Xiaohongshu e-commerce: Chaos in expansion

This article introduces the current status of Xiaohongshu's e-commerce development, analyzes the relationship between Xiaohongshu's e-commerce and Pinduoduo's merchants, and explains the drawbacks of Xiaohongshu's e-commerce in its expansion and development. It is recommended for students who are interested in the development of Xiaohongshu's e-commerce to read, hoping to bring inspiration to everyone.

Xiaohongshu has begun to enter the era of buyer e-commerce.

At the e-commerce conference at the end of August this year, Xiaohongshu officially announced its vision of buyer e-commerce, which is to build real consumption scenarios through the personal experience of buyers to link user consumption. At the conference, Xiaohongshu proudly disclosed data: in the past year and a half, the number of buyers and managers of Xiaohongshu e-commerce has increased by 27 times, the number of active merchants has increased by 10 times, and the number of purchasing users has increased by 12 times.

Xiaohongshu is one step closer to shopping. This trend is becoming more and more obvious. If you refresh the homepage a few times, you will definitely see multiple notes marked with the word "sponsored" or with shopping links.

The introduction of the "store-account integration" mechanism has ushered in a wave of "store openings" on the platform, but in practice, this is still a business with a threshold. Merchants with sources of goods or sufficient early operating experience can naturally stand out from the crowd, while merchants without sources of goods choose to "drop ship" on Pinduoduo and make a profit as middlemen, which has created a farce of "Xiaohongshu's beautiful life on Pinduoduo".

In the early stages of e-commerce development, the wild growth of business will bring a lot of chaos. Douyin and Kuaishou have both gone through similar periods. Xiaohongshu, which is full of ambition, has taken an important step, but the rest of the road is also very critical.

1. Spendthrift and stinginess

At the beginning of this year, Dong Jie made her first live broadcast on Xiaohongshu, with a total sales of over 50 million yuan, which not only made her the first model of Xiaohongshu's sales, but also set the tone of Xiaohongshu's "light luxury" live broadcast , and made the platform embark on the road of celebrity live broadcast - among the 200+ products selected in Dong Jie's live broadcast room, high-priced products are everywhere, such as 5,200 yuan cardigan, 4,932 yuan ballet shoes, etc. Afterwards, "Be the master of your own life" as Dong Jie's live broadcast slogan is more like a consumption buff tailored for Xiaohongshu women.

Hong Kong socialite Zhang Xiaohui, who "took over" Dong Jie's live broadcast, has a temperament that is very consistent with the tone of Xiaohongshu. Her live broadcast also continued the high-priced product selection mechanism, emphasizing the insistence on brand pedigree. A set of high-top shampoo set and two bottles of revitalizing hair masks have a unit price of more than 600 yuan. The high sales in the live broadcast room further deepened the impression of Xiaohongshu's female users' high purchasing power.

Xiaohongshu sells lifestyles to users, and users also pursue quality of life and have their own preferred consumption areas. Therefore, some niche clothing designs, household items, and luxury goods can quickly run on the platform.

There is indeed no shortage of “light luxury” products on the platform. High-end brands, designer products, and handicrafts all have a place on Xiaohongshu. Looking through the Xiaohongshu product list at a certain time, the number one @上海siiinko中古奢款 is mainly selling luxury bags, with prices ranging from 10,000 to more than 100,000 yuan.

@麦琪啦, who has 120,000 followers on Xiaohongshu, labels herself as "a CEO of women's clothing who has traveled to 89 countries" on her homepage. Her live broadcast room offers "the highest quality and the lowest prices". The price of a single skirt is nearly 500 yuan, while a coat is more than 1,000 yuan. Another example is @邱黎, who has 135,000 followers. The products selected in her live broadcast room include Morris handbags, bracelets, etc., and the average customer spending is also more than 300 yuan.

Although it has the stereotype of "high purchasing power" to the outside world, the products that are widely active on the platform are actually affordable or even low-priced products.

@牛角包, a blogger who runs fashion content on Xiaohongshu, mainly focuses on 1688 shopping sharing, and later added more maternal and child elements because of pregnancy. By recommending high-quality and cost-effective products, Niujiaobao has accumulated 140,000 fans. After sharing clothing content for two years, she decided to integrate the experience of these years, found a warehouse in Shenzhen, and opened a store directly on Xiaohongshu.

