Xiaohongshu "sways" 618

Abandoning the banner of buyer e-commerce and grabbing the tail of the first year of store broadcasting, Xiaohongshu has made a mistake in the live broadcast e-commerce. Can Xiaohongshu's e-commerce struggle successfully knock on the door of IPO? Recommended for Internet friends to read.

618 without GMV is like a battlefield without smoke, but the secret war in the shadows has not stopped.

At the top are Taobao, JD.com, and Pinduoduo, which are offering all-round low prices. Behind them are Douyin, Kuaishou, and Video Number, which are competing in the live streaming of goods. The outside world's attention is focused on the relatively small number of domestic e-commerce platforms at the end, which include the only two content community platforms, Xiaohongshu and Bilibili, which are also making their own efforts.

During the just-concluded 618 period, public data showed that the number of buyers whose GMV of goods sold on Xiaohongshu platform doubled increased by 2.8 times year-on-year, and the number of buyers whose sales exceeded one million in a single session was three times that of the same period last year; in a similar dimension, the number of UP hosts participating in sales on Bilibili increased by 143% year-on-year, and the number of UP hosts whose sales GMV exceeded 10,000 increased by 236% year-on-year.

With 300 million monthly active users, Xiaohongshu has a slight advantage over Bilibili, which has 340 million monthly active users. However, compared with Bilibili, which also has other revenue sources such as games, premium memberships, and live broadcasts, e-commerce seems to be the last straw that Xiaohongshu must grasp before going public.

However, Xiaohongshu, known as a "slow company", still cannot get rid of its old problem of wavering in deciding its future e-commerce business. In August last year, Xiaohongshu announced that the "buyer era" had arrived. During this year's 618, the platform shifted its focus to store broadcasts. In the first day of sales on May 19, the "store broadcast number is 3.8 times that of the same period last year, and the store broadcast GMV is 4.2 times that of the same period last year" was used as the core information dissemination, which shows how much importance it attaches.

Is it that the newly promoted super buyers like Dong Jie and Zhang Xiaohui are no longer popular? Or is it that they are eager to complete their e-commerce business and take two steps at a time to achieve "more, faster, better and cheaper"? Can Xiaohongshu's e-commerce struggle successfully open the door to an IPO?

1. The missing super anchor gene

An e-commerce platform without live streaming sales is not complete, and live streaming sales without super anchors cannot stand out.

Taobao has Li Jiaqi and Viya, Douyin has Dong Yuhui and Brother Yang, and Kuaishou, which is in a remote corner, still has Simba. Even JD.com, which has come to its senses and started to catch up, has brought out Liu Qiangdong's digital avatar.

Regardless of whether these super anchors are controversial or sell goods, it is almost expected that they will become a hot search topic as soon as a topic about them comes out. The core competitiveness of super anchors is first of all the unique traffic that breaks through the circle, and secondly the GMV data converted into goods.

In 2023, Xiaohongshu was only one step away from becoming its own super anchor.

According to industry insiders, Dong Jie and Zhang Xiaohui, the two benefactors who later opened the so-called "buyer era" of Xiaohongshu, initially only had independent investment and support from the MCN agency behind them. It was not until there was a trend of taking a low-frequency, slow-life style differentiated live broadcast sales path that Xiaohongshu woke up and quickly responded positively.

In terms of organizational structure, the live broadcast business was first formally promoted to an independent department, and then the live broadcast business department and the e-commerce business department were integrated into a newly established transaction department, which became a first-level department parallel to the community department and the business department.

In the Double 11 battle in the second half of the year, Xiaohongshu used the strength of the entire platform to promote the concept of "buyer e-commerce". Although some super buyers achieved sales of over 100 million in a single live broadcast, compared with Li Jiaqi and Dong Yuhui who have long become symbols of the live broadcast culture, they have missed the best dividend of the era.

