Playing the Olympic card, Xiaohongshu can hardly realize its dream of becoming an "encyclopedia of life"

Xiaohongshu, as a platform with content sharing at its core, is trying to realize its dream of becoming an "encyclopedia of life" through the global event of the Olympics. From the Tokyo Olympics to the Beijing Winter Olympics, and then to the European Cup, Xiaohongshu has been exploring how to use sports events to expand its influence and commercial value. This article will analyze in depth how Xiaohongshu uses the global event of the Olympics to conduct brand marketing and commercialization exploration, as well as the challenges and opportunities it faces in achieving this goal.

The Olympics is not only a battle for marketing traffic, but has gradually evolved into a battle for the consumer end as content platforms accelerate the commercialization of advertising, e-commerce and other engines.

From the Spring Festival Gala to the European Cup, Xiaohongshu has continued to break through the circle, and naturally did not miss the "huge wealth" of the Paris Olympics this time. However, unlike Douyin and Kuaishou, which hold the broadcasting rights of the event, Xiaohongshu aims to create a "second scene" for the Olympics for all people. Since May this year, Xiaohongshu has been promoting the Paris Olympics in advance and released three series of sub-IPs for the Olympic season - Everyone's Sports Games, Paris Life Festival and Watching the Olympics Together.

In July, Xiaohongshu used Liu Xiang’s entry into Xiaohongshu and Mbappe’s joint TVC to bring back a wave of nostalgic memories. During the Paris Olympics, the left hand continued to attract traffic by using the Olympic champions to enter the Xiaohongshu, and the right hand linked up with CCTV to use CCTV’s self-made program “Big Red Car Paris Non-stop Broadcast” to continue to deepen its national mind.

Xiaohongshu Olympic marketing related content Source: Xiaohongshu screenshot

However, compared to the past when it used the Spring Festival Gala to break out of the circle, this time Xiaohongshu is taking advantage of the Paris Olympics, a top sporting event IP. Obviously, it wants more, but it also faces more challenges.

1. Why does Xiaohongshu want to break out of its circle by taking advantage of the Olympic momentum?

The Paris Olympics is not the first sporting event that Xiaohongshu has taken advantage of.

Whether it was the previous Tokyo Olympics, the Beijing Winter Olympics, or the European Cup, Xiaohongshu was even jokingly called one of the best content platforms by netizens after signing the Chinese women's football team to win the Asian Cup and its spokesperson Gu Ailing won the championship.

Looking back at Xiaohongshu’s historical actions in sports marketing, unlike Douyin and Kuaishou which hold the broadcasting rights for events, Xiaohongshu’s breakthroughs in sports events usually feature two main features due to the size limitations of the platform and the differentiated attributes of its own content: one is lightweight content, and the other is Olympic-style marketing.

The former is aimed at attracting new users and promoting activation. Unlike Douyin and Kuaishou, which focus on the grand narrative of watching the games, Xiaohongshu uses "Everyone's Games" to emphasize mass sports, which is a more interactive way to get closer to ordinary people. The latter is aimed at brands. The Olympics is a top marketing venue, and generally there is no place for "small businesses". Xiaohongshu actually gives more brands outside the stadium the opportunity to "take advantage of the Olympics" by making the Olympics a daily and scene-based event.

However, Xiaohongshu’s bet on the Olympics is far more than just about marketing, its main goal is to break the circle.

First of all, "Olympic traffic + sports life" can attract more general people to Xiaohongshu and break the circle of people more quickly.

On the one hand, from the perspective of gender, Xiaohongshu is dominated by female users, but in recent years, with the enrichment of content forms, male users are also growing. According to Xiaohongshu's official data, Xiaohongshu currently has 300 million monthly active users, with a male-to-female ratio of 3:7, and the growth rate of the male population is faster than that of the female population. Using sports events to continuously attract male users has always been Xiaohongshu's basic operation.

On the other hand, according to "Qiangua Data", in addition to the relatively large urban population, young people from small towns have also become an important active population on Xiaohongshu. From the perspective of disposable income, young people from small towns who are rich and have free time are also susceptible to the consumption of sports marketing content.

Xiaohongshu's eight major crowd tags Source: Qiangua Data

Secondly, it is about breaking the circle of categories. Outdoor sports, which are strongly related to the sports track, have become the key advantage category that Xiaohongshu e-commerce is betting on.

