Why am I not optimistic about Xiaohongshu’s local life?

Xiaohongshu has recently entered the local life track, which has aroused heated discussions among netizens. This article details the current situation and limitations of Xiaohongshu in the "local life" track. It is recommended for students who want to understand the operation of Xiaohongshu.

The issue of Xiaohongshu entering the local life market has been hotly discussed this year, but I have never spoken out.

Because Xiaohongshu has made too many moves in various fields in the past, but most of them started well but ended badly, and they died down after some discussion.

I am also taking a wait-and-see attitude towards this local life. I want to see what long-term layout this will bring to Xiaohongshu and what the next plans will be.

Now that some time has passed, the discussion has cooled down, but the general strategy has gradually become clear.

I think it's time to discuss this with everyone.

Before Xiaohongshu officially "announced" its entry into the local life field, many businesses had already promoted and attracted traffic on Xiaohongshu through methods such as bloggers visiting stores, internet celebrities checking in, and food ordering, which once became one of Xiaohongshu's popular tracks.

The previous conversion channels are similar to the current underwater promotions, where influencers post notes to check in, and users are encouraged to shop in stores or go to apps such as Dianping and Douyin to make group purchases.

This means that Xiaohongshu has completed the grass-planting part, while the verification part is still completed by other apps.

From this perspective, it is reasonable for Xiaohongshu to enter the local life and take over the subsequent consumption write-off part, and everything is ready.

Then why am I not optimistic about Xiaohongshu’s local life?

To clarify this issue, let’s first take a look at what Xiaohongshu has done in the local life section.

1. What has Xiaohongshu done in the local life section?

1. Merchant side

First is the merchant side.

(1) Food and Beverage Store Plan

Xiaohongshu launched the [Food Store Plan], which in summary means 0 deposit, 0 commission and corresponding traffic support.

At the same time, we found that the segmented presentation page was not like Xiaohongshu’s original waterfall flow push format, but instead concentrated content on business districts .

You can link to nearby merchants through any merchant or note, and then read related shopping lists and check-in notes, and even purchase group purchases.

(2) Note marking

In addition to the food and beverage store plan, there is another point that was noted previously.

That is , the influencer marks the store when posting the note, and the reader can clearly see the address in the note without having to jump in a second time.

At the same time, by jumping to the address, you can see more information about the merchant and related notes.

The subsequent presentation is similar to the food-powered power generation plan.

In summary, it is to achieve a collaborative closed loop of notes, stores and group purchase verification through first-, second- and third-level jumps within the site.

2. Experts

In addition to the merchant side, Xiaohongshu also provides guidance to influencers, who are essential content providers for Xiaohongshu's ecosystem and local life closed loop.

That is, we initiate a collection of store visits and provide corresponding content guidance and traffic support.

(1) Project Searchlight

That is Project Searchlight.

At the same time, a certain number of places are also given for application on a regular basis.

Friends who are familiar with group buying should understand it as soon as they hear it: Isn’t this the original “free meal” from Dianping?

It can be said that everything from the method to the link is exactly the same. It’s just that Xiaohongshu’s requirements for identity verification and content quality may be much higher.

2. Why I am not optimistic about Xiaohongshu local life

"Things that used to require switching between several apps can now be done in the sweet potato field."

This is what the official account of Xiaohongshu, Groundhog, wrote in a recruitment post for local life businesses.

Previously, due to the lack of a closed transaction loop, Xiaohongshu was merely a content provider and found it difficult to achieve clear commercialization in the big pie of local life. But now, the consumption path is very clear.

It seems that all conditions are in place, the links have been opened, and even in the relatively mature native ecosystem, Xiaohongshu has relatively active planning and layout.

Then why am I not optimistic about Xiaohongshu’s local life?

Because from the current perspective, Xiaohongshu’s disadvantages in developing local life are too obvious and there are too many difficulties.

I analyzed from three perspectives: user side, platform side and merchant side.

