When doing business in 2024, how can small and medium-sized businesses make good use of Xiaohongshu?

This article focuses on the three major pain points of small and medium-sized businesses in operating on Xiaohongshu. Through case analysis, it explains in detail how to solve these problems and the marketing paths with potential on Xiaohongshu. Come and learn.

There is a saying that goes, "The origin of Chinese business is husband-and-wife shops."

The mom-and-pop shop described in this sentence is actually the embodiment of many small and medium-sized businesses and ordinary people's entrepreneurship: they may be the second generation of factory owners seeking transformation, entrepreneurs who have finally run a successful business model after years of hard work in a certain field, or even college students who knit beautiful scarves and socks in their dormitories to earn some living expenses.

It is these people who together constitute an important piece of the Chinese business puzzle. While many large companies and big brands are occupying screens of all sizes with high budgets, they are also looking for their own development opportunities.

The Knife Skills Research Institute has noticed that a group of small and medium-sized businesses and ordinary entrepreneurs are breaking through Xiaohongshu : the startup clothing accessories brand "UOOSEE" has achieved an ROI of more than 3 on Xiaohongshu; the cutting-edge domestic fragrance brand "Fu Ke" has launched the Oriental Seal Carving series of incense hangers, a hit product, within 3 months of entering Xiaohongshu; "Xingwei Illustrations", which focuses on education and training, has achieved a 200% increase in annual revenue through Xiaohongshu.

This is due to the fact that most users on Xiaohongshu have the willingness to share, good aesthetics, and the ability to consume. Many of their sincere sharing of an altruistic nature has also become an important material for brand front-end link user insights, forming a closed loop of consumption.

In an interview with Xiaohongshu by Daofa in 2021, they mentioned the concept of "traffic equality", that is, the platform will not simply allow content with high traffic to run faster. This logic is very friendly to small and medium-sized brands with limited budgets; and in August of this year, Xiaohongshu began to promote "account and store integration". As long as you open a professional account, you can "open a store with zero threshold". The merchant's store and account are merged to shorten the user transaction chain. This is more friendly to small and medium-sized merchants, and has also allowed many brands of this type to put their first entrepreneurial stop on Xiaohongshu.

However, how should small and medium-sized businesses make good use of Xiaohongshu? Is there any relevant methodology that can be used as a reference?

Daofa has conducted research on the above-mentioned brands that are at different stages of development and in different categories, and used their experiences to try to explain how small and medium-sized businesses and ordinary entrepreneurs can "make money decently" on Xiaohongshu.

01 Three major bottlenecks for small and medium-sized businesses: content, bloggers, and budget

As a small or medium-sized business or individual entrepreneur, when entering a new platform, you often face these three pain points:

First, it is difficult to independently produce high-quality content. Each platform has its own tone, which requires the team to spend some time exploring. At the same time, most of Xiaohongshu's users are located in first- and second-tier cities, have received a high level of education, and have stricter requirements for content quality.

Second, it is difficult to find a suitable blogger. When choosing a blogger, there are many dimensions to consider. What is the blogger's daily data? Does the style match the brand? Can you find a suitable scenario around the product and create high-quality content? After a set of screening, the right person may be too expensive, and small and medium-sized businesses simply cannot afford it.

Third, the budget for traffic investment is low. Even if you produce good content and find the right people, but there is no promotion budget, the traffic will not flow, and even if it is gold, it can only shine in a small range.

The specific business situation may be different, but these key points are what brands at any stage will encounter when entering a new platform for development.

For example, for some start-up brands, the overall project funds are very limited, and the focus of the early work will definitely be on the product, and marketing promotion will not be given high priority. Therefore, you need to be very cautious when choosing investment areas.

Although some brands have produced hit products after operating for a period of time, the immediate problem they face is how to make the hit products continue to be popular and develop and promote more new products based on the hit products to keep the brand popular.

