Can Xiaohong Bookstore’s live broadcast defeat the “saleswoman”?

This article mainly discusses Xiaohongshu’s new trends in the e-commerce field, especially its emphasis on and development of “store broadcasts” (brand officials conducting live broadcasts and selling goods in their own live broadcast rooms).

This year's 618, super anchors have become more low-key.

The number of Li Jiaqi's live broadcasts has dropped significantly, Crazy Brother Yang did not warm up for 618 in advance, Simba bluntly said "there will be fewer and fewer live broadcasts in the future", and Dong Yuhui's face exposure time in the live broadcast room is also decreasing.

In contrast to the cooling of live streaming by experts, store live streaming is becoming more and more popular.

Store broadcast refers to the act of brand officials conducting live broadcasts in their own live broadcast rooms to sell goods. To put it simply, brand merchants conduct live broadcasts themselves, without relying on celebrities, Internet celebrities, and influencers. Data shows that in 2023, the market size of store broadcasts on the entire network will account for 51.8%, surpassing the 48.2% of influencer live broadcasts for the first time, and the proportion of influencer live broadcasts is still on a downward trend. Taobao, JD.com, Pinduoduo, Douyin, Kuaishou, Xiaohongshu and other platforms are increasing their efforts to deploy store broadcasts.

On June 12, Xiaohongshu released a set of latest data at the 618 media conference: the order volume of Xiaohongshu's e-commerce live broadcast room during 618 was 5.4 times that of the same period last year, and the GMV of store broadcasts was 5 times that of the same period last year. In this regard, Yin Shi, the head of Xiaohongshu's e-commerce operations, said that store broadcasts have become a new growth engine for merchants during the 618 period.

In the past year, Xiaohongshu's e-commerce ecosystem has undergone many adjustments. At the beginning of 2023, Xiaohongshu relied on live streaming by celebrities such as Dong Jie, Zhang Xiaohui, and Yi Nengjing to try live streaming e-commerce business; at the end of August of the same year, Xiaohongshu announced that it would go all in on "buyer e-commerce"; in late May this year, according to media reports, Xiaohongshu's merchant operation business and buyer operation business were merged to become the second-level part of e-commerce, and will focus on store broadcasting.

Xiaohongshu, which has previously been struggling with commercialization, seems to have been looking for a breakthrough in the e-commerce field.

1. Store live broadcast, the new growth pole of Xiaohongshu?

Xiaohongshu's road to commercialization has been rather tortuous.

Previously, Xiaohongshu has experienced multiple attempts at monetization, including advertising, self-operated e-commerce, live streaming, note sales, etc., but Xiaohongshu's business closed loop is relatively imperfect, and merchants face many uncertainties, which restrict Xiaohongshu's commercialization process.

Since last year, Xiaohongshu has gradually explored a clear and effective business path in e-commerce. In 2023, Xiaohongshu achieved profitability for the first time - revenue of US$3.7 billion and net profit of US$500 million, mainly due to the high-gross-margin advertising business and e-commerce model transformation. According to official data, the number of merchants on Xiaohongshu with annual transaction volume exceeding 100 million increased by 500% year-on-year, and the number of merchants with annual transaction volume exceeding 10 million increased by 380% year-on-year.

In the rapidly growing e-commerce industry, live streaming is the main growth engine. Yin Shi said: "Live streaming is the most important carrier of Xiaohongshu's e-commerce, and live streaming is an important direction for Xiaohongshu's e-commerce."

Xiaohongshu’s live e-commerce can actually be divided into two forms: buyer live streaming and store live streaming. The so-called buyer live streaming means that buyers such as managers, celebrities, and creators select products that meet their own characteristics and fan needs, and then promote them through live streaming and other means.

Last year, Dong Jie achieved a 90 million yuan live broadcast performance on Xiaohongshu, and Zhang Xiaohui set a record of over 100 million yuan in a single live broadcast. This year, just after the 618 shopping festival started, Zhang Xiaohui's Xiaohongshu live broadcast sales exceeded 100 million yuan. These highly popular talents have injected strong momentum into Xiaohongshu's Dabo (referring to "expert live broadcast").

Since then, Xiaohongshu has begun to actively expand its store broadcasting and try new ways of commercial realization. In May of this year, Xiaohongshu's merchant operation business and buyer operation business were merged to form an e-commerce operation department. During the recent 618 period, Xiaohongshu encouraged merchants to increase the length and frequency of broadcasting, and they would receive corresponding traffic support if they achieved GMV. In addition, Xiaohongshu has also launched a new store broadcasting gameplay, including "store broadcast ranking competition" and "store broadcast new star plan", covering top merchants, small and medium-sized merchants and new merchants.

Gintoki revealed that Xiaohongshu is currently gradually enriching the supply of store live broadcasts, hoping to achieve a state of parallel development of buyer live broadcasts and store live broadcasts.

These actions seem to send a signal that store live streaming will become the focus of Xiaohongshu's e-commerce layout in the second half.

2. Why store broadcast?

In fact, not only Xiaohongshu, many e-commerce platforms are planning store live broadcasts, so 2023 is also called the "first year of the store live broadcast explosion."