Different e-commerce platforms have different genes and have formed different dominant category mindsets, such as Taobao Tmall's beauty and JD.com's home appliances and 3C products. Xiaohongshu's current main categories include clothing, home furnishings, beauty, etc., but Xiaohongshu does not have a monopoly on these categories.

The differentiated entry point is sports and outdoor activities. Influenced by the craze for home fitness, Xiaohongshu began to promote camping, frisbee and other content around 2021. This differentiated content route soon made Xiaohongshu a hot spot for sports and outdoor activities. The "2024 Xiaohongshu Sports and Outdoors White Paper" shows that there are currently more than 200 million people interested in Xiaohongshu's sports and outdoor activities. From 2022 to the present, Xiaohongshu's sports and outdoor categories have maintained an annual search growth rate of more than 80%. In 2023, the year-on-year growth rate of people interested in Xiaohongshu's sports and outdoor activities has exceeded 80%.

At the same time, unlike standard and popular products, the non-standard attributes of sports and outdoor products focus on scenes and experiences, and are a natural fit for e-commerce platforms such as Xiaohongshu that started with community content.

In addition to breaking through the crowd and category circles, Xiaohongshu's foothold in taking advantage of the Olympics is still breaking through the commercial circle. At present, Xiaohongshu's commercialization mainly relies on advertising and e-commerce. Thanks to the two major business engines, in 2023, Xiaohongshu turned losses into profits for the first time, and its revenue soared to US$3.7 billion, a significant increase of 85% from US$2 billion in the previous year. Among them, the advertising business, which accounts for 70-80% of the total revenue, is still the primary pillar of Xiaohongshu's commercialization, and sports and outdoor brands have always been the major marketing seedlings.

In Xiaohongshu's e-commerce landscape, sports and outdoor products are also very profitable, and the ability of sports and fitness buyers to bring goods is not inferior to that of advantageous categories such as clothing and beauty. According to Xinhong data statistics, from October 2023 to January 2024, among the top 13 categories of Xiaohongshu live streaming GMV, sports and fitness ranked fourth, second only to clothing and dressing, beauty and home furnishing. At the same time, Xiaohongshu has also seen the emergence of a group of top sports buyers such as Jiang Sida, Andy Zhao, and Liu Xuan.

Top 13 categories of Xiaohongshu live streaming GMV Source: GF Securities

It can be seen that it is no accident that Xiaohongshu leverages the Olympics. In fact, it is based on the triple considerations of population, category and commercialization. However, another question also arises from this: can outdoor sports support Xiaohongshu's commercial ambitions?

2. Outdoor sports are still not enough to support Xiaohongshu’s commercial ambitions

The reason why sports and outdoor brands choose Xiaohongshu is very simple.

First, there are visible costs. Since Xiaohongshu's e-commerce business is still in its early stages, thanks to the decentralized traffic distribution logic and the community atmosphere of outdoor content, Xiaohongshu's content and traffic costs are lower than those of traditional shelf e-commerce and interest e-commerce platforms such as Douyin. Saucony's e-commerce director Wu Zengping once mentioned a set of data: "It takes half a month to a month to make a new product popular in traditional e-commerce, but it takes 7 days on Xiaohongshu."

In addition, as a distribution channel, Xiaohongshu's traffic spillover can also drive sales of shelf e-commerce platforms such as Taobao. Therefore, considering the reality of traffic and cost, it is natural for sports and outdoor brands to deploy Xiaohongshu.

Secondly, it is the maturity of Xiaohongshu's mentality of bringing goods. Xiaohongshu has experienced twists and turns in its e-commerce business. Thanks to the development of slow live broadcast models such as Dong Jie and Zhang Xiaohui in early 2023, Xiaohongshu changed its wavering mentality and began to establish an e-commerce model with "buyers as the core". At the same time, it gradually closed its own e-commerce businesses such as Xiaoluozhou and Fulishe. By concentrating resources and traffic on "buyer e-commerce", it has shaped its own differentiated mentality of bringing goods in the homogeneous competition of e-commerce in the three forms of "carrying notes + Dabo + store broadcast".

