Xiaohongshu’s benefits are not lost to outsiders

This year's Double Eleven battle is different from the previous years' three giants, with more and more platforms joining the competition, including Douyin, Kuaishou, and Xiaohongshu, all of which adopt different strategies to get a piece of the pie. Xiaohongshu has also invested heavily in live streaming, and unlike before when it was just a platform for seeding products, it has begun to restrict off-site traffic and transactions, so that the water should not flow to outsiders.

Xiaohongshu, which has been preparing for Taobao and JD.com’s Double Eleven for many years, is finally fighting for itself.

On the eve of Double Eleven, Xiaohongshu launched the "What to buy on Xiaohongshu on Double Eleven" campaign. Interestingly, the precautions for participating in the event include that the main text needs to mention "XX can be purchased in Xiaohongshu mall or XX live broadcast room", the shared live broadcast room must be a live broadcast room broadcast on Xiaohongshu, and the note content cannot be diverted to other platforms.

Other platforms are obviously e-commerce platforms such as Taobao and Pinduoduo, as well as private domains such as WeChat.

"The general direction of Xiaohongshu now is that all matters related to Xiaohongshu must be completed on Xiaohongshu," explained Valen, a brand operator with six years of experience in operating Xiaohongshu.

Violations, traffic restrictions, and being locked in a small black room are the collective nightmares of Xiaohongshu bloggers. A home blogger with 3,000 fans on Xiaohongshu told Zizibang that she was "locked in a small black room" for diverting her fans to WeChat and was not unblocked until 7 days later.

Under the rules, bloggers and fans have reached a certain tacit understanding. For example, "🍑" represents Taobao and "🎵" represents Douyin. Some bloggers will also carefully add a "." in the middle of the brand name to separate the complete brand name to prevent it from being retrieved by the platform.

Regarding the interconnection, establishment and severance of relations between platforms, Alibaba and Douyin, Alibaba and WeChat, and WeChat and Douyin are the focus of outside attention. In fact, the relationship between Xiaohongshu and its investor Alibaba is equally delicate.

In the early days, Xiaohongshu was a free traffic pool for Taobao, Pinduoduo and other platforms. Of course, it was just a place for seeding, the link could not be redirected and the conversion effect was unknown. In August 2020, Taobao links appeared in the live broadcast rooms of influencers. On the eve of Double 11, Xiaohongshu began internal testing to support the jump to Taobao links in the cooperation notes.

The cooperation lasted only one year before Xiaohongshu cut off the external links. In August of the following year, Xiaohongshu implemented the "account and store integration" strategy and at the same time closed the permissions for Taobao links in the notes for selling goods. Xiaohongshu stepped up its crackdown on illegal marketing and soft advertising notes. Xiaohongshu responded to the media at the time that it would close the permissions for external links in the notes for selling goods, and the external link function for live streaming sales would remain unchanged. "Internal and external links in notes affect the user experience, so they were cancelled."

Xiaohongshu has always had strict restrictions on off-site transactions.

In July, Xiaohongshu officially announced that due to the lack of platform protection for off-site transactions, user rights were damaged and even fraud occurred. Xiaohongshu will strictly deal with malicious transaction diversion behaviors, and in serious cases, the account will be blocked.

For Xiaohongshu in the past, whether or not to create a closed transaction loop was not a question of willingness, but a question of ability. After all, no platform does not want to keep transactions within its own system.

Xiaohongshu is in the traffic business. It sells traffic to Taobao and Pinduoduo, and it also sells traffic directly to merchants in its own closed-loop transactions. Selling traffic directly to merchants not only saves an intermediary link, but also allows it to have a higher voice.

Douyin has walked a similar path before. In 2019, LatePost reported that Douyin signed a 7 billion yuan annual framework agreement with Taobao. In October of the following year, Douyin cut off external links, and products from third-party sources would no longer be supported in the live broadcast room.

Interestingly, on the eve of Double Eleven, Taobao announced its cross-platform circle of friends lineup, which included Tencent WeChat advertising, Bilibili, Zhihu, and Weibo, but missing Xiaohongshu.

Dong Jie's slow live broadcast has opened a good stage for Xiaohongshu's e-commerce. Xiaohongshu has become more confident in closing the door to its competitors, and this Double Eleven is clearly the moment for Xiaohongshu to realize its greater e-commerce ambitions.

Gintoki, the person in charge of Xiaohongshu's live broadcast, announced the latest Double 11 data of Xiaohongshu. As of November 3, the single-game sales of Gigi Lai and Dong Jie exceeded 100 million yuan respectively, and a large number of buyers with single-game sales exceeding 10 million yuan have also emerged.

However, a brand merchant said that compared with Taobao and Douyin, Xiaohongshu's potential energy is still relatively small. Except for Dong Jie and Zhang Xiaohui, the conversion performance of other anchors' live broadcast rooms is average.

