What is lifestyle e-commerce?

As e-commerce giants compete fiercely for the market of standard and popular products, Xiaohongshu is exploring a new lifestyle e-commerce model to meet the diversified and personalized needs of consumers. By combining community ecology and content creation, can Xiaohongshu open up a new world in the e-commerce field? This article will explore in depth the characteristics, challenges and prospects of Xiaohongshu's lifestyle e-commerce.

It addresses diverse consumer demands beyond standard and explosive products, and the capabilities required are more complex.

The underlying gene of the Internet is standardization. Its large-scale transformation of e-commerce prioritizes addressing popular and standardized demands, and this demand accounts for the majority of the consumer market.

After Alibaba took the early steps of Taobao, which focused on personalized, non-standard e-commerce shopping needs, it differentiated itself into Tmall, which in turn attracted large brands that have the ability to attract a wide range of people and provide popular, standardized solutions; Douyin e-commerce gathered large traffic for group buying through live broadcasts and short videos; Pinduoduo gathered mass demand through social fission and low prices.

The result of the e-commerce evolution they brought is: efficiency, standard and scale orientation, screening out standard brands, top merchants, and single hot products. This is also the most fiercely competitive field among e-commerce giants, so that they will not give up an inch around the single price dimension until the end, which is the critical point of collapse.

But by the end of 2023, e-commerce will account for less than 30% of total social consumption.

E-commerce should be an online reflection of consumption. However, it is still difficult for the current e-commerce model to conquer categories and scenarios other than standard and popular products - from the perspective of categories, such as fresh food, automobiles, luxury consumption, and one-stop home solutions, and even women's clothing categories that are currently plagued by high return rates. It encompasses premium consumption that can reflect unique experiences and lifestyles under the K-type differentiation trend, and can also point to a consumption guide for mass commodities on how to be more cost-effective.

The reason why it is difficult to conquer is that this part of the demand is decision-oriented, decentralized, differentiated, non-standard, experience-oriented, and even newly emerging. Consumers do not make consumption choices based solely on price, traffic, and product functions. For the platform, it is not enough to solve the problem of traffic supply, product supply, price advantage, or introduce enough big brands to facilitate large-scale transactions.

Let's call it diversified consumer demand to correspond to the single and standardized consumer demand such as standard products and hot-selling products.

Solving diversified consumer demands requires the intervention of content, the intervention of people (corresponding to offline shopping guides/buyers/sales consultants), the catalysis of social interaction, and even the sense of scene wrapping. It satisfies people's diverse and even uncertain needs and solutions, and conforms to the consumption trend of increasing subjectivity, circleization, segmentation, and experience.

By establishing the ability to address this part of the demand, it will be possible to bypass the current scale competition, price involution and homogeneous competition among e-commerce giants, and form a differentiated, dynamic and sticky trading platform.

In our opinion, the lifestyle e-commerce that Xiaohongshu wants to do has the potential to meet some of these needs. (Lifestyle e-commerce can be seen as a continuation and upgrade of the e-commerce that Xiaohongshu proposed last year with buyers as the key factor.) Because lifestyle e-commerce is built on the community, it has traffic capacity, grass-roots mentality, content capacity, community atmosphere, and bloggers and buyers involved, so it has the ability to promote diversified consumption.

Although overall, the demand for standard products, single products and hot-selling products is still the common denominator of the e-commerce market, Xiaohongshu's lifestyle e-commerce will inevitably encounter problems of scale and efficiency in the short term. However, for Xiaohongshu at present, the primary goal of doing e-commerce is not to compete with giants in scale and efficiency, but to enrich the community ecology and find a new flywheel for community profitability.

It is in this context that we observe Xiaohongshu's transformation from a buyer e-commerce to a lifestyle e-commerce. What is its solution, why does it do so, what are the capabilities that support it, what are the prospects and limitations of this approach, what is the impact on the company itself and on the e-commerce market, and what reference significance does it have for communities doing e-commerce.

01 What is lifestyle e-commerce

Mainstream e-commerce companies compete mainly on factors such as price, function, and standard products. However, an e-commerce company that can provide diversified consumer solutions must not only solve basic e-commerce problems such as traffic and supply, but also have at least the following factors:

First, it can understand users’ complex needs beyond standard products, single products and explosive products, including needs that users themselves are not aware of, and be good at stimulating them.

Second, we should provide refined and full-link user interaction and services. To meet non-standard, personalized, and long-decision-making consumer needs, we usually need to conduct more in-depth and longer-term user communication before and during sales, and we should also provide good user experience guarantee after sales.

Third, in addition to brand orientation and price orientation, there must be more ways to achieve precise supply and demand matching, whether by using people or content as intervention nodes, or through richer tools and algorithms.

There is also a very important premise here, that is, the platform rules must allow such small supplies and small demands to emerge. At the same time, the platform has the patience to bear the inevitable limitations in scale and efficiency when meeting such demands.