"Without accounting for the costs of warehouse, freight insurance, free shipping, etc., the profits are all based on the original production of clothes. I hope to do a good job and increase the volume." On the first day of opening the store, the total payment amount of her store reached 15,000 yuan. In terms of price positioning, the women's clothing in the store is mainly 88 and 128 yuan. The price is slightly lower in the early stage, and occasionally there are single items that exceed 200 yuan in the later stage.

On Xiaohongshu, croissants are relatively cheap, and there are many clothes with lower prices. The vests at 19 yuan and the pants at 39 yuan are hard not to remind people of Pinduoduo, which is famous for its low prices, except that there are more Xiaohongshu features. "It's so good, I bought this hooded sweatshirt for 49 yuan in full", "A few dozen yuan of banana pants are very comfortable to wear", "It's so comfortable, I really need such straight shoulder long sleeves", "Help, I really love this style" and similar expressions can be called exaggerated expressions of "four-piece suits", which are circulated among merchants.

In addition to clothing with higher profit margins, Xiaohongshu is also full of low-priced small items, such as a few cents of transparent small clips, 6 yuan canvas bags, etc. This low-price logic is easy to understand. On the one hand, the establishment of user consumption habits often starts with low-priced small items such as 9.9 mobile phone cases. Such products are easier to reach consumers and awaken their desire to consume.

On the other hand, although it is a recognized gathering place for trends, Xiaohongshu is also closely related to Pinduoduo. The platform itself has a large number of Pinduoduo recommendations . Planting grass on Xiaohongshu and pulling grass on Pinduoduo were once very familiar shopping paths for users. Active on the platform are not only experienced merchants with sources of goods and warehouses, but also more merchants without sources of goods, who play the "one-piece drop shipping" game on Pinduoduo . At one time, the complaint that "all the pieces on Xiaohongshu are sent by Pinduoduo" was very popular and even became a secret consensus within the platform.

In the tutorial notes circulating on Xiaohongshu, some people teach experts how to do drop shipping well, such as negotiating with merchants to use Xiaohongshu to write orders to avoid being judged as having no source of goods by the platform. Low prices are only relative. Merchants with no source of goods who are good at manipulating traffic take advantage of the "information gap" and raise prices to earn the difference.

Under this mechanism, the ratings of many stores that Kas browsed were around 4 points, and more than 4.5 points were considered a high rate of positive reviews. Compared with clothing, stores owned by individual craftsmen are more likely to receive positive reviews.

2. Expansion and disorder

Xiaohongshu’s journey into e-commerce has been full of twists and turns.

In the past year, Xiaohongshu has experienced rapid growth in users. As of the end of 2022, its monthly active users reached 260 million and its monthly active creators reached 20 million. The huge user base has brought about both growth in demand and supply.

After struggling in the community e-commerce industry, Xiaohongshu has finally determined its own path as a "buyer e-commerce" and started to make drastic changes to its previous business. First, it officially shut down its self-operated e-commerce platform "Little Oasis" in October this year, and then announced its farewell to its own store "Welfare Society", stopping the sale of products on October 16.

In the vision of the person in charge of Xiaohongshu's live broadcast, "Xiaohongshu buyers start from people, and e-commerce anchors start from goods." This is the ideal e-commerce status of Xiaohongshu buyers, that is, buyers rely on daily notes to accumulate fans, convey their own aesthetic attitudes, and then reach consumers through notes or live broadcasts, completing the grass-planting and conversion links .

This can also be seen from Xiaohongshu's definition of "buyers" - buyers are "people who use their sincerity, passion and aesthetics, their own product selection, service and communication to create purchase scenarios, and connect users and products through live broadcast rooms or notes." Under this definition, this group includes individual creators who have the ability to select products or produce and sell them themselves, brand managers with a solid supply chain, brand store clerks, etc., almost covering all people who sell goods on Xiaohongshu, thus outlining the official ideal sales picture of Xiaohongshu.

However, Xiaohongshu, which has just barely escaped the fate of "planting grass on the site and converting outside the site" through vigorous governance, is now in the "land reclamation period" with the most contradictions as a buyer e-commerce.

On the one hand, the acceleration of e-commerce on content platforms will inevitably lead to the imbalance of the original ecology , and Xiaohongshu, which is still in the "pain period", is no exception. "Xiaohongshu is now full of soft ads." Xiao C, a heavy user of Xiaohongshu, complained to Kas that commercial content appears everywhere on her homepage. The sales methods that are perfect on other platforms are still effective after being changed and put on Xiaohongshu. For example, under a note asking for clothing recommendations, all the online pictures occupy the comment area.

