The unfinished and ongoing aspects of Xiaohongshu’s e-commerce

In the era of consumer sovereignty, commodities are only the foundation, and platforms must provide more added value. In the field of e-commerce, Xiaohongshu, with its unique community foundation and user groups, is shaping a new shopping experience.

Xiaohongshu e-commerce is not the oldest nor the largest platform, but it is always hard to ignore in the business world.

From the "buyer" proposed last year to the "manager" this year, and even to the definition of lifestyle e-commerce in July, all of these are reflecting differentiation. Although they seem to be different abstractions, in fact, behind them is Xiaohongshu's complete thinking on community and e-commerce.

On Double 11, Xiaohongshu e-commerce is also a special existence. Instead of holding traditional big promotions, it chooses to create a shopping carnival once a year, and finds a new way to connect users and commercial roles through online blocks and stamp collection.

Today, Xiaohongshu e-commerce has gradually become one of the important bases connecting people and products, and even the first business card for some brands.

One of the core reasons is that Xiaohongshu e-commerce is based on community growth, not just a trading platform. The prosperity of the trading ecosystem promotes the evolution of the community, which goes round and round and becomes a positive cycle.

This characteristic fits the new requirements for channels in the era of consumer sovereignty. In the past, e-commerce channels were responsible for traffic distribution and product recommendation, and were "middlemen". Now, under the trend of immersive and spiritual consumption, products are only the basis, and channels or platforms must provide more added value, which can also be called "cultivation system".

Under this trend, there is almost no objection that Xiaohongshu e-commerce is the one that best fits the bill.

During Double 11, Xinmei Daybreak had an in-depth exchange with Gintoki, the head of e-commerce operations at Xiaohongshu. He shared with us his thoughts on Xiaohongshu's e-commerce that have happened, are in progress, and are yet to be completed.

01 E-commerce and community move in the same direction

During this year's Double 11, when most e-commerce platforms were still relying on issuing coupons and offering discounts to drive transactions, Xiaohongshu used a smaller version of the Xiaohongshu community to create a new effect.

More than a thousand merchants and buyers representing various lifestyles were placed at the center of the promotion by Xiaohongshu, concentrated at the entrance of the "shopping street" for the Double 11 event. The selection is not based on absolute GMV, but on whether the products can meet certain lifestyles and personalized needs. People can collect stamps, receive small gifts, and shop while shopping, just like offline.

This is an experiment: checking in and collecting stamps are just a way of interaction. Xiaohongshu e-commerce wants to explore whether there are new ways of connecting between merchants and users that can produce different chemical reactions?

Facts have proven that this is indeed the case. Users collect stamps, follow merchants, and then place orders. When Gintoki browsed the comments in the merchant notes, he found that there were thousands of comments, some showing off their gifts, and some expressing regret for not getting any gifts. In short, users are very enthusiastic about participating. In the beauty and care category, the average user stay time in the live broadcast rooms of merchants such as wigs, wearable nails, and essential oil soaps is more than 7 minutes.

After an event, some businesses gained more than 100,000 fans. Some people said that this was almost "huge wealth."

Of course, the increase in followers also brought about transactions.

Xiaohongshu e-commerce is also experimenting with how to extend the "neighborhood shopping" approach to other major promotional activities and even daily operations. Consumers' pursuit of new things, new aesthetics, and new lifestyles has never diminished. Moreover, the factors driving purchases are diverse and have great room for imagination.

The human factor determines that Xiaohongshu e-commerce grows out of the community. Whether it is the user's ootd, the sharing of good things, or the large number of calls for purchases in the comment area, these large amounts of personalized consumer demands are captured by the platform, merchants, and buyers, and naturally extend to transactions.

In other words, e-commerce is not a means for Xiaohongshu to commercialize, but a business in the same direction as the community.

When it comes to traffic distribution, the platform chooses to take an equal perspective and distributes e-commerce content together with community content, instead of dividing platform traffic according to traditional thinking. Instead, it needs to monitor whether e-commerce content is over-distributed.

Just like when we are flipping through a magazine and accidentally see an outfit we like, we want to buy it; just like when we are strolling around a city block and see an item we like, we want to take it home.

To a certain extent, users’ recognition of an APP is either by spending time (community) or money (e-commerce).

