Xiaohongshu in a commercial dilemma: betting on the founder, becoming popular in less than 10 days

Xiaohongshu is facing an unprecedented business dilemma. This article explores in depth the challenges and problems that Xiaohongshu has encountered in its attempt to achieve commercial transformation through the "manager" model. From the popularity of the manager model to the problems and limitations behind it, the article provides a comprehensive analysis and outlook on Xiaohongshu's business prospects.

Recently, the "grass-planting community" Xiaohongshu has become the focus of attention in the Internet industry, and the center of the topic storm is the new definition of the "lifestyle e-commerce" + "manager" model.

"What users buy on Xiaohongshu is not goods, but they can see and buy the life they desire from the merchant's live broadcast room." Recently, Xiaohongshu COO Conan explained the connotation of this definition in a conversation with economist Xue Zhaofeng.

Earlier, from July 24 to 25, Xiaohongshu held the Link e-commerce partner conference with the theme of "Hello, the manager" in Hangzhou, the capital of e-commerce. Yin Shi, the head of e-commerce operations, said that under such a business model, the number of merchants with monthly sales exceeding 5 million on the platform has increased by 3.5 times in the past year. At the same time, the unit price of the live broadcast pen has reached 400+, with a low return rate of 33% and a same-store repurchase rate of 29%.

Can betting on the manager model really support Xiaohongshu's long-term commercial transformation and resolve the fundamental contradiction between community content and commercial monetization?

The reality does not seem to be satisfactory.

1. The manager became famous for less than 10 days?

The manager model is the core of Xiaohongshu's lifestyle e-commerce. It directly faces users and shows users life attitudes, lifestyles, and product concepts through store design and product selection planning, so that users can not only understand the products, but also intuitively feel the "people" behind the products.

Different people have different understandings of the so-called manager. The definition given by the Internet is that it refers to the masterminds and navigators of a fashion brand, who are generally the owners or professional managers of the brand.

Simply put, what used to only appear in youth subculture groups in related fields such as trendy clothing, rap and street dance labels is now widely used by owners or professional managers of trendy, fashion and literary brands.

On the whole, it is more of a formal presentation. For example, some people say that "Chengdu is the capital of managers", and some institutions that sell entrepreneurship courses have tried to summarize the "four-in-one" characteristics of managers, "more Western than the boss, more friendly than the CEO, more relaxed than the person in charge, and more romantic than the general manager."

"Jidian Business" observed that Xiaohongshu is making every effort to strengthen the community culture and content ecology through this innovative model, trying to open up a unique commercialization path.

Xiaohongshu's meticulous planning and construction of the manager model can be seen from the initial popularity of the topic "Becoming a lifestyle manager".

According to Xiaohongshu's data platform "Xinhongyoushu", since the topic was created in January 2023, it has rapidly accumulated up to 276 million views in one and a half years. It not only demonstrates Xiaohongshu's strong ability in content innovation and community mobilization, but also reflects users' high interest and expectations for the new role of content creators.

Image source: Xinhongyoushu

However, this enthusiasm seems to be more confined within the community walls built by Xiaohongshu itself. Even the highly anticipated "Managers' Conference", the outside world's consensus on this model still remains in internal community discussions and some media reports.

Once the external marketing enthusiasm wanes a little, the participation and discussion volume of the topic will recede like the tide, leaving behind doubts about the sustainability of the model.

During the e-commerce conference, Xiaohongshu successfully pushed the manager model to the forefront of public opinion through a series of marketing activities, and the number of participants in the topic and the increase in browsing volume reached a short-term peak. However, as the conference came to an end, the outside world's attention quickly cooled down, and the incremental data on participating in topic discussions showed a cliff-like decline.

Xinhongyoushu shows that during the July 25th meeting of the managers, the incremental data of participating in the discussion of the managers' topics was 252, while on the second day after the meeting, that is, on the 26th, the incremental data of participating in the related topics was only 12, a rapid decrease of 95.24%. From July 28th to 29th, the incremental data of the managers' topic browsing also dropped from 1.5812 million to 300,500, a decrease of 80.99%.

Data source: Xinhongyoushu

Obviously, the outside world's attention is more based on the stimulation of platform marketing activities rather than a deep recognition of the value of the manager model itself. For a large number of ordinary users, the so-called manager or KOL is actually just a gimmick.

