Fighting 618 again: Xiaohongshu’s newcomer test, video account waiting for adulthood

Video accounts are an incremental growth for Douyin merchants, while Xiaohongshu is a fresh source of income for Tmall merchants. What decisions will these two new forces make in this year's 618 battlefield?

618 is no longer a new thing for Xiaohongshu and Video Account, the second-tier e-commerce companies.

This year is the second time for Xiaohongshu and the third time for Video Account.

In the current e-commerce landscape, the biggest commonality between Xiaohongshu and Video Account is that they entered the market late, are still small in size, and are in urgent need of creating benchmarks. For both, "establishing" is the key; but for Alibaba, JD.com and other established e-commerce companies, "breaking" is the key, so canceling the pre-sale mechanism and focusing on "ready-to-sell" has become the biggest variable for the latter. In addition, the battle line for 618 this year is particularly long, and established e-commerce companies have moved the first wave of promotions forward to May 20.

The biggest difference between Xiaohongshu and Video Account is the time of entry. Xiaohongshu, which "jumped the gun" to grab the meat in the e-commerce market, was the first to release its battle report on May 21st - the GMV of the first day of live broadcast was 6 times that of the same period last year; Video Account was still "later", choosing to start the "618 Good Products Festival" on May 31st.

Low prices are always the core of the 618 promotion. The difference between platforms is that Alibaba, JD.com and Douyin want to deepen their user base to prevent diversion, while content e-commerce platforms such as Xiaohongshu and Video Account want to compete for users to cultivate habits and promote conversion. The overlap of users on both sides is getting higher and higher, so which side they choose to place orders may be the main focus of the 618 promotion node.

For example, for many emerging home design brands in China, Tmall and Xiaohongshu have become the standard of their online channels, and shuttling between the live broadcast rooms of the two platforms is also the norm during the 618 promotion. It is also not difficult to see from the recent promotion cases of Video Account that the home textile merchants who once achieved brilliant results in Douyin e-commerce have begun to leverage greater growth on Video Account, and both sides of the hand are flesh.

In order to have a source of fresh water, in the current precisely fragmented consumer market, Video Account is the incremental source for Douyin merchants, and Xiaohongshu is the fresh water for Tmall merchants.

01 Xiaohongshu, the first big test for newcomers

"Live streaming e-commerce is a tough job." Several Xiaohongshu merchants told Blue Hole Business that the overall e-commerce environment is under great pressure this year. It is expected that this year's 618 will be a market for precise and dispersed consumption, that is, users' consumption decisions will be made by comparing multiple platforms and merchants, taking into account multiple dimensions such as demand and price, rather than being exclusive to a certain platform and brand.

Perhaps it is precisely this kind of pressure that has led Xiaohongshu to take a further step in "grabbing meat" in the e-commerce market this year compared to its rapid progress in the e-commerce market last year.

Determination and ambition are first manifested in people. At the end of last year, it was rumored that Xiaohongshu would launch an IPO in Hong Kong in the second half of this year. Xiaohongshu immediately denied the rumor; but since then, Xiaohongshu has undergone frequent personnel changes. First, Wu Yingbing, the former head of Didi's supply and demand strategy, and Zhang Rui, the head of the ride-sharing business, were introduced to strengthen e-commerce and commercialization. Later, Ye Heng, the former head of Kuaishou's e-commerce products, took the No. 1 position in e-commerce C-end products.

This year is Xiaohongshu’s second time participating in 618, but it is also the first big test for the new e-commerce team. People who understand e-commerce are in place, and real money and resources have been invested. Whether the buyer e-commerce can succeed depends on this year’s 618.

Lily, the founder of the domestic home design brand Zhiyin, has been shuttling between the live broadcast rooms of Tmall and Xiaohongshu every night recently. The live broadcasts often last until 12 midnight. Zhiyin's Xiaohongshu live broadcast room often appears at the top of the brand list.

The Zhiyin brand was founded 11 years ago, and it started its online channel from Taobao. In order to break through the circle and reach a more precise group of people, Zhiyin has continued to publish notes on Xiaohongshu since 2021. In 2023, Xiaohongshu began to bet on "buyer e-commerce." Zhiyin officially launched live streaming on Xiaohongshu, and soon achieved a single live broadcast with over one million views.