At the end of the year, Xiaohongshu was in a hurry to catch up with the "first year of store live broadcast" in the e-commerce industry. With the shift in focus, Dong Jie and Zhang Xiaohui's road to breaking the circle came to an abrupt end. On Bilibili, which is also an e-commerce follower, Mr. Mideng, a UP host in the home furnishing area, accounted for one-third of the total live broadcast transaction volume in 2023 with a GMV of 3.3 billion, but he can only "enjoy himself" on the small broken station, and there seems to be a chasm between him and the super anchor.

The fact that Xiaohongshu and Bilibili cannot produce super anchors may be related to the natural genes of the content community platforms.

One started with urban petty bourgeoisie women, and the other developed from ACG two-dimensional subculture. The underlying logic behind the concept of content community is essentially a group of niche circles that keep each other warm in the mainstream cultural atmosphere.

The defensive mentality of niche circles is extremely strong, and they carry an aura of independence, xenophobia, and rationality and clarity. Therefore, breaking the circle and commercialization have become dilemmas that both platforms need to face and are equally difficult to solve.

After going public, Bilibili has been sticking the slogan of "breaking the circle" on its forehead every day, and Xiaohongshu has also tried to invest heavily during the Tokyo Olympics in an attempt to break down the "male" wall. The efforts cannot be regarded as wasted, but they are all half the result with twice the effort.

The same is true for commercialization. The "grass planting" culture engraved in Xiaohongshu's bones is itself the information gap disadvantage of community users as consumers, which needs to be compensated and leveled by the expert notes and guides on the platform. It can be said that it is incompatible with the crude low prices and impulse consumption in the mainstream live streaming model.

Super anchors are the product of the emotional resonance of the mainstream group in the great era. But if Xiaohongshu and Bilibili are allowed to tear off the label of being unique, the trump card they rely on to coexist with Weibo, Douyin and Kuaishou may no longer exist.

2. There are many pitfalls in store broadcasting

Xiaohongshu’s “buyer era” came quickly and seems to be going away quickly too. So after accelerating into the “store broadcast era”, can it be said that it has seized the industry’s opportunity?

Live streaming sales exploded in 2020, when the online economy was "in danger". Relevant data show that in 2020, the proportion of store live streaming sales on the Douyin platform was only 30%, which was not outstanding; but in 2021, it reached about 58%, a year-on-year increase of nearly 100%.

This is closely related to the successive failures of several super anchors in the industry, as well as the chaos of slot fees for influencers at that time. However, at that stage, it seemed that merchants were preparing a backup plan to fight against the strong position of influencers, but due to the team threshold and the initial software and hardware investment, it was difficult to snatch a piece of meat from the super anchors.

However, after three years of accumulation, the enrichment of industry talents and the trial and error of brand merchants, coupled with the platform's consideration of risk differentiation for super anchors, store broadcasting is becoming a basic facility for merchants to carry out e-commerce plans.

Among them, the more e-commerce platforms lack super anchor ecosystems, the more enthusiastic they are about brand store broadcasts. Pinduoduo, Meituan, and Video Account are all among them. After Xiaohongshu's buyer concept failed to continue to gain popularity, turning around and keeping up with the industry trend is a safe choice.

There is a reason why 2023 is called the "first year of store broadcasting". According to official data from Taobao, during the Double 11 shopping festival last year, 58 live broadcasting rooms with sales exceeding 100 million yuan were generated on Taobao, of which store broadcasting accounted for more than 60%; the number of new store broadcasting rooms increased by more than 300,000 throughout the year, with nearly 30,000 stores with sales exceeding 1 million yuan and nearly 4,000 stores with sales exceeding 10 million yuan.

Xiaohongshu's move into store broadcasting is several steps ahead of its epiphany of creating super buyers, but it is still repeating the old path of the leading e-commerce platforms. The newcomers can learn from the pitfalls of their predecessors, but they have to jump in and climb out one by one. Efficiency can be improved, but the process is difficult to omit.

Referring to the mature live streaming ecosystems such as Taobao and Douyin, Dabao and store broadcasts are in a complementary state. Experts bring their own traffic and create scarce hot-selling categories at a fixed frequency; store broadcasts are long-term and are mainly used to undertake "overwhelming wealth" with high uncertainty.