Xiaohongshu’s lifestyle e-commerce basically possesses these elements.

A consumer shared a case with us:

She saw an original designer brand skirt for more than 400 yuan on Xiaohongshu. At that time, the manager was sending notes asking whether the company wanted to make a third batch of goods. Many people said they wanted to, and many people who had bought the first and second generations before posted pictures below, saying, "Wow, it's really beautiful." Later, the manager also posted notes about the changes made to the third generation compared to the first and second generations, "and finally I bought it."

The consumer said that if he saw this dress on other platforms, it would probably "be thrown into my shopping cart and gather dust."

There are many similar cases. Some people replicated the home of home buyer @一颗KK 1:1 after seeing her decoration style; some people booked a homestay on Xiaohongshu because they were attracted by the ancient buildings in Shanxi; some people thought the kitchen scene in @文森特别饿's live broadcast room was very beautiful, so they bought the same cutting board and cast iron pot.

The common feature of these consumptions is that users’ demands are stimulated in specific scenarios and corresponding consumption is generated, and this conversion is driven by content, professional opinion leaders and solutions.

From the supply perspective, Xiaohongshu e-commerce gathers and attracts more products of this type.

The main categories of Xiaohongshu e-commerce currently include: clothing, especially original designer brands or brands owned by the designer; home furnishings, which are non-standard categories, and the best performing brands are new and small brands, such as Okensho, which was established last year; and maternity and baby products, a consumer field that has been evolving in cognition and concepts. Even in the beauty sector, the representative supply is overseas niche brand collection stores such as Zhang Xiaohui's Rose is Rose.

Many buyers will introduce some new supplies based on their own usage experience. Ding Qijun, the founder of the service provider Firefly, once mentioned to us that more than one of their buyers would introduce some niche brands for their own use into Xiaohongshu. Firefly is an organization with more than 300 bloggers. They are responsible for the buyer live broadcasts of celebrities Hai Lu and Zhang Meng. Xiaohongshu's top workplace blogger @Olga姐姐 is also their contracted object.

Some Xiaohongshu merchants have previously operated on other platforms, but they generally mentioned that it is difficult for them to be seen on a platform that is oriented towards standard products, single products and hot products. For example, Yinuo, the owner of the cultural and artistic brand Yinuo Bennuo, said that their products are mainly for girls, but on other platforms and in the entire consumer market, the audience for such cultural and artistic products is mainly middle-aged men, so it is difficult to find an audience.

Consumers have similar feelings. One consumer said that she was attracted to an original women's clothing brand on Xiaohongshu. This store has also opened stores on other platforms and has existed for many years, but "I couldn't find them when searching for general keywords (on other platforms), but I was recommended on Xiaohongshu."

It is worth reminding that this type of consumption cannot be divided into two dimensions such as useful/useless, high price/low price, practical/impractical, rigid demand/non-rigid demand. Instead, it is another channel model that the market needs as e-commerce has developed to date. In order for this model to work, it must rely on content, community, live streaming, non-standard supply chains and merchants, and even professional consumers and other elements.

Therefore, lifestyle e-commerce does not necessarily mean expensive or high-premium in terms of price. There are many 1688 guides and other content in the Xiaohongshu community. Designed mobile phone cases that cost only a dozen yuan are also very popular on Xiaohongshu. Some users classify such products as "junk gadgets with emotional value". They are not rigidly needed, but necessary and very easy to be inspired.

02 How does Xiaohongshu solve the problem

So, how to meet the complex needs of the above complex consumption?

Judging from its official external statements, Xiaohongshu's lifestyle e-commerce solutions also mainly revolve around people, content, interaction, and matching. It combines its own foundation, capabilities, and stage to refine the development priorities at this stage, emphasizing the introduction of people, the importance of live streaming, and the importance of group chat.

People are the creators, disseminators and solution providers of lifestyles. Gintoki, head of e-commerce operations at Xiaohongshu, said, "People are the foundation behind the value of e-commerce."

The "people" highlighted by Xiaohongshu include the buyers emphasized last year and the managers emphasized this year. The so-called managers, according to the official explanation, refer to store owners who have both aesthetic and design capabilities and supply chain capabilities. In the view of manager Zhou Qi, the manager is the person in charge of a "personal store with a unique style."

So to a certain extent, buyers are roughly equivalent to experts on other platforms, and managers are roughly equivalent to stores that have the potential to grow into brands. Introducing managers means introducing supply with a tone.

The importance of live streaming to Xiaohongshu’s lifestyle e-commerce lies in the fact that it is a new content carrier that can better carry complex product introductions and lifestyle displays for Xiaohongshu, which is known for its pictures and texts. Therefore, some managers are very keen on the content and even cinematic feel of the live streaming room. For example, the home furnishing brand Okensho has built 10 live streaming rooms of different styles in its 1,000-square-meter factory offline to create a feeling of shopping in an online home furnishing store.