Zhiyin’s 618 event homepage on Xiaohongshu

From chairs costing hundreds of yuan to leather sofas costing tens of thousands of yuan, the prices of Zhiyin's home furnishing products naturally meet the consumption characteristics of Xiaohongshu's population: niche, high-priced, and mainly mid-to-high-end brands. At the same time, Zhiyin has also made layouts on Douyin and Video Accounts, but it is just a simple distribution of content because "energy is limited, so we can only focus on one thing at a time and do it slowly."

And what is the difference between Tmall and Xiaohongshu during this year’s 618?

The most intuitive answer is often price.

Take the Mobius chair, a hit product of Zhiyin, for example. The price is the same across all channels, but the prices users see on their phones are different because the platforms have their own preferential mechanisms, such as Tmall's 88VIP members and the 40-yuan new user coupons subsidized by Xiaohongshu. Therefore, for non-Tmall 88VIP members, buying a Mobius chair on Xiaohongshu is about 40 yuan cheaper, which shows the strength of support.

"Whether it's Tmall or Xiaohongshu, Zhiyin uses it as a platform to communicate design concepts with users." Lily believes, "As a design brand, especially an innovation-driven design brand, we should focus on doing the products and things we are good at."

Over the past year, the home furnishing sector has become a fast-growing hot area on Xiaohongshu.

The most typical case is the amateur blogger @一颗KK. Last year, Xiaohongshu participated in the 618 for the first time. As a home furnishing buyer, @一颗KK achieved a GMV of 20 million in a single live broadcast. During the subsequent Double Eleven period, she joined forces with many domestic home furnishing design brands to participate, and the GMV exceeded 100 million. Many brands also had sales of over one million or even over 5 million. Zhiyin is one of them.

It was with the encouragement of @一颗KK that Lily transformed from a quiet person to an energetic anchor. Her single live broadcast received over one million views, and Zhiyin was selected as one of the annual rise100 e-commerce platforms on Xiaohongshu. She concluded, "You have to endure the loneliness of talking to the air in the early stage, and persevere through the fruitless planting period (especially for low-frequency consumer products such as furniture), and finally usher in sales conversion."

Having Xiaohongshu in one hand and a Tmall store in the other has now become the standard for many 618 merchants.

Xiaohongshu's high average order value has undoubtedly attracted merchants who are eager to make money. Xiaohongshu's users are willing to pay for high-quality products with unique aesthetics. An e-commerce practitioner revealed to "Blue Hole Business" that the average average average order value of his company's products on Xiaohongshu live broadcasts is 1,000+, while the average order value on Douyin during the same period is often around 400+.

"The current traffic distribution pattern of Xiaohongshu is very clear. The live broadcast room has become the main battlefield for e-commerce transactions. Brands need certain profits, and the revenue gap between those who do buyer live broadcast e-commerce and those who don't is often seven or eight times." A mid-level Xiaohongshu blogger revealed to "Blue Hole Business".

During the Double Eleven promotion last year, Xiaohongshu was also the first to get ahead, showing off its buyer Zhang Xiaohui's live broadcast sales of over 100 million yuan; during this year's 618, Xiaohongshu's desire for speed was still obvious, and it was the first to release its battle report: the number of live broadcast orders on the first day of 618 was 8.2 times that of the same period last year, the GMV of live broadcast transactions on the first day was 6 times that of the same period last year, and the number of purchasing users in the live broadcast room was 7.4 times that of the same period last year.

But the glamorous numbers cannot conceal the anxiety behind them, especially during big promotions like 618 when traffic is expensive. Who will be the next mid-level buyer on Xiaohongshu to grow up like @一颗KK?

Xiaohongshu's content product characteristics mean that its buyer e-commerce will take a path that is different from traditional e-commerce platforms and short video platform models, and this is destined to be an unrepeatable commercialization path.

02 Video Account, still Buddhist?

Creating benchmark samples is the top priority for every live e-commerce in its early stages. From a video live e-commerce case promoted by WeChat Open Class in May, we can see the gap between it and Douyin in terms of sales capabilities.

"Video Account "Self-broadcast + Da-broadcast" is really good! Mercury Home Textiles sold 80 million in half a year." This WeChat open class clearly conveys only two messages. One is the method - "Self-broadcast + Da-broadcast"; the other is the result - in the second half of last year, Mercury Home Textiles sold 80 million, with an average customer unit price of more than 200 yuan, becoming the TOP merchant in the home textile category in the video account.

Mercury Home Textiles is regarded by Video Account as one of the first businesses to "take the plunge" on the platform. This case is an achievement for the current Video Account, but from an industry perspective, it may not be as good as Douyin's ability to bring goods in 2022. Mercury Home Textiles has already "taken the plunge" on Douyin.