More are another large category of small and medium-sized businesses, that is, businesses that were originally based on offline operations, but due to the shrinkage of offline traffic in the past two years, they have to look for growth online. As a novice online player, it needs to change its thinking, find content that can quickly break through the circle online, and connect the original offline resources with the online; at the same time, for mature brands, while pursuing sales, they also need to build their brand image.

02 How did they do it from planting grass to business growth?

In fact, the "crowd reverse funnel" model at the bottom of Xiaohongshu's commercialization is very friendly to small and medium-sized businesses and start-up brands with limited budgets, because the core logic of the "reverse funnel" is to find the core population, break the circle layer by layer, and use small steps and fast delivery methods to save budget.

For example, the clothing and accessories brand founded in June 2022 is a light sports brand that focuses on sustainable materials . Its current main products are bags made of environmentally friendly materials such as used bicycle inner tubes and waterproof awning surfaces. The products are novel and also have certain educational costs.

Despite the limited budget, UOOSEE started by planting content , finding popular OOTDs, unboxings, and fitness/cycling/hiking lifestyle bloggers on Xiaohongshu to co-create, and successfully introduced the dual-purpose tire bag, a product that meets a variety of usage scenarios, into the light outdoor product category, radiating from the core circle to the outside layer by layer.

Among the brand’s popular articles on Xiaohongshu, the top three content tags are ootd, Lu Chong, bag recommendations, etc. Although most of the collaborators are mid-level influencers, many articles have received thousands of likes.

For example, the case of the emerging brand "Fu Ke" is worth reference for individual entrepreneurs with a certain traffic base.

As a fragrance brand inspired by oriental poetry culture , its founder is a designer by profession. His family business also worked as a brand OEM. He was originally a small KOL on Xiaohongshu with nearly 10,000 fans. Therefore, the brand chose to launch its first product on the founder's personal account, amplifying the founder's basic traffic to complete the cold start; two months later, the brand opened a corporate store and started to produce content.

Its popular product "Oriental Seal Carving Series Incense Hanger" - it adopts the design style of "garden round window" and is made by hand-carving in three dimensions. Thanks to the visualization ability of the incense hanger series, Fuke has created a set of unique oriental cultural content on the Xiaohongshu homepage based on the overall shape, three-dimensional carving, and packaging color matching of the product: for example, the Longjing Green Tea Incense Hanger is matched with a magazine cover in the same green series as the background, and the yellow incense stone in the shape of osmanthus is added with a filter with warm autumn colors, etc.

On this basis, the brand uses the Juguang platform to increase traffic promotion for high-quality content, so that high-quality content can reach TA people in a targeted manner and improve the ROI of the delivery; and it also positions the search to obtain more long-tail traffic. This combination of punches not only won a large number of C-end consumers for the brand and attracted users to purchase and place orders; it also opened up the brand's B-end business. Fuke's products can be seen in many scenic spots across the country.

Representatives of offline business transitioning to online include Xingwei Illustration: founded in 2009, it is an illustration training institution for art enthusiasts and art practitioners.

The most taboo thing when changing brand strategy is to have a makeshift team that may disappear one day. In response to the dual needs of business transformation and brand building, Xingwei Illustration chose to use the official matrix account to establish its brand communication image.

The four major accounts under its umbrella, Xingwei Illustration, Xingwei Illustration Teacher Wei, Xingwei Illustration Class, and Xingwei Commercial Illustration, carry four types of mainstream content: brand promotion, founder's personal story, practitioner experience sharing, and student homework display. They also amplify high-quality content through the commercial traffic of the spotlight platform and generate highly praised notes. If you search for the keyword "Xingwei Illustration" on Xiaohongshu, you will find that the most popular content is all official brand content, which can bring a sense of trust to users.

At the same time, the Juguang platform can also use customer data collection to help brands acquire more potential users. Under the highly popular content of Xingwei Illustrations, the most commented by users is "asking for price", which can prove its traffic-generating effect.

