making online shopping decisions and facilitating transactions. The core value of the shopping guide platform is to provide consumers with price discounts and shopping references through rebates, coupons, product recommendations, etc., while providing brands with a low-cost source of traffic. According to the "User Scale of China's Shopping Guide E-commerce from 2015 to 2020" released by iMedia Data, since 2015, the number of users of shopping guide e-commerce has continued to rise and reached 381 million in 2020.

2. PEST Analysis

(1) Policy level

In recent years, the country has continuously increased its policy support for the e-commerce industry and has formulated a number of strategic plans and industrial policies accordingly, providing strategic guidance and resource support in terms of future development direction and key work points of the e-commerce industry. Shopping guide e-commerce has the support of the big tree of e-commerce and relies on the prosperous development of the online shopping market, so its political environment is quite advantageous.

(2) Economy

Due to the impact of the COVID-19 epidemic in the past two years, the real economy has been significantly affected, online consumption has become the mainstream, merchants and consumers are more dependent on e-commerce channels, and the demand for shopping guide e-commerce has gradually increased.

(3) Culture (Society)

Nearly 70% of consumers have the habit of using shopping guide e-commerce when shopping. At the same time, consumers' permanent demand is to pursue cost-effectiveness and convenience. Shopping guide e-commerce can not only meet consumers' demand for low prices of goods, but also meet their demand for saving time. Therefore, shopping guide e-commerce has flourished.

(4) Technology

Shopping guide e-commerce still needs to improve user experience. Because shopping guide platforms tend to offer discounts in the form of rebates and cashbacks, but rebates and cashbacks alone are not enough to increase user stickiness. The after-sales service of some cross-border shopping guide e-commerce platforms is worrying and still needs improvement.

3. Product Features

4. Core Function Experience

Overall, the main core functions include search, grass-planting notes, and mall. Below, we will conduct functional analysis and functional experience in turn.

1. Search

Note search: After entering the homepage, click the 🔍 search icon in the upper right corner to go directly to the search interface.

It can be seen that the note search interface is very simple and easy to use. Apart from the necessary "History", "Guess What You Want to Search" and "Search Discovery", there are no redundant components.

Since Xiaohongshu was originally developed by UGC, it mobilized users' enthusiasm to publish original notes, guides, and recommendations, etc., thus accumulating a large number of original notes. Gradually, more and more users regard Xiaohongshu as the second "Baidu". If I need help with common sense in life, travel tips, or fashion selection, I will think of Xiaohongshu to see what others have to say.

Xiaohongshu's decentralized form also attracts more users to share and publish notes, thus forming a closed loop. Take me as an example. In addition to professional knowledge, I will ask Xiaohongshu when I am in doubt.

Taking the search for the product "Chanel Golden Globe Fatty" as an example, the search results show three categories: all notes, users, and mall.

Most users who do not own this product will click on "All Notes" to view the reviews of creators who have used/owned this product. Users who want to buy this product can go directly to the "Mall" to compare prices and make purchases.

Sorting of search results: comprehensive sorting, hottest, and latest. Generally speaking, the "hottest" notes are those with more likes, comments and collections, and most of them are from KOLs. Sometimes, in order to avoid seeing only advertising articles, users will choose "latest" to view the most recently published related notes. Generally speaking, such notes have fewer likes, comments and collections, but also less "suspicion of advertising". People will reveal their true feelings, and this ranking is more timely.

But I am not sure about the update frequency of "latest". I tried to search for keywords after posting a note, but I couldn't find the note content in the keywords. This is a bit delayed compared to searching for keyword content after posting Weibo content and sorting by the latest time.

From the data provided by Aimei Consulting, it can also be seen that users use Xiaohongshu mainly to enrich their knowledge in a certain aspect and understand product introductions and usage experiences.

2. Planting Notes

When I paid attention to the homepage, I found that different types of notes were pushed locally. Pay attention to the recently published notes of the creators you follow, and you will find that the algorithm usually makes accurate recommendations based on the user's recent browsing, likes, comments, and collections. Local recommendations are based on the user's city/country (overseas). This type of recommendation will also mark the distance from the user in the lower right corner of each note. Entering a note mainly consists of three parts: publisher, published content, and likes, comments and collections.

The publisher column consists of return, publisher's avatar and nickname, follow the publisher, and share the note. Click on the publisher's avatar and nickname to quickly reach the publisher's homepage and view the publisher's other works. Click Follow to follow the publisher directly without entering the publisher's homepage, so that the publisher can quickly increase his or her followers. Share notes. The recipient can open the note on a third-party platform without having to enter the app. It is quick and convenient.