On the eve of 618 in 2022, Mercury Home Textiles achieved a total sales of 59 million during the Douyin Super Brand Day by cooperating with celebrity live broadcast rooms, ranking first in single-brand sales in Douyin's e-commerce consumer electronics and home furnishing industry. The store's new customer rate reached 93.3%, and brand-related word search UV increased by 485% month-on-month.

From the methodological point of view, Mercury Home Textiles uses self-broadcasting + Dabo on Douyin and Video Account, but the results are obviously different. In other words, the sales of 80 million in the second half of 2023 and the sales of 59 million in one month of activities in 2022 can be regarded as the most intuitive comparison between the two companies in terms of their ability to bring goods.

Mercury Home Textiles' video account live broadcast interface

What is more fundamentally reflected is the forward-looking nature of Mercury Home Textiles, which first embraced Douyin and then entered the video account. It began to settle in Douyin in 2020, and after more than two years of cultivation on Douyin, it achieved a GMV of 59 million during the event. Today, Douyin and Video Account are both one of its e-commerce customer acquisition channels. In 2023, Mercury Home Textiles' operating income was 4.21 billion, of which the e-commerce channel revenue increased by 11.7% year-on-year.

This year's 618 is the third time that Video Account has entered the shopping festival, but it is a little late compared to platforms such as Taobao, JD.com and Xiaohongshu. The Video Account team cannot be unaware that the pre-sale period of major e-commerce platforms for 618 in 2023 has been advanced to around May 23.

On the morning of May 21, the second day after the war had already started, Tencent released this year's Video Account 618 Promotion Plan. The event lasted for 19 days, from May 31 to June 18. Official rewards included a reduction in the technical service fee rate to 1%, generator growth card incentives, GMV target task incentives, etc. Participants included Video Account stores and expert accounts.

At this time, Xiaohongshu has already produced a successful start report; Tmall has started the first round of spot sales the night before; three days later, Douyin Mall’s 618 Good Products Festival will also be fully launched. E-commerce platforms are eager for change and have extended the battle lines of major promotions, while Video Account has maintained its past slow attitude.

Amid the clamor of the 618 promotion by major e-commerce companies, are video accounts not in a hurry? The answer is obviously no.

A week before the release of the 618 promotion plan for Video Account, Tencent Advertising officially announced the investment plan. On June 18 this year, celebrity Christy Chung will be a guest on Video Account to create a 618 live broadcast feast, "the total live broadcast time is not less than 10 hours", trying to drive brand sales and purchases through celebrity influencers. Tencent Advertising's move is to attract merchants from multiple industries such as clothing, sports, beauty, and food to occupy the pit.

More importantly: the importance of Video Account to Tencent is self-evident, and the task of "supporting the family" has become a heavy burden on its shoulders.

At the end of last year, "Latepost" disclosed that the GMV (gross merchandise volume) of WeChat Video Account e-commerce was around 100 billion yuan. Tencent will further expand the team of Video Account e-commerce business: in addition to the Video Account live broadcast team responsible for front-end products, the WeChat payment team will also join the construction of Video Account e-commerce, participate in the expansion and operation of various industry categories, experts, and customers, as well as the construction of basic functions such as trading products.

The real data of the commercialization of video accounts is being unveiled. In 2022, Tencent's performance declined for three consecutive quarters. Tencent mentioned the revenue of video accounts in its financial report for the first time, which became one of the few highlights in the financial report. At that time, the revenue of video account live broadcast service became one of the core factors for the growth of Tencent's value-added business, contributing 29.1 billion in revenue.

In the second quarter of last year, Tencent announced the advertising revenue of Video Account for the first time in its financial report - more than 3 billion. As WeChat users continue to develop the habit of shopping on Video Account, e-commerce is undoubtedly one of the important reasons for driving the advertising revenue of Video Account. However, Tencent has not disclosed the commercialization data of Video Account separately since then. Video Account, together with mini programs and official accounts, contributed 26.5 billion in advertising revenue to Tencent in the first quarter of this year.

This year’s 618 is the third time that Video Account has set out.

As one of Tencent's fastest-growing businesses, the performance of Video Account is obviously a key test to measure its e-commerce capabilities. Previously, a Tencent insider revealed that the target growth rate of Video Account live broadcast this year is 100%. In a red ocean market where e-commerce companies are chasing low prices, the private domain attributes of Video Account e-commerce are one of the keys to solving the problem.

But only when Tencent chooses to announce the GMV of Video Account e-commerce, will Video Account truly come of age.