Zhang Meng is a knowledge blogger who shares lifestyle content such as reading, health, and beauty. Because she studied brain science in college, she created a "rational live broadcast room" on Xiaohongshu, and then crossed over to become a food buyer. The first broadcast in September 2023, the transaction exceeded one million in one month, and during this year's Double 11, the first live broadcast exceeded 10 million.

Zhang Meng personally demonstrated how content and e-commerce can coexist with each other. She likes to have celery juice, kale juice, blueberry juice and other vegetable juices for breakfast, so users are naturally interested in the process of making breakfast.

So she told these ideas and needs to those merchants who were not on Xiaohongshu, such as farmers in the fields of Shouguang, Shandong. They cooperated with Zhang Meng to create products, and the result was that the products were sold out before the live broadcast of breakfast making was over. By the way, the juicer and vegetable washing machine she used also became guests of honor in the live broadcast room. Zhang Meng said, "This is sharing of lifestyle, not marketing with goods."

02 A new structural opportunity for e-commerce

In July this year, Xiaohongshu e-commerce defined itself as a lifestyle e-commerce. More and more merchants and buyers began to stay in the live broadcast room.

Behind the prosperity of the ecosystem is growth, and growth means business certainty. Yinshi told us that there are two key issues worth exploring: first, supply, and second, diversified business paths.

The user group gathered on Xiaohongshu may be the "most picky". When selecting products and merchants, they must fully consider: what kind of new supply truly meets the needs of Xiaohongshu users, and which ones are not easily searched or recommended on other platforms.

This is a misaligned competition among platforms, and the original design brand is the best example of this idea. Based on the content trends of the community, Xiaohongshu's e-commerce investment team knows what categories to look for and what kind of merchants to introduce.

From fashion, beauty to home furnishings, the first batch of new faces emerging on Xiaohongshu may not be the top brands in the industry, but the people attracted and served by each merchant can intersect with the users of Xiaohongshu.

BEIN SPACE, which was established less than three years ago, is one of them. It is an outdoor clothing brand designed for oriental women and was born and raised on Xiaohongshu.

The founders, Lili and Anna, are outdoor enthusiasts, but they found that many outdoor brands' pants were not suitable for the body shapes of Asian girls, or the colors were not suitable for their skin colors, so they chose to start an original brand with a pair of hiking pants. The main concept is to support every outdoor girl to live confidently and self-consistently in her own way.

For example, the drawstrings of a pair of pants that ranked second on Xiaohongshu are very long after being tightened, which is dangerous if exposed outside, so they designed them inside to prevent people from tripping while walking and ensure safety. Lili said that it was precisely because of the understanding of user scenarios that such a design was made.

The core reason for choosing Xiaohongshu is that the platform's user population is highly compatible with the brand's audience. Lili explained that Xiaohongshu brings together the most fashionable and open-minded people at the moment, who are always open to new things, new experiences, and new brands, so we can quickly and efficiently find our target users.

BEIN SPACE was founded in July 2022, and its Xiaohongshu brand account and store were launched in August. It started cooperating with buyers that month, thus entering a channel of rapid growth. They took advantage of the situation to open a store broadcast, and the manager also entered the live broadcast room. Last month, the transaction volume of their Xiaohongshu store reached 6 million yuan.

Since 2016, Xiaohongshu community has encouraged users to share their clothing and outfits, which has become a breeding ground for original brands. Many brands have opened accounts on Xiaohongshu in recent years, and buyers have asked them to open stores there. Therefore, in the past two years, the first batch of roles that have emerged on Xiaohongshu e-commerce are original design brands and buyers who drive the capabilities of these brands.

In the beauty and skin care field dominated by four major groups, Xiaohongshu e-commerce also needs to find a differentiated path.

In the early years, Xiaohongshu brought overseas products to China, and also had a group of users who shared and liked personalized beauty products. What Xiaohongshu wants to do is to better match demand and supply through some path.

For example, the dog-head koala hair mask that became popular on Xiaohongshu may be difficult to find on other platforms, but on Xiaohongshu, it is a single product that sold 10 million GMV in a single live broadcast. Augustin Bader, a pioneering German anti-aging brand, also sold over 10 million in a single live broadcast on Xiaohongshu. Including the new domestic brand Xiyue, whose manager is also a native buyer of Xiaohongshu, the brand's sales exceeded 5 million in the first week of Double 11.