There are many reasons for this explosion. First, the cost of store broadcasting is lower. In the past two years, the slot fees and commissions of top anchors and celebrity anchors have been getting higher and higher, but the sales effect is very average, or even dismal.

Faced with high "slot fees", many brand merchants choose to personally create store live broadcasts to reduce the cost of bringing goods.

Secondly, store broadcasts can explain products in more detail. For example, in a live broadcast, the influencer will not give a detailed explanation on a single brand product, nor will they do too much promotion of the brand culture. But in a store broadcast, since the live broadcaster understands their own products and culture better than the influencer, they can provide more detailed explanations, and the user experience will be better. In addition, store broadcasts can also adjust product arrangements and sales strategies based on real-time feedback from consumers.

Although store broadcasts are often not as likely to generate hundreds of thousands of orders instantly as Dabo, they are a more sustainable development model that is more likely to form a fixed fan base and achieve long-termism.

Based on these store broadcast advantages, Xiaohongshu store broadcast has its own characteristics and advantages.

First of all, compared with other platforms, Xiaohongshu’s major feature is the content of notes, which has the characteristics of "planting grass". On Xiaohongshu, merchants can output content by publishing notes to achieve more efficient traffic and customer acquisition. These users attracted by the notes are highly targeted, which helps to improve the order conversion rate.

Secondly, Xiaohongshu has stronger content attributes, a stronger community atmosphere, higher quality private communities, and a closer relationship between brands and users, which has laid a very good user foundation for the growth of store broadcasts. Compared with the mechanical "customer service store broadcasts", Xiaohongshu's content-centered store broadcasts are more attractive and impressive to users.

Finally, compared with other platforms, Xiaohongshu’s store broadcast space has not yet been fully explored. It has a small base and fewer competitors, so there is relatively large room for development for merchants.

Of course, for Xiaohongshu, the layout of store broadcasting is also a necessary strategy. Because relying solely on buyers has certain limitations. After all, Xiaohongshu’s current top anchors are only Zhang Xiaohui, Dong Jie, Wu Xin, etc., and there are no real anchors with tens of millions of fans or hundreds of millions of fans.

3. The road to commercialization is still long

Although e-commerce development is gradually improving, Xiaohongshu must be clearly aware that it still has a big gap with Douyin and Kuaishou, which are also developing content e-commerce.

First, the number of stores and products on Xiaohongshu is not as rich as on other e-commerce platforms. For consumers, the experience of watching store broadcasts is a bit monotonous.

This question may seem unimportant, but it actually has a huge impact. Now many people have formed the habit of "searching" for products on Xiaohongshu and then "buying" them on e-commerce platforms, because quite a number of people still only regard Xiaohongshu as a content platform, with content attributes greater than e-commerce attributes. In the future, only by enhancing the e-commerce attributes in the minds of users through a variety of products can we form an accelerated growth consumption potential on Xiaohongshu, otherwise the development will still be slow.

It should be noted that increasing the richness of products does not mean "mixing up". In fact, some products have good results in store broadcasts on Xiaohongshu, such as some products with high customer unit prices and certain brand characteristics, which also conforms to the characteristics of users on Xiaohongshu, that is, a high proportion of women and high requirements for quality of life. On the contrary, for those daily necessities with high frequency of consumption, store broadcasts on Xiaohongshu have average effects, because consumers are accustomed to placing orders on typical e-commerce platforms and local life platforms.

Therefore, only by carrying out a differentiated product layout can Xiaohongshu break out of the encirclement of rivals such as Taobao, JD.com, Pinduoduo, Douyin, and Kuaishou.

Secondly, Xiaohongshu’s store broadcasts should also improve their functionality. For example, during the 618 shopping festival this year, Taobao and JD’s live broadcast rooms both had price comparison functions, because consumers are now more and more concerned about cost-effectiveness, and price plays an increasingly important role in decision-making, while Xiaohongshu lacks a price comparison function.

Last but not least, in addition to the live broadcast experience, the supply chain, payment, logistics, after-sales and other links behind the store broadcast require greater investment. For example, Douyin has built a complete e-commerce system around these links, thereby improving user experience and accelerating e-commerce growth. At present, Xiaohongshu is slightly weak in these links and needs to be improved.

In addition, Xiaohongshu needs to balance commercialization and user experience. Many users on the Internet have complained that Xiaohongshu's excessive commercialization has eroded user experience.

Originally, Xiaohongshu was a community characterized by sharing real life and shopping experiences. However, due to excessive commercialization, the original atmosphere of trust based on real sharing and community interaction has been weakened, and the unique charm of the community and the trust relationship between users have been affected.

In fact, in Xiaohongshu's system, users are no longer just "audiences" or "consumers", but also producers and interactors.

As the boundaries between producers and consumers blur, a new "people, goods, and place" relationship is formed. Therefore, whether it is Dabo or Dianbo, it should be built on this unique "people, goods, and place". The future direction will also revolve around content quality, personalization, and community atmosphere.

Author: Zhu Ming; Editor: Tang Fei

Source public account: Value Planet Planet (ID: 1092401)