Xiaohongshu still has a long way to go from directing traffic to e-commerce platforms to building a mature e-commerce platform.

01

"E-commerce professionals should take a look at Xiaohongshu again," Valen wrote on a social media platform in June this year. The background at that time was that after Dong Jie, Zhang Xiaohui, the second benchmark figure in Xiaohongshu e-commerce, appeared.

Compared with the beginning of the year, the situation of Xiaohongshu's e-commerce is much better. It has more cases that have gone viral, gained more discussion, and achieved higher transaction volume.

Liu Danyao, who started shopping on Xiaohongshu Welfare Club in 2017, told Alphabet List that she finally placed an order on Xiaohongshu again recently, four and a half years after her last shopping on Xiaohongshu.

These four years were obviously the four years of uncertainty for Xiaohongshu's e-commerce, and also the four years of the rise of Douyin's e-commerce.

In an article titled "Is Taobao's goal about to be achieved by Zhang Yiming and Su Hua?", Alphabet wrote that in 2016, Alibaba pointed out that Taobao's future development direction is to move from a universal commodity market to a super consumer media. In the same year, Taobao began to focus on the content, community and local life of Taobao, and launched products such as live broadcasting. From a content perspective, Douyin and Kuaishou are closer to "super consumer media" than Taobao because they are naturally media.

In fact, Xiaohongshu also has the potential to become a consumer media.

It is rich in content and has many active users, but it has chosen shelf-based e-commerce and self-operated e-commerce in the e-commerce path. This path has obviously created an artificial gap between Xiaohongshu's advantage areas of content and community and e-commerce, preventing Xiaohongshu from bringing out its content and community advantages.

Why did Liu Danyao and others return to Xiaohongshu to place orders? Obviously, something has changed.

Zhu Yin, the owner of Shanghai advertising company "Caxiangzohuo", also found that its clients have more demands for marketing on Xiaohongshu. This is related to the fact that Xiaohongshu is one of the few platforms that still has good traffic growth.

"In the past year, Xiaohongshu has snatched user time from other platforms," ​​Zhu Yin said. "Xiaohongshu has promoted its e-commerce department to a first-level department, and the infrastructure of the entire platform has also been improved a lot."

Xiaohongshu seems to have figured out how to build its own e-commerce closed loop, from content directly to transactions, rather than switching from the content sector to the e-commerce sector. A few days ago, Xiaohongshu’s self-operated welfare club officially stopped selling goods and will close the store next month.

In fact, after Xiaohongshu cut off the external links of its notes, it also cooperated with Taobao for a period of time. In October 2022, Xiaohongshu and Taobao Alliance launched the "Little Red Star" project. After the brand released the recruitment plan on Taobao Alliance, agents or influencers could claim the relevant needs and monitor the effect of converting Xiaohongshu into Taobao transactions. However, the product has been suspended.

Regardless of the reason, it is obvious that Xiaohongshu is accelerating the improvement of the e-commerce closed loop.

02

This Double Eleven became the first Double Eleven for Xiaohongshu after its transformation into an e-commerce company.

According to data released by Xiaohongshu, during the Double 11 period, fashion buyer Duantouhua brought in more than 33 million yuan in sales in a single session; home furnishing buyer Miss Yeshizi brought in more than 17 million yuan in sales in a single session, which was several times higher than the 2 million yuan she brought in three months ago; fashion buyer Akikiyu, who has only 60,000 fans, brought in 10.71 million yuan in sales in a single session.

Some changes are happening on Xiaohongshu.

At the end of August this year, Valen began to help a clothing merchant open a Xiaohongshu store. To her surprise, the store started to receive orders on the third day of operating the account, with monthly sales reaching more than 500 orders.

This result is much higher than the stores they launched on Taobao at the same time, and the cost paid by merchants on Xiaohongshu is only a few thousand yuan in traffic fees and commissions for cooperating with Xiaohongshu buyers.

Zhu Yin believes that small B brands with good aesthetics are very suitable for the growth of Xiaohongshu. "It can be said that they are small white brands with their own style." These brands meet the aesthetic needs of Xiaohongshu users and can find their own target user groups.

Some niche demands can also be met on Xiaohongshu. "Xiaohongshu can serve those niche demands that Tmall cannot meet," said Valen, such as baby clothes.

Valen mentioned that the advantage of operating Xiaohongshu is that the operating threshold is low, orders can be placed even with 0 or 100 fans, and the user base is of high quality, so you can avoid the fierce price war on Xiaohongshu.

"What Xiaohongshu buyers are actually selling is personal aesthetics, taste, attitude and insights towards life," Xiaohongshu blogger "Two Puppies Six" once said. In this way, the products they sell have added value and they avoid the internal price wars of e-commerce platforms.