Gintoki said, "This is a very good window that exposes a structural opportunity of this era." More and more brands are consciously understanding and producing products that meet the personalized needs of consumers, and making these products better and more detailed.

03 Diversification of business paths

New supply brings new opportunities, and at the same time raises a new proposition for Xiaohongshu e-commerce: how to build a new business path.

When each supply comes in, how merchants connect with users can maximize the value of goods and functional experience perceived by users, and make it smoother and more natural. At the same time, for merchants, the sale of goods can have more certainty and growth in operation. This is a two-way process. It is also what Xiaohongshu e-commerce needs to break through.

Two years ago, the platform wanted to introduce original design fashion brands. These merchants were not suitable for live broadcasting, but they needed professional and detailed explanations of aesthetics and matching, and did not do live broadcasts of dumping or hawking. A group of bloggers were discovered in the community, and the role of buyers naturally emerged. Buyers have gradually become an important business tool for merchants, and many brands have opened up their business on Xiaohongshu e-commerce through buyers.

The relationship between buyers, brands and products that complement each other soon led to the emergence of benchmark buyers, such as Yike KK, of course, and Rong Erduoer. So when the platform is promoting supply, the first thing it focuses on is which group of merchants and products can complement each other.

KK, who has transformed from a media person to a home furnishing buyer, achieved sales of over 100 million yuan on Double 11 last year. In the first half of this year, 16 brands achieved sales of over 1 million yuan in her live broadcast room. Many of them are designer furniture brands that are in line with the characteristics of Xiaohongshu.

As a buyer, KK plays a very important role in helping merchants build brand awareness and even cold start. A new brand that opened a store on Xiaohongshu for 10 days quickly achieved sales of nearly one million yuan through cooperation with KK. This is because during the product proofing period, the brand worked in depth with KK to collect the needs of Xiaohongshu furniture users and directly reflected them in product design. In addition to the effective seeding in the early stage, the transaction was finally converted in the live broadcast room.

Another furniture brand, Sinabo, has also tasted the sweetness of buyers' influence and has started to cooperate with buyers to create new products this year. Based on the pain point that customers like fabric beds but are troubled by the trouble of disassembly and cleaning, it took three or four months to launch a new bed, which also sold out on Double 11 this year.

This is the unique ecology of Xiaohongshu, and it is also the result of buyers and brands pulling each other and growing together.

Zheng Feng, head of Xiaohongshu’s home furnishing buyers, said that the addition of multiple merchants helped buyers to open up more shelves and achieve corresponding growth. Buyers continued to attract more merchants to settle in, opening up their first stop on Xiaohongshu.

After a large influx of supply, Xiaohongshu platform has gradually grown a group of managers this year, and managers have direct connections with users. Unlike traditional brands that reach users with logos, Xiaohongshu managers are more inclined to the sensory level, with people in the front and close relationships with users before and after sales. To a certain extent, this determines the image of the goods purchased by users, and people are changeable, so managers can have richer control and design over the goods.

At the Xiaohongshu e-commerce link conference in July this year, the outside world had a clearer perception of the identity of the manager. Zhou Qi was previously a KOL in the field of fashion. Last year, she was upgraded from a buyer to a manager and built her own clothing brand CHOWKI. Although she only has 160,000 fans on Xiaohongshu, in less than a year, the monthly GMV of her live broadcast room exceeded 10 million yuan.

However, whether it is a buyer or a manager, these two business paths still have their own limitations. Each business model has corresponding costs and thresholds, which in turn keeps some groups out.

For example, starting with buyers’ live broadcasts and then transitioning to brand store broadcasts, operating based on live broadcasts is a common path for overseas brands in the beauty industry, because they have accumulated certain content and stories, and have a brand tone. However, this path may not be suitable for all brands.

Different businesses will naturally have different business demands. Some are suitable for live streaming (whether it is buyer live streaming, manager live streaming or store live streaming), some are suitable for note streaming, and some are suitable for communities.

