To succeed in lifestyle e-commerce, what did this brand do right on Xiaohongshu?

On the lifestyle e-commerce platform Xiaohongshu, how does Dongli Cashmere realize the transformation from an OEM to a brand through the power of the community? How does Xiaohongshu's high-end business become concrete?

With the rapid development of China's Internet economy and its accelerated integration with the real economy, diversified occupations have gradually emerged, and different occupations will inevitably lead to diverse lifestyles.

Each lifestyle corresponds to multiple life, work, and entertainment scenarios. In these scenarios, what clothes to wear, what furniture and daily necessities to use, and what food and snacks to eat must not only conform to the characteristics of professional identity, but also to the state and mood of life...

Due to the diversity of lifestyles caused by the diversification of occupations, people's consumption demand for rich and diverse life and work scenarios is increasing day by day. For Xiaohongshu, a grass-planting community with 300 million monthly active users (data as of the end of 2023), lifestyle e-commerce vividly and appropriately describes the characteristics of these users' needs.

At the end of July, "Zhuang Shuai Retail E-commerce Channel" was invited to participate in the Link E-commerce Partner Conference held by Xiaohongshu in Hangzhou with the theme of "Hello, Managers". This was after Xiaohongshu COO Conan first defined "Xiaohongshu e-commerce as lifestyle e-commerce" on July 22, clarifying the e-commerce ecosystem composed mainly of brand managers and buyers, and announcing the business path and product upgrades of lifestyle e-commerce.

"To be successful in lifestyle e-commerce, the people behind the scenes are the most important",

Yin Shi, head of Xiaohongshu's e-commerce operations, said that the managers on Xiaohongshu are not only merchants but also product managers of user experience. They use products through content and scenarios to meet users' different lifestyle needs.

In the view of "Zhuang Shuai Retail E-commerce Channel", merchants of almost all categories, whether new brands or well-known brands, small merchants or large merchants, as long as the products are good enough, understand life and scenes, and understand user needs, can display their own products in different life scenes such as notes and live broadcast rooms, and convey the lifestyle of the corresponding people, they can generally achieve good results.

Official data shows that in the past year, the number of merchants with monthly sales of 5 million or more on Xiaohongshu's e-commerce has increased by 3.5 times, the number of purchasing users on Xiaohongshu has increased by 4.3 times, and the proportion of searches with purchasing intentions has reached 25%.

At the Xiaohongshu Link e-commerce partner conference, "Zhuang Shuai Retail E-commerce Channel" listened to the entrepreneurial journeys of several brand managers and buyers and the operating experience of Xiaohongshu, and was fortunate to have an in-depth interview with the manager of the official flagship store of the Dongli Cashmere brand, Na Jie (Xiaohongshu ID: Na Jie Dongli Cashmere), who has been deeply involved in the cashmere industry for more than 40 years.

"Zhuang Shuai Retail E-commerce Channel" first learned about Dongli Cashmere at the Shanghai Fashion Week at the end of March this year. Dongli Cashmere cooperated with high-end fashion designer SIQIYOUNG to launch a joint model, successfully transformed into a fashion brand, realized the brand dream of the OEM factory, and brought great surprise to its peers.

After entering Xiaohongshu, the brand awareness of Dongli Cashmere has been further improved. As the brand manager, Na Jie shared the opportunity of Xiaohongshu lifestyle e-commerce for OEM factories to transform into brands, the impact on organizational structure and business ideas, the relationship between consumers and brands, and future brand development plans.

1. The difficulties faced by OEM factories in establishing brands

The cashmere clothing market has a considerable scale. According to the "2023-2028 China Cashmere Industry Supply and Demand Analysis and Development Prospects Research Report" released by the China Research Institute of Industry, the global fashion and luxury cashmere clothing market size in 2022 is approximately US$2.85 billion, and it is expected to reach US$3.531 billion in 2023.

As one of the few cashmere companies with a full cashmere industry chain in China, Dongli Cashmere ranks among the top ten in the Chinese cashmere industry and has the DNA of OEM for big brands. However, Cheng Xudong, the founder and chairman of Dongli Cashmere, is very determined.

"If you want to do long-term business, building a brand is undoubtedly the most correct development path. If you keep doing foreign trade processing, you will not be able to build a century-old enterprise."

The seeds of branding were sown, because the whole industry chain means that Dongli Cashmere controls the whole process from sheep breeding to cashmere raw materials and garment production, which can be traced and ensure product quality. From the transformation of international big-name customers to selling to individuals, building a brand and achieving sales seems to be a natural process.

However, the process of growing into a towering tree is long and difficult.

