Xiaohongshu shuts down its “self-operated e-commerce platform”, what is its plan?

Recently, Xiaohongshu closed its self-operated e-commerce, which caused heated discussions. From closing "Little Oasis" to "Welfare Club", what will be the development path of Xiaohongshu's e-commerce? What will be the next step?

The closure of Xiaohongshu's self-operated e-commerce a while ago attracted a lot of attention. It can be said that Xiaohongshu, which is celebrating its tenth anniversary, has finally turned back on its exploration of self-operated e-commerce.

The thing is, on September 4, Xiaohongshu's self-operated e-commerce platform "Xiaoluozhi" issued a farewell letter, announcing that it would cease operations on October 1 and officially close on October 31. Once "Xiaoluozhi" is closed, Xiaohongshu's self-operated e-commerce business will only have its "welfare club".

But ten days later, on September 15, Xiaohongshu’s “Welfare Club” also began to issue a farewell letter, stating that the welfare club will stop selling goods on October 16 and officially close on November 16.

The "Welfare Society" can be said to be the source of Xiaohongshu's e-commerce business. It was originally derived from the users' demand for "asking for links". Many Xiaohongshu's e-commerce users placed their first order in the "Welfare Society".

The closure of "Little Oasis" and "Welfare Club" means that Xiaohongshu's previous self-operated e-commerce strategy has failed, and Xiaohongshu e-commerce needs to explore the e-commerce path again. From offline to online shopping malls, from online shopping malls to "one account and store", from "one account and store" to Little Oasis, Xiaohongshu's e-commerce exploration path is extremely tortuous, and after trying many paths, there are still few results.

Although Xiaohongshu community has a reputation for "planting grass", Xiaohongshu still finds it difficult to enter the transaction link when China's e-commerce infrastructure is extremely mature. The behavior path of a large number of users is to plant grass on Xiaohongshu and compare prices on Taobao for transactions. Therefore, Xiaohongshu has never been able to build a closed loop of "planting grass-pulling grass", and therefore it is difficult to form a mature business model.

In the field of Chinese e-commerce, I think there are almost no opportunities for vertical e-commerce platforms. Vertical e-commerce will eventually be covered by Taobao, JD.com, etc. If Xiaohongshu wants to do e-commerce, it cannot expect to only do vertical categories with high popularity in a certain community (such as beauty, second-hand luxury, etc.). Therefore, if Xiaohongshu wants to do well in e-commerce, it must innovate its model at the so-called "people, goods, and venue" factor level.

In the past few years, Douyin has carved out a path for itself through live-streaming e-commerce, Pinduoduo has grown and developed through the social dividends of WeChat and "consumption downgrade", and Xiaohongshu needs to find a new e-commerce model to gain a foothold in the e-commerce platform. Frankly speaking, Xiaohongshu has not found its direction now.

At the end of August, Xiaohongshu shouted the slogan "The buyer's era has arrived" in an official event, and established the route of "buyer e-commerce", saying that it would concentrate resources and strength to serve more buyers, managers, merchants and brands.

Xiaohongshu does not have as much traffic as Douyin and Kuaishou, nor does it have as much supply chain as Taobao and JD.com. It is in a state of not being involved in either end and is very passive in the e-commerce field. The so-called "buyer e-commerce" is not original. At present, it is just a concept and is still very far from truly opening up a business model.

In fact, I have heard the story of "buyer e-commerce" many times in other second-tier e-commerce platforms, such as Vipshop, which claims to adhere to the differentiated strategy of buyer system and even set up a large number of buyer positions around the world, but Vipshop's presence in the current Internet e-commerce platform is already very low. From the perspective of product category attributes alone, Xiaohongshu and Vipshop are somewhat similar.

According to Xiaohongshu COO Conan, "On Xiaohongshu, the core of buyers is to serve users well and connect products well." However, from this perspective, the role of the so-called "buyer" is still vague, and it is not known why buyers can become sticky to the Xiaohongshu platform.

In my opinion, the number of so-called "buyers" in the fashion industry is extremely scarce, and not everyone can have the same product insights as Zhang Xiaohui, so Xiaohongshu is definitely not what the public thinks it means. Therefore, Xiaohongshu's so-called "buyer e-commerce" may ultimately be a variant of traditional online celebrity community e-commerce.

