Bytedance teaches Xiaohongshu a lesson as the community for planting grass goes global

ByteDance’s deep pockets are in stark contrast to Xiaohongshu’s organic growth strategy. Xiaohongshu’s overseas attempts have failed, while ByteDance has demonstrated its ambition and strength in globalization through Lemon8 and other products.

How big is the potential of the grass-growing community?

In 2021, Zhang Nan, then CEO of Douyin Group, asked the team: "If Douyin is doing so well, why is Xiaohongshu growing so rapidly?" This affirmed this platform that has risen in the market gap surrounded by giants and successfully become a grass-planting community platform with 100 million DAU.

Douyin then set its sights on the product type of grass-growing communities, and has successively implemented it in the form of Douyin's picture and text functions or independent applications. Xiaohongshu launched a development strategy of "sitting one and watching three" in 2023, fully impacting the growth potential of 300 million DAU. This is the domestic market's dream of growth around grass-growing communities, and the two companies have implemented different strategies according to different development stages.

In overseas markets, the growth potential of the grass-growing communities is another story. After several failed attempts in overseas markets, Xiaohongshu is currently focusing on operating in the overseas Chinese market; while ByteDance, which is facing the pressure of being banned in overseas markets, hopes that the grass-growing community Lemon8 can become the next TikTok.

Different expectations for the grass-seeding community have also led to very different growth trends in overseas markets. With high-profile efforts, ByteDance's Little Red Book dream is gradually coming true in overseas markets.

In the past month, ByteDance's version of Little Red Book Lemon8 has once again experienced a big explosion in the US market. In order to achieve the latest result of ranking tenth in the US App Store downloads in a short period of time, ByteDance has once again increased its advertising efforts in the Apple App Store.

According to Appfigures data, Lemon8's parent company ByteDance has been running a "large-scale" Apple App Store search advertising campaign in the first few weeks of September, using nearly 5,300 keywords in the week starting on September 8 alone, mainly covering brand keywords related to TikTok, CapCut, Instagram, etc.

Lemon8 is not a new app. The product was launched globally in 2020, but marketing in the United States only started last year. In the past year, there has been explosive growth and data decline. However, with the pressure of Tiktok's ban, Lemon8 is becoming ByteDance's flagship product in the European and American markets.

As a picture and text recommendation community product, Lemon8's recent outstanding performance has undoubtedly made Xiaohongshu, which has suffered many setbacks in the overseas market, feel inferior. However, from the perspective of actual implementation, the wealthy ByteDance's approach is definitely not something that Xiaohongshu can imitate at present. Faced with this lesson that ByteDance has taught it in the overseas market, Xiaohongshu can only watch and worry.

01 Cracking the overseas seeding code

ByteDance, which has repeatedly failed in the field of grass-planting communities in China, has gradually found the secret to success in overseas markets.

Recently, Lemon8 has successfully ranked among the top ten most downloaded apps in the United States on Apple's App Store. Data shows that the number of downloads last Saturday alone exceeded 70,000, which is 44% higher than the average daily download rate in the past few weeks. According to Appfigures estimates, Lemon8 has been downloaded about 16 million times worldwide this year, about half of which are from American consumers.

It is worth noting that before this, Lemon8 was not launched for the US market. It first debuted in Japan in 2020 and was ByteDance's attempt to create a Xiaohongshu-style community in overseas markets. Until 2022, Lemon8's main focus market is still concentrated in East Asia.

▲ Picture/Screenshot of the US App Store download list

At that time, some media believed that unlike the US market, which has local Internet forces such as Pinterest and Instagram, ByteDance is expected to replicate TikTok's growth capabilities in relatively blank markets such as Indonesia.

According to TikTok Report data, as of 2021, Indonesia is one of TikTok's three major markets, and it took TikTok less than a year to go from almost zero market share to high penetration.

However, Lemon8's key operating markets are now rapidly shifting from East Asia to Europe and the United States.

Judging from the number of advertisements, based on data from App Growing Global and a large number of app stores, Japan and Thailand are Lemon8's two main markets in 2022, with the Japanese market accounting for more than 80% of the total advertising materials.

However, from July 2023 to January this year, Lemon8 placed more than 45,000 ads worldwide, mainly on Instagram and Facebook. From December 2023 to January this year, it placed more than 12,000 ads on these two platforms, accounting for 70% of the total omnichannel advertising during the same period.

The shift in the buying volume market also corresponds to the change in Lemon8 downloads. The US market has replaced the East Asian market as the main region for new users this year, while downloads in other markets such as the Philippines and Singapore are currently declining. Therefore, some foreign media analysts believe that although Lemon8 is growing rapidly, it remains to be seen whether the new users based on buying volume can be converted into active community users.

02 Overseas expansion crushes Xiaohongshu

Compared with ByteDance's Lemon8's high-profile overseas expansion, Xiaohongshu's overseas market expansion tends to take a natural development approach.

Judging from Xiaohongshu’s current overseas expansion, there are two main ways:

First, launch localized applications, mainly targeting local market users;

The second is to promote the internationalization of the Xiaohongshu application, mainly targeting Chinese people in the international market.