At the same time, compared with short videos, live broadcasts can better rely on people's differentiated performance and private domain stickiness to achieve high conversion. Short videos are destined to go to the public domain pool to compete for large traffic to achieve high conversion. Xiaohongshu missed the best development node for short videos, and the large public domain is not its strong point.

Leon, head of Xiaohongshu's e-commerce products, defines Xiaohongshu's e-commerce live streaming as completing the user's "closed loop from discovery to purchase" on Xiaohongshu. He also pointed out that Xiaohongshu's e-commerce live streaming "is not building a highway, but building roads and paths."

The role of group chat in Xiaohongshu's lifestyle e-commerce is reflected in both content and operations. Buyers and merchants will use group chat to release live broadcast previews, test new products, and provide after-sales services.

In fact, including group chats, Xiaohongshu's lifestyle e-commerce emphasizes the importance of sharing and user interaction in multiple scenarios such as notes, live broadcasts, and group chats.

Because the chain from planting grass to pulling grass on Xiaohongshu is very long, each link is highly participatory and has a lot of interactive space. As Gintoki said, "Every content, every comment, and every private message is a connection between you and the user." This is equivalent to paying attention to the full-link operation of users from the beginning of their thoughts to the completion of transactions, rather than relying on a certain link for high-incentive conversion.

The fundamental reason why Xiaohongshu can use the above capabilities is that it is a decentralized UGC-based community, and Xiaohongshu's lifestyle e-commerce grew out of the community. Therefore, people, content and supply that provide decentralized lifestyles can emerge.

Even the "lifestyle" positioning comes from users' understanding and feelings of e-commerce consumption on Xiaohongshu.

Only lifestyle e-commerce based on the community can form its own stickiness and barriers in the already highly competitive e-commerce market, and will not be swallowed up or assimilated by the scale effect and adsorption effect of single products and standard products.

Previously, Xiaohongshu also did e-commerce that mainly focused on lifestyle categories, such as Welfare Club and Little Oasis. At that time, the solution was still the inherent e-commerce logic, and the integration with the community was not deep, and the rolling effect of people, content and consumers was not brought into play. Moreover, it was a self-operated e-commerce with a heavy model. It was equivalent to a pure competition of goods in the entire e-commerce market, and had no advantages.

03 Challenges and prospects of lifestyle e-commerce

In fact, the entire e-commerce market has been looking for solutions other than single-product hot-selling products and standard products, but has not yet come up with a good solution. Pinduoduo, Douyin, and Tmall have solved some of the problems, such as the new product track created by Tmall's TMIC New Product Innovation Center, and the explosive power of Douyin e-commerce in creating consumption trends and promoting new products with the help of short videos.

In addition, the logic of the development of things determines that we must first solve the single-dimensional single product, explosive product, and standard product. Only after the supply chain has been refined and matured, advanced supply has been screened out, and consumers have become more mature and rational, can we evolve into differentiated and complex dimensions.

Consumption has come to this day through a continuous process of seeking similarities, differences, similarities, and differences again. The same is true for e-commerce. Only at this stage did Xiaohongshu, a lifestyle e-commerce, wait for a better opportunity of its own. The emergence of buyer live broadcasts when live broadcast e-commerce has entered the second half is an example.

However, we have to admit that the main channel of e-commerce platforms is still single-product hot-selling products and large-scale merchants with mature mindsets. Other e-commerce solutions, including lifestyle e-commerce, account for a smaller proportion and are slower.

Therefore, in the short term, Xiaohongshu e-commerce will still encounter scale issues, for example, buyers still feel that Xiaohongshu's product pool is not rich enough. It will also encounter efficiency issues. Only super heads like Dong Jie and Zhang Xiaohui have exceeded 100 million yuan in GMV in a single live broadcast on Xiaohongshu e-commerce. The number of people with more than 10 million yuan in a single broadcast is increasing, but they are still a minority.

However, Xiaohongshu’s primary goal in e-commerce is not to compete head-on with other large platforms in terms of scale and efficiency in the e-commerce market. This is not in line with the community’s pursuit of diversity, and Xiaohongshu e-commerce does not have this capability in the short term.

The most basic role of e-commerce for Xiaohongshu should be to meet the needs of users to buy products after planting them on Xiaohongshu, and to meet the needs of individual merchants to do business on Xiaohongshu. As long as it can give consumers a good shopping experience, and allow merchants to make money and feel the positive cycle of business, and at the same time not destroy the community atmosphere, Xiaohongshu's lifestyle e-commerce can continue.

In other words, Xiaohongshu needs to be prepared for the scale and speed of e-commerce, and to do a good job in community governance that includes more roles and demands and has richer behavioral patterns.