It can be seen that whether it is a start-up brand, a new brand that has already produced a hit product, or a mature brand that has been established for many years and seeks business innovation, it can find the corresponding business tools and supporting strategies on Xiaohongshu to grow its business.

03 In the era of content-centric marketing, what opportunities are there on Xiaohongshu?

Regarding the future trend of marketing, Daofa has a guess that more than 50% of all brand marketing in the future will need to be delivered through content . Therefore, brands need to pay more attention to content-driven communities.

At present, most small and medium-sized businesses have not invested much in Xiaohongshu, and there is still potential to be tapped in terms of how to use platform tools to improve delivery efficiency and how to better use the community atmosphere to complete front-link insights.

Brands can at least think about how to make better use of Xiaohongshu from the following three aspects.

First, establish more complete user touchpoints and increase investment at the right time.

In the interview, UOOSEE mentioned that since it currently has fewer product SKUs, the frequency of store broadcasts is not high. However, because the product raw materials have their own stories, it plans to further increase its efforts in brand-owned content, expert content and expert live broadcasts in the future. "As long as the ROI is positive, the budget for traffic investment will definitely increase, and Xiaohongshu will also be a very important channel for us next year."

Second, in addition to promoting content, make better use of Xiaohongshu’s front-end link ecology.

Because Xiaohongshu is the front link of consumption, the user insights and data it brings are more forward-looking. The data of each stage such as user notes, interactive behaviors, etc. are deposited on the site, so it can not only be regarded as a content seeding platform, but also as a product insight team.

Fuke stated that the next step will be to develop new products around the user scenarios on Xiaohongshu . Based on the existing "incense hanging" hot products, it will also launch new products such as candles, flameless aromatherapy, car aromatherapy, essential oils, etc.; Xingwei Illustration also opened a larger traffic funnel when its business model transitioned from offline training to a combination of offline and online, and collected the needs of potential online users more widely.

In addition, in the past six months, Xiaohongshu has been making frequent commercial moves, not only promoting e-commerce featuring buyers, but also announcing the opening of a closed transaction loop . These two points are actually opportunities for merchants.

Buyers on Xiaohongshu are people who understand products and user needs. They are distributed in various industries and can connect users and products. More importantly, they can use scenario-based content to discover users' purchasing needs. For some brands with strong product power but low recognition, buyers can better explore the value points of such brands, and they are often willing to grow together with small and medium-sized businesses and start-up brands.

At present, UOOSEE has reached its first cooperation with sports buyer "Qian Qian Ma A Amanda". The brand said that the other party has a good eye for product selection and can be attracted by the products. On the one hand, the cost is relatively low, and on the other hand, it is also a recognition for the brand.

At the Xiaohongshu WILL Business Conference that just ended, Xiaohongshu also released the "1+3" open product matrix, which can directly connect Xiaohongshu's seeding data with the conversion data of various platforms. In the past, there was no back-end data for verification and analysis of seeding on Xiaohongshu, and it was difficult to set goals, but now brands can truly get first-hand data from customers and third-party data from the platform to see the business in the entire domain.

Changes in the platform are opportunities for brands. There is still a lot of room for brands to explore in terms of how to make better use of Xiaohongshu.

04 Analyst Comments

In fact, the opening sentence, "The origin of Chinese business is mom-and-pop stores," also appeared in the internal speech of CEO Mao Wenchao on the 10th anniversary of Xiaohongshu. He also mentioned several keys to the future of Xiaohongshu: development first, people-oriented, and small is big.

These three points are actually well implemented in Xiaohongshu's idea of ​​helping small and medium-sized businesses develop: do not ignore their development potential due to their current size, see the real people and stories behind the businesses, and provide corresponding tools and ecosystems in the entire chain of their business, including inspiring inspiration, track selection, product planning and promotion, word-of-mouth observation and maintenance, to accompany their business growth on the platform.

Daofa also hopes that small and medium-sized businesses can seize opportunities and find their own certainty in the complex business world.

Author: No Sugar

WeChat public account: Knife Skills Research Institute (ID: DigipontClub)