E-commerce is an operation-intensive business, but there are various conflicts between e-commerce operations and community content operations. I even think that the closure of Xiaohongshu's self-operated e-commerce was actually due to the content operations of its own platform, which led to directional errors in the product categories of its self-operated e-commerce.

We pointed out in the article "Xiaohongshu Hurts the Hearts of This Generation of New Consumer Entrepreneurs" that Xiaohongshu has promoted the emergence of a large number of "hot spots" in the past few years, such as camping, frisbees, small household appliances, pubs and other new consumer products. Now the bubbles of these categories have burst and returned to the niche, and most of Xiaohongshu's annual new consumer trends have been falsified.

The reason behind this is that Xiaohongshu is a social display platform. Although Xiaohongshu has repeatedly emphasized the authenticity of the content on its platform, negative public opinion about internet celebrities showing off their wealth and being exaggerated has always been around Xiaohongshu. As a representative of refined life and consumption upgrades, Xiaohongshu is actually also a content fame and fortune place, and users' sharing and display are more or less influenced by vanity.

Therefore, the content on Xiaohongshu's platform is very likely to be out of touch with mass consumer demand. For example, as for the activity of camping, normal people can infer from common sense logic that it will be a niche activity in China for a long time, rather than a leisure consumption demand of the masses.

In order to demonstrate the influence of its own platform on consumer trends, Xiaohongshu encourages the production of niche content such as camping, thus forming a content bubble, attracting a large number of entrepreneurs and capital to join the game, and creating a new consumption illusion. When the bubble burst, people found that there was only fake demand behind a large number of Internet celebrity products.

Back to Xiaohongshu’s self-operated e-commerce business, the closure of “Little Oasis” and “Welfare Club” businesses are closely related to the above logic.

"Little Oasis" was born at the end of 2021. At first, it mainly sold comprehensive categories such as beauty and skin care, but then it was found that the number of notes related to urban sports such as camping on the platform had skyrocketed. "Little Oasis" immediately adjusted to the sports category and focused on sports scenes such as camping, road racing, skiing, cycling, and hiking.

This is a case of one's own people betraying one's own people. Activities such as camping are themselves new consumer bubbles driven by the content operation strategy of the Xiaohongshu platform. It is obviously a mistake for "Little Oasis" to focus on consumer demands such as camping.

Some media found that in the two major categories of camping and urban sports, "Little Oasis" only had 9 products with sales exceeding 1,000. In the farewell letter of "Little Oasis", the official admitted that "it failed to achieve the expected goal of maximizing the satisfaction of everyone's outdoor needs", but in fact this was caused by a wrong direction.

The history of "Welfare Club" is even longer. It was founded at the end of 2014. From its inception, it was closely connected with the content of the Xiaohongshu community and was able to proactively explore trendy products. In the early days of Xiaohongshu, in the rich community atmosphere of overseas purchasing, it was indeed able to bring users a novel product consumption experience.

However, as Xiaohongshu's own community broke out of its circle and reached the general public, the sku of the "welfare club" itself began to expand, making it difficult to support the diverse and complex needs of users, and it was also difficult to capture product consumption trends based on platform content.

It can be said that the problem with the "welfare club" is that the Xiaohongshu content community is breaking out of the circle at a very fast speed, while the development of e-commerce services and e-commerce supply chains is more important and requires expansion step by step. In addition, Xiaohongshu's e-commerce strategy swings back and forth, resulting in a mismatch between the two, which ultimately ended with the closure of the "welfare club".

Now, after Xiaohongshu closed its self-operated e-commerce section, it began to tell the story of "buyer e-commerce". Frankly speaking, this concept is not as convincing as Douyin's "interest e-commerce" and Kuaishou's "trust e-commerce". "Buyers" are essentially KOLs in vertical categories, which is somewhat suspected of rehashing old ideas. If Xiaohongshu just shouts out the concept of "buyer e-commerce", it is far from enough.

Author: Zhou Zai'an WeChat public account: Spreading Gymnastics