According to the "Zhuang Shuai Retail E-commerce Channel"'s understanding of clothing OEM factories (OEM and ODM models), due to the long-term processing and production for brand merchants, the organizational structure, personnel composition and processes created for production are relatively simple. Once they want to upgrade to create their own brand, the problems they face will be more complicated than imagined.

First, there is a lack of talent

Building a brand requires the cooperation of various types of professional teams in planning, operation, marketing, market public relations, etc. Most of these talents are concentrated in first- and second-tier cities. For OEM factories in low-tier cities, it is very difficult to attract these professional talents, which ultimately leads to a shortage of talent and lack of professionalism. The process of building a brand will become slow or even abandoned halfway.

Second, lack of design

Due to the long-term production based on the designs of big brands, the OEM factories are not systematic in establishing the concept of product industrial design and are also lacking in the accumulation of various design resources. This leads to the inability to build differentiated product competitiveness through design capabilities, and the brand image is not clear and three-dimensional.

Third, lack of marketing

The core capability of OEM factories is still production, and they do business with big brand customers. How to market to mass consumers and establish a marketing system and effective marketing plan that matches the brand's tone is a difficult challenge that requires time and money to overcome.

Fourth, lack of operation

The brands and retail channels have long-term and continuous operational cooperation in various tasks such as product selection, product testing, traffic investment, and sales promotion. This is fundamentally different from every cooperation project between OEM factories and big brands in which products are produced and then accepted and paid.

From an OEM factory to a brand merchant, Dongli Cashmere took its first step cautiously but firmly. From 2010 to 2020, it opened only ten physical stores. It insisted on deepening its local presence to make up for its shortcomings, train its team, and then seek development.

Na Jie, the manager of Dongli Cashmere brand, said frankly, "The experience of opening a store has made us see the shortcomings of OEM factories in building brands. Design has become the core capability that restricts Dongli from building brands, followed by brand marketing and platform operation capabilities."

The sudden black swan event in 2020 turned the crisis into an opportunity for Dongli Cashmere. The physical store had almost no business, which blocked the brand's path. When it turned to e-commerce platforms for growth, it sold its products nationwide through e-commerce platforms instead of regional brands.

Dongli Cashmere's first step into the Internet was to open a brand flagship store on a mature shelf e-commerce platform. However, the competition on the platform was too fierce and the operation was difficult. For the young team without any experience in e-commerce platforms, the business did not improve much.

The second stop achieved breakthrough growth with the support of the short video content e-commerce platform. In 2021, more than 40,000 cashmere clothing were sold through the platform, and the sales transformation from B to C was realized very smoothly.

This has greatly increased Dongli Cashmere's confidence in the operation of content e-commerce platforms, but it has also made it more urgently aware that selling high-quality products is only the first step, and there is still a long way to go to transform products into a brand.

Therefore, Dongli Cashmere's third stop was Xiaohongshu, a lifestyle e-commerce platform. Na Jie admitted that it was a correct choice for Dongli Cashmere to come to Xiaohongshu at the current stage of its brand development.

2. Xiaohongshu is the best choice for building a brand

“We need to run Xiaohongshu with the same attitude as running a physical store…”

When Dongli Cashmere, a contract manufacturer with more than 40 years of experience in the cashmere industry, told the "Zhuang Shuai Retail E-commerce Channel" its business philosophy for building a brand on Xiaohongshu, many brand managers gained a more concrete understanding of Xiaohongshu's lifestyle e-commerce.

In the operation of a physical store, every clerk and shopping guide must cherish every customer who enters the store, make them feel at home, listen carefully to their needs, give professional and reasonable purchase suggestions, patiently recommend suitable products for them, and help them try them on.

Most of the time, the process of running a physical store doesn’t seem fun or exciting, but there’s a genuine feeling that lasts forever.

On Xiaohongshu, Na Jie found that unlike the sales behavior generated directly between brands and users, Xiaohongshu cannot simply recommend products, but also analyzes why the products are good, what scenes are suitable for wearing, and displays activities, catwalks and other related content related to the brand image.

This also allows Dongli Cashmere to have a deeper understanding of how to build its brand image and how to display its products.

The community attributes of Xiaohongshu determine that brands and managers need to have real interactions with users, and provide a variety of professional, real and scenario-based solutions to specific life scenario problems raised by users.

"On Xiaohongshu, the average customer order value of Dongli cashmere can reach 2,600 yuan, which is unimaginable on other e-commerce platforms. We found that Xiaohongshu users are very knowledgeable about life and have high requirements for product quality, and they do not just blindly pursue low prices."