Data source: Xinhongyoushu

It is worth noting that some newly created topics for managers that include niche areas do not show daily pageviews and participation data increments, but only show total pageviews and note increments in the past 30 days, and the total pageviews do not exceed 100,000. This makes people suspect that the topics of managers lack sufficient appeal to users, resulting in low actual interest among users and unwillingness to actively participate in discussions.

Therefore, once the marketing means weaken, the popularity of the topic will be difficult to sustain, which will undoubtedly pose a challenge to Xiaohongshu's long-term plan to attract more creators, deepen the community ecology, and promote commercialization through this model.

2. The host’s live broadcast “up link” remains

For Xiaohongshu, the reason for betting on managers is because they represent a new business form. Wu Zhenzhong, the initiator of the Manager Research Institute, once predicted that at least 100 manager brands with revenue exceeding 100 million yuan will be born in the next ten years.

New business forms require new business systems. Simply put, the manager must be someone who understands business operations and needs to have his own insights into brand marketing, brand community, product logic, operational pain points, and fan building.

These judgment indicators are the key to how many fans’ recognition and even willingness to pay for products and services a manager can win.

So, have the managers of Xiaohongshu built a new business model?

In the early morning of August 3, in the live broadcast room of "Jing Yijia", which ranks second on the real-time list of Xiaohongshu's managers, the anchor was spreading out the clothes in his hand to introduce them: "There is only one size S of this shorts left, 39 yuan off, go back and match it with a colorful dress, 39 yuan off. This gray one has shoulder pads, and there are two left. Don't buy it for 29.9 yuan, it's 20 yuan, and if you want it, you can get 2 yuan off."

Image source: Xiaohongshu

Each product was displayed for no more than one minute, and the words "Start selling blindly, and then go on holiday" on the red banner behind it were particularly eye-catching. Data showed that more than 10,000 people viewed this live broadcast that had not yet been completed.

The previous afternoon, the manager of "Yima Discount Store", which ranked first on the list, sat in a live broadcast room that looked like a warehouse, quickly unpacked the product packaging, and shouted "Discount 1 for this one, discount 1 for this one", and from time to time he rummaged through the messy, crowded boxes behind him to find various products and conduct live broadcasts with the goods.

Image source: Xiaohongshu

"Jidian Business" observed that even in the live broadcast room of the "Focus30 Long-term Business Manager List" launched by Xiaohongshu, the voice of "3, 2, 1, link up" can still be heard frequently. The so-called Xiaohongshu managers are actually the live broadcasters who are active on the platform. Although they have a large fan base and good sales performance, they have not shown much innovation in fan building and business model innovation.

To some extent, this is no different from traditional live streaming and street hawking. It has not become a unique transmitter of lifestyle and life ideals as the platform marketing propaganda has claimed.

The live broadcast of the host is more like "old wine in a new bottle", and its live broadcast scene is exactly the same as that of traditional e-commerce platforms. The anchors quickly display the products, use low-price promotions as a gimmick, and guide the audience to buy by deducting numbers, gradually converging to the old path of "uplinking" of traditional e-commerce.

This live broadcast method will undoubtedly disappoint users who originally expected to find life inspiration on Xiaohongshu, and gradually weaken the uniqueness and differentiation advantages that Xiaohongshu should have as a content community. Users will find it difficult to feel the unique value that is different from other platforms when watching, and excessive content marketing will also weaken the platform's brand image as a lifestyle leader.

According to the Xiaohongshu mode described by idealists such as Gintoki not long ago, it is a stage where personal lifestyles and life philosophies can be deeply conveyed through live broadcasts and products. However, the live broadcast scenes in reality still focus on price competition and quick sales, rather than the display and sharing of lifestyles.

This makes the manager model seem more like a vague vision full of idealism.

Xiaohongshu stands out from other social platforms largely due to its carefully constructed content community, which is based on high-quality content, a unique user base and a strong sense of community identity, forming a unique competitive advantage.

However, when the manager model cannot achieve content innovation and differentiated transformation across the entire platform, this homogenization phenomenon will inevitably erode the community ecology of Xiaohongshu, causing users to lose interest and sense of belonging to the platform and turn to other more personalized and distinctive platforms.

Xiaohongshu’s path to commercial breakthrough may very well end within the community it has carefully built.