At the same time, for small brands, the cost of marketing and promotion on Xiaohongshu is much lower than that of mature brands. Unlike the live broadcast rooms of top anchors that require slot fees and commissions, there are a large number of KOCs with thousands or tens of thousands of fans on Xiaohongshu. The cooperation form of bloggers with thousands of fans is usually exchange, that is, the brand sends the product for free, and the fee for bloggers with tens of thousands of fans is not high. Now is the bonus period of Xiaohongshu's live broadcast, and the platform will also provide traffic support for store broadcasts and buyers' live broadcast rooms.

Zhu Yin discovered that at this stage, Xiaohongshu will provide a lot of traffic support to the live broadcast room. For example, if you do a live broadcast on Xiaohongshu about your life after quitting your job, even if you don’t sell any goods, you can still get very high traffic support.

The above-mentioned home blogger told Alphabet List that it can be seen from the buyer cooperation center that the categories with relatively high sales on the product list last month were mainly beauty, clothing and other categories.

Valen observed that home furnishings are another category that is growing rapidly on Xiaohongshu. "This is related to the community hot spots of the platform. Recently, Xiaohongshu has also carried out some marketing activities in the home furnishing category."

The home furnishing category is obviously a market that Xiaohongshu wants to take over. This market has high average order value and ample advertising budgets for top brands. Taking over the home furnishing category will help increase Xiaohongshu's overall e-commerce scale.

03

"Today's Xiaohongshu is the Douyin of three years ago," some marketing mentors posted on Xiaohongshu, saying that they want to call on more people to join.

On the eve of 618 in 2020, Zhang Shuai, the founder of Douyin e-commerce beauty service provider Wanghongmao, told Ziyibang that traffic platforms are "biting back" e-commerce platforms. "In the past two years, traffic platforms have not yet built an ecosystem for brands and service providers. Now they have larger traffic. Once the ecosystem is built and the e-commerce closed loop is established, they will definitely bite back Taobao."

Now the prediction has come true. According to the report "Beauty: Douyin sales growth in May remains strong, domestic brands continue to differentiate" released by Capital Securities, in May this year, Douyin's cosmetics GMV exceeded Taobao Tmall for the first time.

But can Xiaohongshu have such great potential? At present, it may be far from Douyin.

Liu Danyao returned to Xiaohongshu to place orders, but she only ordered one item. Most of her consumption activities remained on Taobao, JD.com, Pinduoduo, and Douyin.

Compared with mature commercial systems such as Taobao, JD.com, Pinduoduo and even Douyin, Xiaohongshu's commercial infrastructure is still in its early stages.

"Xiaohongshu's e-commerce department and live broadcast department have just been reintegrated. When merchants encounter problems, they often don't know which department to contact or who will handle the problem," Valen mentioned. Currently, the operations (xiaoer) provide more help to merchants in matching buyers and establishing relationships with celebrities, analyzing policies, and submitting traffic support. "Merchants who have just settled in need to find information and resources on their own, and there are more information ports." In addition, because the community and e-commerce belong to two different business departments, there are often departmental barriers to collaboration between the two.

Compared with Taobao and Douyin, Xiaohongshu has always been a few steps behind in e-commerce operations. During the e-commerce transformation period, its policies often change. For many merchants, Xiaohongshu's e-commerce is now in uncertainty, and operating Xiaohongshu is equivalent to taking a gamble.

Zhu Yin believes that the current stage is more suitable for the growth of small B merchants, because the scale of e-commerce is limited and big brands will not use Xiaohongshu as the main sales channel.

This situation will also limit the scale and volume of Xiaohongshu's e-commerce. Xiaohongshu has obviously also seen this situation.

At a recent Double 11 media communication meeting, McQueen, the head of Xiaohongshu's merchants, stated that the first wave of store broadcast merchants on Xiaohongshu were more like managers. During the Double 11 period, brand-type merchants began to participate more and more in store broadcasts.

There are a large number of small bloggers on the platform who are also confused. A Xiaohongshu blogger with thousands of fans told Zizibang that when working with brands, the brands would suggest not to put links in the notes first, because recently putting links will be restricted, and after putting links, the platform's assessment of the notes will change from interaction volume to conversion data, "It is best to wait until the data is stable before putting links." This makes small bloggers dare not easily try to put links in their notes, "When there are fewer fans, it is more important to focus on data rather than monetization."

Feedback from users is also mixed. A Xiaohongshu user found that recently there are a lot of fashion bloggers doing live streaming to sell goods. Some anchors are more attractive than videos, but some small anchors have poor lighting, almost no scenery, and perfunctory explanations. "Some small anchors should not do live streaming."

There is no doubt that Xiaohongshu e-commerce is in its bonus period. There is attractive growth here, attracting merchants to join in, but for merchants who are new to Xiaohongshu, there are also many challenges.

Author: Tan Xiaohan

WeChat public account: Zimubang (ID: wujicaijing)