In both of these routes, Xiaohongshu has not taken any marketing actions to force traffic, but has instead tried to achieve natural growth through the fermentation of community content.

The result is predictable. Xiaohongshu’s natural growth strategy has not been successful.

In terms of localized applications, media statistics show that Xiaohongshu has launched three products for the Japanese market in three years: the fashion community Uniik in February 2021, the camping enthusiasts community Takib in October 2022, and the beauty community habU in March 2023.

▲ Photo/Uniik screenshot

In the Southeast Asian market, Xiaohongshu launched Spark in April 2022, which is highly similar to Xiaohongshu in China; in November 2022, Xiaohongshu launched Catalog, a home sharing community, for the European and American markets. But overall, the operation of these regional vertical communities is not successful, and Uniik and Catalog have both ceased operations.

In terms of the internationalization of Xiaohongshu applications, in 2014, Xiaohongshu apps for Japan, South Korea, the United States, Germany, Singapore, France, Thailand and other regions were intensively launched on the AppStore. However, these regional Xiaohongshu apps have now stopped updating and have been replaced by the Xiaohongshu main site.

Some Internet observers believe that the difference between ByteDance and ByteDance’s overseas expansion mainly stems from two aspects:

On the one hand, the product genes of the two teams are different, such as differences in corporate culture. However, it is still uncertain whether the international market will change after Xiaohongshu begins to emphasize DAU, growth and other directions after 2023.

On the other hand, there are differences in the familiarity of product growth and resource synergy in the international market. For example, in terms of creator incentives, Lemon8 directly reuses TikTok's creator ecosystem.

According to foreign media reports, in the early stage of attracting new creators, based on TikTok's influence, Lemon8 will invite TikTok creators to settle in and pay influential people to post on the application as long as they follow the posting guidelines, such as posting 10 posts per month, titles of at least 150 words, and carousels containing 3 to 10 photos.

TikTok also supports traffic. Since September, ByteDance has been pushing Lemon8 ads in TikTok's "For You" column to stimulate users' curiosity. In addition, TikTok creators can also display the app on their personal homepages.

The creator ecosystem is the foundation of content, and traffic resource marketing is the exposure strategy.

Content + traffic have driven Lemon8's rapid growth in the U.S. market. In terms of resource synergy, according to the latest survey results of Watchful.ai, TikTok seems to be integrating with Lemon8.

In this new collaborative integration, TikTok has developed a feature that allows users to sync their Lemon8 posts to TikTok, and then use TikTok’s editing function to add sound and music to the posts, achieving synergy between the two product functions.

In contrast, Xiaohongshu does not have a strong backing in overseas markets.

03 More TikTok backups become official

ByteDance integrates the synergy of the functions of two products, which usually means trying to use one hit product to promote another new product. For example, in 2021, Ole Obermann, global music director of TikTok, said that Resso's artist support program not only promoted music consumption, but also promoted music participation.

Resso’s charted songs are new material that TikTok can adapt into pop music, and popular trends can also increase song streaming on Resso.

This application, which efficiently collaborates with TikTok in terms of music material functions, also comes from ByteDance. As a music streaming application launched in 2020, Resso has now covered major markets such as India, Brazil and Indonesia, and has grown into a dark horse challenger to the global music streaming giant Spotify.

Late last year, it was revealed that the company was in talks with several major music companies to enter a dozen other markets, and there was market speculation that if Resso did so, it might be renamed "TikTok Music."

Like Lemon8, this app is also part of ByteDance's broader move to expand its global app matrix portfolio. In addition to product synergy, the product design on Resso also has similar social elements as TikTok, such as likes, comments, sharing options and follow buttons. Since its launch, Resso has accumulated a group of loyal users.

According to the analysis company Sensor Tower, as of May 2023, more than 250 million people have downloaded the app. Compared with Lemon8, whose downloads have not yet exceeded 100 million, the music app Resso is undoubtedly closer to TikTok. However, the different product forms of the two make it difficult for music apps to support TikTok's ecological imagination.

In terms of ecological imagination, Lemon8, a picture and text recommendation community, has a greater imagination. From the East Asian market to the European and American markets, some foreign media believe that ByteDance is implementing a plan to turn Tiktok from a spare tire into a regular one.

In April last year, there was news that TikTok CEO Zhou Shouzi's authority would be expanded to oversee Lemon8, a content sharing platform under ByteDance. At the same time, Lemon8's head Chen Ying, who is currently based in Shanghai and reports to ByteDance executive Zhu Jun, will soon move to Singapore and report to Zhou Shouzi.

After the personnel adjustment and the transition to the number one overseas management position, as a top-level project, Lemon8's position in the US market has further risen in the past year.

Erich Andersen, ByteDance's global general counsel and representative of TikTok, once declared: "We will do everything we can to ensure that the Lemon8 app complies with US law." Obviously, although Lemon8 is highly expected by TikTok, its identity and background issues are far more difficult than quickly becoming a popular app. After demonstrating a lesson about going global to Xiaohongshu, ByteDance still needs to find a mentor who can lead the globalization of the company and help it become a truly global company.

Author丨Gu Er Editor丨Fern Shadow