Published content includes video/picture content + text content : This section, like the early Moments, does not currently support the posting of text content alone. The author believes that this is due to Xiaohongshu's target users and platform attributes. As a grass-planting platform, publishers posting pictures and videos will be more attractive to the audience and more convincing, and can more effectively achieve the purpose of grass-planting. The picture can be saved by long pressing but it will have a watermark. The text content can be tagged with relevant content to attract traffic.

Likes, comments and collections : All are located at the bottom of the page. You can see the comments of the note when the Chinese text of the note ends. Comments can be pinned by the author first, and other comments are sorted in order according to the number of "likes this comment".

Publisher homepage : You can reach the publisher's homepage interface by clicking on the publisher's avatar nickname in the note or swiping left on the note.

The publisher's homepage is also divided into two parts. The first part shows the creator's basic information: nickname, Xiaohongshu account, creator category, data on fans and likes, follows, private messages, his/her moments, etc.

The second part is the notes posted by the creator and the creator’s collection. Creators can categorize the notes they publish. For example, in the picture below, Yi Mengling divides the notes into three categories for viewers to search and watch: OOTD, VLOG, and WORK VIDEO. By entering a note category, you can collect the creator's notes in that category, or view the creator's notes in that category in chronological order. If the notes in this category are all videos, the next video will continue to play after any video is played. Creators can choose to make their collections public or private.

3. Mall

Click on the mall module to enter Xiaohongshu's own mall. In the mall module, you can see check-in, search, order, enter the welfare club, and the classification of mall products. When you enter the welfare club, you can see that the main product categories are: skin care, personal care, and cosmetics. From this we can see that the welfare club’s main products are beauty and cosmetics.

At the same time, data from iMedia Consulting also shows that in 2020, the most popular category of products purchased by most Xiaohongshu users was beauty and cosmetics. The welfare club has four major modules: new products, star brands, recommended brands, and president’s recommendations.

You can also see the products on sale from the search page-products. We can notice that, unlike traditional e-commerce, Xiaohongshu also adds a ranking based on the number of recommendations. The product channels are not only operated by Xiaohongshu itself, but also by third-party merchants. Clicking on self-operated products will automatically jump to the welfare center to display the product information. Similarly, clicking on third-party merchants will jump to the third-party merchant’s store to display the products.

Take Lelabo perfume as an example. This brand of perfume has no counters in mainland China. In this era where counterfeits are prevalent, Xiaohongshu Mall ensures that consumers can buy authentic products even in mainland China because everyone believes in the brand value of Xiaohongshu. However, from the author's point of view, this type of product has no price advantage, but the advantage is that you can buy it with peace of mind.

5. Business Model

• Commissions for live streaming sales
• Advertising
• Welfare club self-operated income
• Xiaohongshu membership fee

VI. Summary: Look up at the stars and keep your feet on the ground

1. Community platform, cross-border e-commerce

Xiaohongshu started out as a community platform and engaged in cross-border e-commerce, so it has accumulated a large amount of consumer behavior data: consumer views, likes, collections and other behavioral data, which is used to analyze user needs and select products accurately. At the same time, the launch of the welfare club solves users' overseas shopping needs, while also providing after-sales quality assurance and logistics services.

2. Open to third-party merchants

Xiaohongshu is not satisfied with the profits from its own mall and has begun to allow third-party merchants to join, achieving rapid growth in SKUs across all categories, while charging merchants sales commissions as a profit point.

3. Develop offline experience stores

In 2018, Xiaohongshu tried to use the advantages of online social networking to attract traffic to offline stores, and successively opened offline stores in Shanghai, Suzhou, Changzhou, Ningbo and other places in the Yangtze River Delta region. However, due to the high offline financial costs on the one hand and the impact of the epidemic on the other, offline stores cannot make good profits. According to "Financial Graffiti", Xiaohongshu's Shanghai store has been closed. Since then, the failed dual-line shopping model has made Xiaohongshu's development path not smooth.

4. Live e-commerce

Xiaohongshu's "Looking up at the Stars" As early as 2019, when the live streaming industry was just starting out, Xiaohongshu smelled the huge business opportunities and began internal testing of live streaming.

On November 28, 2019, Xiaohongshu launched the "Creator 123" plan, introducing in-depth interactive tools for content creators, allowing users to interact with anchors in real time while viewing valuable life information. Data shows that since Xiaohongshu launched live streaming, more and more brands have chosen to settle in Xiaohongshu. As of July 2020, there are more than 30,000 brands settled in Xiaohongshu.

From a cross-border e-commerce platform to a shopping guide e-commerce platform and then to a live streaming e-commerce platform, every step has been steady and solid. It is not a transformation but an injection of more product value. While Xiaohongshu's development is down-to-earth, it also reaches out to the latest trends, leading the fashion trends and future directions.

The above are some of my humble opinions drawn from analyzing Xiaohongshu.

Author: Yu Xiaoyu

Source: Yu Xiaoyu Operation Notebook (ID: yuxiaoyuyunying)