3. Lack of closed loop leads to degraded experience

"Good communities give rise to good businesses. Communities and businesses are neither in opposition nor contradictory, and a very prosperous and vibrant business ecosystem has emerged."

Conan said that in 2018, her core team had a heated discussion on whether "content is more important" or "sharing is more important". At that time, she firmly believed that Xiaohongshu should not engage in e-commerce from the perspective of the community. However, with the improvement of the community ecology and the growth of user needs, she now feels that Xiaohongshu's differentiated e-commerce path may not be a better attempt.

It is true that lifestyle e-commerce and the manager model have injected new vitality into the platform, but their effectiveness is extremely limited in solving the problems of business closed loop and improving user experience.

According to Qiangua data, Xiaohongshu has 300 million monthly active users, an increase of 37.6% compared with 187 million monthly active users in January 2023. However, the daily active users of the mall are less than 20 million.

This number seems particularly thin compared to Xiaohongshu's huge user base.

Image source: Qiangua Data

The key to improving user purchase conversion rate lies in establishing a strong trust foundation and a clear purchase path. Although the manager model attempts to stimulate users' emotional resonance and promote consumption decisions through scenario-based marketing, this approach may not be as influential and attractive as expected for rational consumers or users who have high requirements for product cost-effectiveness.

In addition, in building a closed loop of e-commerce, Xiaohongshu still needs to solve the problem of improving the supply chain system such as logistics and after-sales, which is the key to improving user consumption experience and enhancing user stickiness. The manager model does not provide effective solutions to these pain points.

According to Black Cat Complaint Data, there are as many as 47,395 complaints about Xiaohongshu, and the problems are mostly concentrated on product quality, false delivery, difficulty in refunding, etc.

One user said that he bought a bottle of DW foundation from a store on the Xiaohongshu platform, but found that it was quite different from the product he had purchased from the official channel, which made him doubt the authenticity and quality of the product. He contacted the store to explain the problem but could not get a response.

Image source: Black Cat Consumer Complaint Platform

"I bought things on Xiaohongshu three or four times and never used it again. I felt the prices were still higher than on other platforms." User L told "Jidian Business" about her shopping experience. In addition to the price factor, she said that after-sales service was also one of the reasons why she no longer used the platform for online shopping.

On July 2, L bought a pair of high-top bangs clips from the Xiaohongshu store "Wai Zai YYDS". The product page clearly stated "7-day unconditional return" and "Quick refund". Since the actual product did not match the picture and text description, the user chose to return the product. Only then did he find that the platform did not provide shipping insurance like other e-commerce platforms, and there was no prompt on the product page. Users need to bear the shipping cost themselves, and the shipping price is almost the same as the product price.

"In the end, I was given a coupon with no threshold, but I'm still angry when I think about it now." L recalled this shopping experience, which made her feel that after-sales issues on the Xiaohongshu platform were very troublesome.

Image source: provided by user

This is not an isolated case. The problem that has emerged is that Xiaohongshu platform has insufficient supervision over merchants and lacks protection for consumer rights.

The existence of these pain points not only weakens users' trust in the platform, but also limits the improvement of user purchase conversion rates.

It is worth mentioning that Xiaohongshu’s support for merchants is also very subtle.

On well-known content platforms, many users recalled their experience of trying to monetize on Xiaohongshu. Most users were attracted by the platform's generous subsidies and promotion policies. However, after the first order was completed, the store owners often found that the platform would limit the flow of grass-growing content and stores based on considerations of maintaining the community ecology, and they returned to the starting point of "lack of traffic".

Although this short-term support can motivate merchants to a certain extent, it also causes many merchants to question the sustainability of Xiaohongshu's e-commerce.

Whether it is a "lifestyle e-commerce" or "manager" model, Xiaohongshu needs to listen carefully to the voice of users and understand market demand. When the content community that is carefully nurtured is transformed into a "traffic monetization pool", users who are good at "anti-harvesting" will not be so naive as to pay for the empty idealism constructed by others. When the marketing heat fades, Xiaohongshu's real challenge has just begun.

Author | Sun Tianyu Editor | Liu Shanshan This article is written by the author of Operation School [Jidian Business], WeChat public account: [Jidian Business], original/authorized to be published on Operation School, and any reproduction without permission is prohibited.

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