As for cleaning products such as shampoo and facial cleanser, in order to hide their advertising intentions, bloggers will insert the seeding products into the reviews of a large number of products or the "red and black list", and then ask the bloggers to actively respond in the comment area, "I have tested it, it is very useful", to further guide users to place orders. After encountering similar "fake reviews, real harvest" notes, Xiao C also began to stay away from products that are "very popular on Xiaohongshu".

On the other hand, Xiaohongshu, which is running towards the consumer era, is no longer twisted, but in the early days of e-commerce development, the running-in between the platform, users and merchants was still painful. The mixed shops and imperfect infrastructure made the first order experience of many users very bad. When searching for the keyword "Xiaohongshu shopping" on the platform, most of the notes that pop up are negative.

In general, most of these complaints can be attributed to product quality and back-end services, focusing on poor product quality, delayed delivery, and disputes with sellers and platforms during the return process.

Among them, the most criticized are product problems, such as placing an order on Xiaohongshu, but finding out that the goods received were sent by Pinduoduo merchants; the products are not the same as the ones on the order, and the quality is poor. What is even more annoying is the price difference. "The same thing is 118 on Xiaohongshu, 78 on Taobao, and Pinduoduo may be cheaper." "The same product, Xiaohongshu's price is three times that of Taobao." Many users find it difficult to accept the high price of buying the same product of the same quality.

"It's very frustrating, buy carefully, Xiaohongshu has no after-sales service." A Xiaohongshu user complained in her notes about her very frustrating shopping experience. After the returned product was sent back, the seller claimed that the clothes would affect the secondary sales and no refund would be given. The platform's customer service intervened but did not solve the problem, only offering a compensation coupon. It is difficult to return goods and complain. Users who have enjoyed the excellent after-sales system of Taobao and JD.com are obviously not satisfied with Xiaohongshu's handling method.

In this type of anti-tampering post, some users mentioned their own experiences with false shipments: "The logistics showed that the goods were shipped on the 24th, but four days later I was told that they were out of stock." Another user ordered durian, but due to logistics anomalies, the customer service promised to resend it, but it was not resent until the goods were almost confirmed. Such cases, coupled with the untimely handling of customer service, angered users pointed the finger at the platform, accusing it of favoring merchants.

This is not the first time that Xiaohongshu has encountered such a problem. When its self-operated e-commerce welfare club was first opened, the scandal of selling counterfeit goods and the immature after-sales system brought about a crisis of trust.

Faced with such a problem, Xiaohongshu has also made attempts to manage it, such as cracking down on "drop shipping" stores and store groups, reaching a strategic cooperation with Fengchao, and filling the gap in logistics. However, the platform's crackdown on "stores without supply" sometimes inevitably hurts handmade merchants by mistake. Adao, who makes handmade earrings, encountered such a situation. After her store was frozen, someone in the comment area reminded her that "if 50% of the delivery orders are useless, Xiaohongshu will be considered to have no supply." The "one-size-fits-all" approach of the platform's rectification did not satisfy the merchants.

In fact, the current chaos in Xiaohongshu shopping is not only due to the imperfect construction of its own infrastructure, but also to a considerable extent due to "no source" merchants. For e-commerce platforms, "no source" is a double-edged sword. In order to attract more merchants and enrich product supply, the platform must tolerate the existence of "no source stores", especially since Xiaohongshu is eager for ordinary creators to become "buyers", it must accept the reality that creators are unable to build their own warehouses and choose to trust the buyers' ability to select products.

The olive branch thrown by Xiaohongshu was accurately accepted by some people. Within the platform, there are many tutorials such as "How to communicate with merchants for drop shipping?" and "It's easy to deal with no source of goods on Xiaohongshu." But from the consumer level, no matter whether the shopping interest starts from "goods" or "people", the final focus will definitely fall on the goods.

At the same time, users' long-standing preference for the platform's fashion filters has prevented them from equating Xiaohongshu with Pinduoduo. Instead, they hope that Xiaohongshu can stand out from the crowd. This is consistent with Xiaohongshu's "buyer" blueprint, but how to achieve this goal is a long road that Xiaohongshu needs to continue exploring.

Author: Lin Wu

Source: WeChat public account "CaasData (ID: caasdata6)"