After in-depth communication with the Dongli Cashmere team, "Zhuang Shuai Retail E-commerce Channel" believes that there are three important reasons why Dongli Cashmere believes that Xiaohongshu is the best choice for merchants to build their brands and regards Xiaohongshu as the brand's long-term business base.

One of the reasons is that the soil of Xiaohongshu is more suitable for building a brand: as a lifestyle e-commerce platform, Xiaohongshu is more closely related to life and consumption than platforms that mainly focus on entertainment content; compared with pure shopping e-commerce platforms, it has more humanistic atmosphere and fashion elements.

In the first half of 2023 alone, searches related to Fashion Week on Xiaohongshu increased by 352%, and users created more than 130,000 notes on interpreting show content and new season clothing.

Many shopping guides at luxury goods and high-end brand stores also said that "consumers often take out their recommendations on Xiaohongshu and ask about buying the same items." This has made more and more luxury and fashion brands increasingly aware of the high overlap between Xiaohongshu users and their target customer groups.

With such platform positioning and user mindsets, brands can then create real-life scenario-based pictures, texts and short video content to acquire customers. This is not only more accurate, but also more interactive with users, helps brands better understand users’ real needs, and can also develop new products based on user feedback.

For example, Na Jie and Xiao Hongshu (another name for Xiaohongshu users) learned in the comment section that friends in the south also like Dongli cashmere, but the existing styles and sizes are mostly designed for northerners. Therefore, they were able to improve the clothing styles in a timely manner, such as raising the V-neck by 3 cm.

The co-branded models developed this time with the famous designer SIQIYOUNG are mostly of a more simple style.

"The best-selling items on other e-commerce platforms are the lowest-priced styles, but the main users of Xiaohongshu are women around 30 to 40 years old, and the best-selling products are white cashmere coats with the best value for money."

Sister Na admitted that the soil of Xiaohongshu is very suitable for Dongli cashmere, and the design and quality of Dongli cashmere products are increasingly in line with the mainstream users of Xiaohongshu's demand for quality life.

The proportion of female users exceeding 70% and the extensive participation of high-net-worth white-collar workers in first- and second-tier cities have built Xiaohongshu's unique user base.

These user groups are not only huge in number, but their spending power and willingness are significantly higher than the industry average. They pursue higher quality of life and uniqueness of products, which is the core competitiveness of Xiaohongshu.

“Every user of Xiaohongshu needs us to patiently explain the products, and our interaction with them is the same as that with customers entering the store.

Their entry into my account has already shown that they recognize Dongli Cashmere at first sight, but they still need to learn whether the merchant is professional enough, whether the product is cost-effective enough, and whether I, as the manager, can better understand their needs and provide them with more suitable products. "

On Xiaohongshu, the concept is not about acquiring or converting traffic, but about managing users with care.

The second reason is official support: It is understood that Xiaohongshu has provided comprehensive and effective guidance to Dongli Cashmere in account management, and combined with functions such as notes and live broadcasts on the platform, it allows Dongli Cashmere to find more accurate target users and achieve higher conversions.

"Xiaohongshu has a dedicated team to guide us on how to operate our account, how to write notes, how to do live broadcasts, etc. The first time we did a live broadcast on Xiaohongshu, our sales reached over 100,000, which exceeded our expectations. We also participated in the fashion show at Shanghai Fashion Week in March with the official support of Xiaohongshu."

At the Xiaohongshu Link e-commerce partner conference, Gintoki, head of Xiaohongshu's e-commerce operations, also stated that in order to support more managers to grow their businesses on Xiaohongshu, the "Treasure Manager Plan" was launched: announcing that it would provide hundreds of billions of traffic to support the growth of managers and help more managers achieve efficient growth.

Leon, head of e-commerce products at Xiaohongshu, mentioned that the three major merchant platforms, Dandelion, Qianfan and Chengfeng, will be upgraded to continuously create better business products for merchants from basic operations, buyer cooperation to marketing investment.

The newly launched Chengfeng platform provides one-stop marketing and promotion support to managers, including professional delivery tools, intelligent diagnosis suggestions and other product tools to reduce operating costs and improve the delivery effect of managers.

The third reason is the platform's ecological system: Xiaohongshu has formed an ecological system of the platform, users, merchants (managers) and buyers. Dongli cashmere can also be recommended to more users with the same aesthetics and tastes with the help of buyers with matching tones.

According to the long-term and in-depth research of "Zhuang Shuai Retail E-commerce Channel" on Xiaohongshu, for Xiaohongshu, which has 300 million monthly active users (data as of the end of 2023), its platform mechanism and ecological system have formed its own unique "anti-funnel marketing model" in more than ten years.