There are also objective risks that cannot be ignored. The IP of the experts created by professional teams still has the risk of making mistakes, and the ordinary workers who are pushed to the stage by brand stores have to face the test of longer working hours, low salary and high pressure. In the past, brands that caused negative public opinion were mostly vented through private chats with customer service on e-commerce platforms, but now there are also screen-sweeping bullet comments in public live broadcast rooms.

The store broadcast ecosystem of mature platforms grew from the natural overflow of live broadcast traffic from influencers. The rapid rise of Xiaohongshu store broadcast seems more like a deliberate attempt by the platform to force growth. On one hand, the status of super buyers is unstable, and on the other hand, store broadcasts from merchants are starving for food. There is a big traffic gap on both sides of the palm and the back of the hand. I am afraid that this will only magnify the reality that the community's progress in breaking the circle is not as good as that of Bilibili, which is even more weak.

3. The slower, the more swaying

In the past, Xiaohongshu was “slow” and everyone was aware of it. Qu Fang, one of the founders, once said frankly: “Xiaohongshu’s attitude towards business is to let it grow slowly, rather than eagerly harvesting traffic.”

At the Geek Park Innovation Conference at the end of last year, COO Conan publicly stated that five years ago he was very determined that Xiaohongshu should not engage in e-commerce.

In fact, Xiaohongshu's trial of e-commerce business began with its self-operated cross-border e-commerce business "Welfare Club" in 2014. This section and the self-operated e-commerce "Little Oasis" launched in 2022 around the popular beauty, skin care, clothing and other categories in the community have now been closed.

In the past ten years, Xiaohongshu has introduced third-party platforms and brand merchants to build community e-commerce. It also caught up with the trend of live streaming and launched related functions early. It also launched the "account and store integration" mechanism to support sellers. Now, all of them, along with the banner of "buyer e-commerce", have been swept into the corner of history by the era of store live streaming.

The repeated adjustments in business direction are linked to the back-and-forth jumps in the organizational structure. According to public information reported by the media, in 2019, after Xiaohongshu first opened up the community e-commerce model, it upgraded the original community e-commerce division to the "Brand Account" department; in 2022, the e-commerce department was assigned to the community department, and live streaming became a second-level department under the new department; after the major adjustments mentioned above to promote the buyer era, at the end of May this year, Xiaohongshu's e-commerce buyer operation business and merchant operation business were merged to form the e-commerce operation department, which is a second-level department of the e-commerce business.

Frequent changes in the internal structure inevitably increase the turnover rate of team members. A former Xiaohongshu employee once joked that ordinary employees who have worked for more than two years can be called "living fossils."

According to relevant sources, the core decision-making power within Xiaohongshu belongs only to the two founders Mao Wenchao, Qu Fang and COO Conan. Other executives either left during the entrepreneurial process or were introduced from leading companies such as Tencent and ByteDance and then left.

Since January this year, Xiaohongshu has set its sights on Didi's talents and poached a number of middle and senior management, including Wu Yingbing (Benny), the former head of Didi's supply and demand strategy, who joined to be responsible for part of the e-commerce business; and Zhang Rui, the former head of Didi's ride-sharing business, who joined the commercialization team.

The new atmosphere brought by the new team is undoubtedly the good results of the store broadcast during the 618 shopping festival this year. But along with the old team, the old flag that was planted with great difficulty in the past also left.

Breaking the circle and commercialization are being vigorously promoted. The last door left for Xiaohongshu is IPO. Even the slowest companies will be forced by the capital market to step on the accelerator once they step on the IPO train. However, repeated maneuvers in low-speed driving environments can also enjoy the scenery along the road. Steering left and right in high-speed conditions may lead to unpredictable dangers.

The anxious Xiaohongshu can no longer waver.

Author: Fu Shen

Source: WeChat public account: "New Entropy (ID: xinshangxz)"