Lai Shangbo, founder of Sinabo, feels that Xiaohongshu e-commerce emphasizes interactivity, and transactions are more based on content and communication between people. Lili knows the importance of group chat, but currently group chat is more of a place for them to share content, such as live broadcast warm-up and outfit sharing, and has not yet achieved business conversion. After all, this consumes manpower, and startups have to take their time.

Therefore, what Xiaohongshu will do next is to continuously broaden its business paths. The core is to diversify methods, reduce merchants' operating costs, and allow different merchants to find a business method that suits them.

04 Cultivation of User Mindset

E-commerce and communities move in the same direction, building new supply based on the needs of Xiaohongshu users and opening up diversified business paths, which is equivalent to leveraging new e-commerce structural opportunities. This is also an important background for Xiaohongshu e-commerce to define itself as a lifestyle e-commerce in July this year.

Conan explained that as lifestyles become more diverse, user needs are becoming more and more segmented. What Xiaohongshu e-commerce needs to do is to help users choose and find products that match their personalized needs.

In this process, what Xiaohongshu e-commerce cares most about is the stimulation and creation of personalized needs.

Xiaohongshu's e-commerce covers various industries, such as fashion, home furnishings, food, beauty care, cultural relics, mother and baby, etc. Each category has its own scene demands that are segmented to different users.

Take fashion as an example. Xiaohongshu defines categories that other platforms do not have. For the office scene alone, there are categories such as siren style, cleanfit, and mature workplace. Beauty care, which entered the market earlier, has already been divided into more than three levels of classification. Even an eyelash brush can be interpreted in many ways.

For example, bracelets were previously more of a male hobby, but now "wenwan girls" are the latest trend. On Xiaohongshu, this topic has been viewed nearly 3 billion times. Walking on the street, you will find that in addition to electronic watches, girls' left wrists are likely to be bracelets, made of various materials and with a more slender overall design.

Based on this small insight, when most e-commerce platforms divide product categories by material, Xiaohongshu launched the topic of "Young People's Left Wrist". This has almost affected the production and operation of bracelet merchants. Those merchants who saw the change in demand, broke the industry rules, changed the materials and designs, and gained a lot.

The most extreme manifestation of stimulating segmented demand is in the furniture field. The characteristics of the furniture category are scene segmentation, diversified categories, high customer unit price, low repurchase, and long chain decision-making. If you want to create a live broadcast scene, the threshold is very high. Therefore, most platform furniture categories are undertaken by comprehensive experts. However, there are special furniture buyers on Xiaohongshu, such as Yike KK, Miss Wild Persimmon, Youyang Aesthetics, etc.

The core is that there are already a large number of original furniture content creators in the community, so the platform naturally has a furniture consumption mentality. Based on the analysis and research of market size and consumer psychology, Xiaohongshu took the lead in identifying furniture buyers in 2023. Soft furnishing designers and space designers are constantly planning their overall business on Xiaohongshu.

Segmentation does not mean narrowing the field, but deepening it, and then expanding into a broader track and space. This year, Xiaohongshu has grown a group of home buyers, who have expanded their focus to bedding, kitchenware, small appliances, daily necessities and other fields with higher frequency and greater user demand.

Because categories are the connectors between demand and supply. Every time you open a category, Xiaohongshu accurately matches demand and supply. In addition to splitting categories, the platform also uses tags to refine user needs, which is not only conducive to platform distribution, but also helps understand supply.

Personalized needs mean differentiated value, and value is scarcity.

As we all know, Xiaohongshu is a natural tool for planting grass. From planting grass to pulling grass, the distance in between is what the platform needs to do. And to retain users and cultivate the mindset of Xiaohongshu as the first user. In the current situation of homogeneous competition in channels, introducing new brands or native brands to form differentiated new supply is another way for Xiaohongshu e-commerce to be itself.

A diverse and prosperous ecosystem is the basic path for Xiaohongshu's e-commerce to expand on a large scale, so it is only natural that millions or tens of millions of merchants and buyers emerge on the platform. As Zhang Xiaolong said, vitality may be more important than scale.

This is also the fulcrum of Xiaohongshu's differentiated value from traffic channels and delivery channels. When the platform structure tends to be stable, for brands, refined operations based on channel characteristics are a new normal and a new opportunity.

Written by Li Huan Edited by Zhai Wenting