In other words, Xiaohongshu’s system will first match the brand’s core products with the core population.

For example, the graphic notes and short videos related to Dongli Cashmere's high-quality cashmere clothing products will match users who have demands for quality life, and then expand layer by layer to find people who are interested in cashmere, and then to a wider population, thereby helping the brand to quickly and accurately match the corresponding trend styles and life scenes, and achieve the dual effects of brand building and product sales.

This "reverse funnel marketing model" is similar to the operation of physical stores. Physical stores are limited by their location and area and can often only serve target groups that are highly matched with the brand and products. They can only be recognized by a wider range of people after gaining word of mouth.

The same is true for Dongli Cashmere's operation on Xiaohongshu. Every note is an important means to reach the core group of people, and every user who comments and interacts needs to be managed carefully and for a long time.

Gintoki, the head of Xiaohongshu's e-commerce operations, also summarized at the conference the three major paths that managers must master to operate well under the lifestyle e-commerce model:

First, we need to use the live broadcast room to build a trust platform and create an online store in the Xiaohongshu community;

Secondly, we should integrate the account with the live broadcast, and make good use of the pictures, texts and videos of Xiaohongshu to make the account three-dimensional and full-bodied in addition to the live broadcast;

Finally, by operating group chats and retaining private domain users, you can gain certainty in long-term business.

Leon, head of e-commerce products at Xiaohongshu, also believes that live streaming and group chat are two major business tools that connect users and life scenarios: live streaming is good content with interaction and high conversion, which opens up a closed loop for users from discovery to purchase of products, and is a window for users to intuitively experience their lifestyle.

Official data shows that over the past year, the number of users purchasing through Xiaohongshu live broadcasts has increased 6.3 times, the average order value per live broadcast customer has remained stable at more than 500 yuan, and the return rate for live broadcasts has also remained at a healthy level.

3. Final Thoughts

The lifestyle e-commerce concept proposed by Xiaohongshu, together with the community, has formed a differentiated business philosophy and model in the highly competitive e-commerce industry.

This also allows excellent OEM factories such as Dongli Cashmere to use the business philosophy of physical stores to do e-commerce in the flourishing retail e-commerce industry. Any brand manager who loves and understands life can communicate closely with Xiaohongshu users in a "be yourself" way, be better accepted, and have more equal dialogues.

The relationships between merchants and users, merchants and platforms, and platforms and users are no longer simply and crudely transactional relationships, but communities full of life.

Through in-depth communication with the brand manager of Dongli Cashmere, "Zhuang Shuai Retail E-commerce Channel" found that Xiaohongshu's unique lifestyle e-commerce model and community atmosphere, as well as its increasingly perfect platform ecology and e-commerce tools, not only make it easier for OEM factories to establish brands, but also make brand growth healthier and more sustainable.

However, as a new e-commerce platform that continues to grow, Xiaohongshu still has room for improvement in the eyes of managers and buyers.

"Xiaohongshu has obvious advantages in terms of user base and ecosystem, and the government has provided us with great support. However, as an emerging e-commerce platform, the shopping experience and process are not smooth yet, which is where we expect Xiaohongshu to quickly improve and enhance."

After being exposed to mature shelf e-commerce platforms and fast-growing content e-commerce platforms, Na Jie believes that Xiaohongshu's advantages obviously far outweigh its disadvantages, and these are only on the "technical level".

“I believe Xiaohongshu will be able to catch up soon.”

Judging from the product upgrades and ecosystem construction dynamics announced at the Xiaohongshu Link e-commerce partner conference, Xiaohongshu e-commerce is accelerating its improvement.

Finally, when talking about the goals and plans for 2024, and Dongli Cashmere’s goals on Xiaohongshu, Na Jie once again showed full confidence.

"It should be no problem to achieve tens of millions. After all, Dongli's cashmere is of the best quality, and its design strength has been greatly improved in this year's Shanghai Fashion Week. Xiaohongshu users have great potential for high-quality products.

Maybe if we work hard together, we will have a chance to make 100 million!"

Dongli Cashmere not only found the code to build its brand on Xiaohongshu, but also found the main battlefield for long-term brand operation and sustained growth.

Xiaohongshu is now not only a city life guide, a lifestyle e-commerce platform, and a community for planting grass, but also a main battlefield for brand managers to attract high-quality users, build brands, and conduct long-term operations!

"We will not disappoint our users' expectations for a better life, nor will we disappoint every sincere operator."

Gintoki further emphasized at the conference that in the future, on Xiaohongshu, every dedicated business owner can open an online store that represents his or her lifestyle.