Xiaohongshu's own aggressive commercialization has also led to the influx of a number of sports and outdoor brands including Anta, Nike, Adidas, Saucony, Salomon, Asics, HOKA, and ON, while also providing a "model case" for Xiaohongshu.

According to the observation and analysis of "Caijing Wuji", the current business practices of sports and outdoor brands on Xiaohongshu can be divided into the following three categories:

The first category focuses on utilizing the trend scenarios of Xiaohongshu, targeting the crowd through the KFS content marketing combination model, and doing efficient grass-planting. In essence, it actually helps sports and outdoor brands to carry out full-case integrated marketing.

The second type is to leverage the top buyers on Xiaohongshu to accelerate the explosiveness of business conversion. Typical cases include Saucony and HOKA using Jiang Sida’s live broadcast room to launch new products, and Adidas’ cooperation with Dong Jie.

Adidas and Dong Jie's collaboration (left) Jiang Sida and Sonycon's collaboration (right)

Image source: Xiaohongshu

The third type is to establish a KOS matrix, which directs traffic to offline stores through product recommendations by its own employees. Typical examples include Anta and lululemon.

However, even with the above advantages and a proven model, outdoor sports are currently unable to support Xiaohongshu's commercial ambitions.

On the one hand, most sports and outdoor platforms regard Xiaohongshu as a new channel, not the main battlefield for operation, and many brands are still waiting and watching. "With the rise of domestic sports and outdoor brands in 2019 and 2020, there are more people and more market opportunities, but there are also more homogeneous products, and the loss rate of sports and outdoor products is high. Now we pay more attention to the repurchase of old customers and the precise acquisition of new customers. We don't put all our eggs in one basket when choosing channels." An outdoor industry insider analyzed the current market situation in this way.

In other words, Xiaohongshu can be used as a platform for sports and outdoor brands to identify target groups and attract new customers accurately, but from a long-term business perspective, brands still value stable and long-term shelf operating scenarios.

On the other hand, as a popular vertical category, the outdoor sports track is inevitably caught in the situation of "content involution". As more and more creators and sports buyers flock to the outdoor track, Xiaohongshu will still face difficulties in scale and efficiency, which also puts higher demands on its content supply and product supply.

More importantly, sports and outdoor products have become the key category for most e-commerce platforms to collectively focus on. During the 618 shopping festival this year, 29 brands in the sports and outdoor industry exceeded 100 million yuan during Tmall’s 618 shopping festival. JD.com also mentioned in its recently released “Sports Consumption Report for the First Half of 2024” that the overall sales amount of JD.com’s sports in the first half of 2024 will increase several times compared to the same period in 2019. Douyin, which is also known for its content and hype, has also been popular with outdoor sports products. In addition to the top brands, it is also good at incubating white-label products in the industry.

Therefore, in the short term, for Xiaohongshu, sports and outdoor activities are undoubtedly an opportunity market. Its non-standard, high customer orders and strong crowd play are naturally in line with the temperament of the Xiaohongshu platform. But in the long run, non-standard also means diversified demands. With the further expansion of sports and outdoor categories in the future, how to meet the personalized demands of merchants and users is an issue that Xiaohongshu needs to think about more.

3. People are the difference, but so are the challenges

More than one merchant mentioned that according to the time machine theory, Xiaohongshu's current commercialization progress is equivalent to that of Douyin two or three years ago, especially in terms of Dabo's strategy, there is actually not much differentiation.

Another similarity between the two is that in the face of the solid walls of traditional e-commerce, Douyin has torn a hole with interest e-commerce. Now, Xiaohongshu also wants to tell a new story, from buyer e-commerce to today's "lifestyle e-commerce". According to Xiaohongshu COO Conan, the so-called "lifestyle e-commerce" aims to activate the power of "people" in the e-commerce field.

The three elements of an e-commerce platform are still people, goods, and places. Whether it is the "people looking for goods" of traditional shelf e-commerce or the "goods looking for people" of interest and content e-commerce, Xiaohongshu emphasizes "people looking for people" - using the platform's buyers and managers to achieve the maximum match between goods and consumers. The reason why Xiaohongshu emphasizes "people" needs to be viewed from two dimensions:

First, look inward: Xiaohongshu's differentiated advantage lies in its people, the community atmosphere and the attribute of sharing life. Buyers, managers, etc. can attract fans and traffic through their own categories and preferences, screen out products that match their own label positioning and fan tone, and then strengthen interaction through notes, live broadcasts, and group chats to shorten the grass-planting link.

According to an industry insider, since Xiaohongshu is still building its own e-commerce closed loop and its traffic pool is relatively open, those with strong sales capabilities can grab the explosive dividends of Dabo, those with strong content capabilities can use notes to bring goods, and those with strong operational capabilities can focus on store broadcasts. Therefore, on Xiaohongshu we can also see many cases of small teams reaping the benefits of buyers.

The second is to look outward: seizing the opportunity of e-commerce platforms collectively "cutting prices", Xiaohongshu continues to consolidate its differentiated user mindset by emphasizing "lifestyle e-commerce".

However, differentiation lies in people, and challenges often also lie in people. Xiaohongshu still faces three visible hurdles in terms of “people”:

The first is the scale and efficiency of people. On the one hand, with the increase in buyers, higher requirements are placed on the richness of Xiaohongshu's product pool. On the other hand, in terms of the efficiency of seeding, Xiaohongshu live broadcasts still rely on top buyers. Only Dong Jie and Zhang Xiaohui have achieved GMV of over 100 million in a single live broadcast on Xiaohongshu e-commerce, and there has not yet been a third buyer with a single live broadcast GMV of over 100 million.

Taking the sports and fitness category as an example, according to Xinhong data, the total number of influencers who have started broadcasting on Xiaohongshu in the past 90 days has exceeded 20,000. However, judging from the average sales performance, the top KOLs dominate, and the explosive power of brands, companies and tail KOCs is not that strong.

Therefore, affected by the scale of the market, the ceiling for individual buyers and managers is still limited.

The second is the issue of human mobility. Because of the supply and efficiency issues, Xiaohongshu is inevitably faced with the problem of super-head fleeing, such as Zhang Xiaohui's "entry into Taobao". Therefore, it is necessary to continue to pay attention to the mobility of Xiaohongshu's buyers and managers.

The third is the issue of people's labels. Merchants value the "people" of Xiaohongshu, so they naturally need more refined business tools. Over the past year, Xiaohongshu has also been refining the underlying e-commerce business tools and improving the construction of e-commerce labels. "Financial Wuji" noticed that Xiaohongshu's current business tools mainly include Dandelion, Juguang, Qianfan, Chengfeng and Lingxi. Dandelion is aimed at bloggers and brands, Juguang is an advertising platform, Lingxi is aimed at merchants' product selection and research (similar to Taobao Business Advisor), Qianfan is aimed at merchants who have opened stores, and is adapted to the ROI delivery needs of small and medium-sized merchants. Chengfeng, which is still in internal testing, has opened up paid and free traffic by lowering the product operation threshold, integrating internal marketing and delivery scenarios. Currently, major e-commerce platforms also have similar products.

The launch of new products also confirms Xiaohongshu’s determination to accelerate the introduction of more small and medium-sized businesses and enrich supply, but how to enable more small and medium-sized businesses to accept new technologies and invest boldly is also a long-term proposition for Xiaohongshu’s future.

In a recent interview, Xiaohongshu COO Conan mentioned: "We can experience three or four ways of living in our lifetime. Why does Xiaohongshu often talk about life and lifestyle? Because we often say that there are no standard answers to life." Although there are no standard answers to life, the content platform business still exists. Advertising, e-commerce and local life have become the money-making directions for most content platforms, and the same is true for Xiaohongshu. It's just that as soon as it looked up in these directions, it was already surrounded by strong competitors.

References:

1. Narrow broadcast: Xiaohongshu has a monthly sales volume of one million. How do brands view the e-commerce dividends of Xiaohongshu?

2. GF Securities: "Buyer e-commerce" is rooted in the community ecology, and the growth of the native business system is expected

3. Huatai Securities: Xiaohongshu leads the commercial prosperity of content communities

4. Xiaohongshu COO Conan talks with economist Xue Zhaofeng: Xiaohongshu e-commerce is a lifestyle e-commerce, and the biggest difference is people

Author: Walnut This article is written by the author of Operation Party [Financial Wuji], WeChat public account: [Financial Wuji], original/authorized to be published in Operation Party, and any reproduction without permission is prohibited.

The title image is from Unsplash, based on the CC0 protocol.