1. User side

(1) Content push

Before officially entering the local life market and inviting merchants to join, Xiaohongshu already had basic closed-loop product functions, sufficient content volume and users.

This is the advantage of Xiaohongshu.

From the note marks and food power generation plan above, we can see that after entering the notes, the harvesting closed loop in Xiaohongshu has been established. It seems that everything is going smoothly, reading - planting grass - in-depth understanding - verification and weeding.

But is this really the case?

We all know that the reading experience of Xiaohongshu is a waterfall push notification with different faces for different people. This means that based on what the user has read recently, the system will give priority to recommending similar high-quality content to him.

There are two points of information here.

First, recent reading .

Everyone knows that Xiaohongshu is a lifestyle platform, which fundamentally determines that it cannot only have food exploration content, but also a collection of content related to all aspects of life.

Even if this user has recently read content related to local food, it is impossible for the platform to push related notes 100% of the time. First of all, the amount of content of the same type that he can read is relatively limited.

Next is push matching .

The platform's algorithm is constantly being refined, which means it will constantly make corrections and matches based on your reading habits.

For example, if you read an article about local restaurant exploration today, it may react an hour later and recommend you 10% of related content. After monitoring that you click to read a certain proportion of this 10% content, the system will make further judgments - among all the content dimensions pushed to it, he is most concerned about what delicious food is available locally - and then increase the proportion of recommended content.

Did you notice?

There is a certain time difference in reading matching optimization, and it needs to be constantly corrected through reading behavior.

Moreover, the recommended content is only the content that is [label-matching and high-quality], not the store that [has recent high-rating feedback from users and is closest to the user's actual distance].

As a food consumer in a physical store, what is the scenario in which he is most likely to search for food?

He immediately made an appointment with friends and relatives, and they were even discussing what to eat for lunch on the street!

The need is clear and urgent.

The time difference, push notification adjustment, distance and rating matching we mentioned earlier cannot be met, and browsing the content on Xiaohongshu is too inefficient for users!

Some people may wonder, if the goal is very clear, can't users search for it? This is obviously much more efficient than waiting for push notifications!

We are back to the previous question - Xiaohongshu's push mechanism.

This also determines that the presented content is not [recent feedback and close], especially when I search for a business district, the matching results that can come out are very limited. Only when your content contains the name of this business district will the probability of being pushed to the front row increase.

Let's be more specific and search for the business district directly in the store recommendations. For example, here, it shows that there are 6,000+ nearby delicacies, but there are only 20+ actually presented. The selection range is very limited and the taste is very consistent.

If you want to realize search consumption on Xiaohongshu, the requirements for search behavior are very high (even someone like me who is very familiar with the platform cannot successfully search and match what I want to eat), but the entire push system is not perfect for local life.

Imagine if you are discussing with your friends what to eat and where to eat nearby, is Dianping, Meituan or Xiaohongshu more efficient?

(2) Content credibility

In addition to efficiency, the value and credibility of content to users is also one of the factors that hinder Xiaohongshu from entering local life.

Unlike the daily necessities, clothing, and home furnishings that we are attracted to on Xiaohongshu, the dimensions we focus on and consider when choosing offline food stores are completely different.

What are they most concerned about?

Taste, location, price, food safety.

Let’s not talk about the location and price, let’s take a look at the taste and food safety.

Almost all the store exploration content we see on Xiaohongshu is essentially a promotion.

The essence of planting grass is never a completely true presentation, but beautification.

After all, Xiaohongshu is a stylish social platform, and its content contributors are bloggers rather than amateurs.

This is equivalent to when we go to order a takeaway, the reviews we see are all praises about the cashback cards, rather than real users’ feedback. How credible are such reviews to us?

The expressions on Xiaohongshu are even more exaggerated, and you can often see words like [Come to Shenzhen just for this restaurant], [Eat here ten times a week], [yysd], etc.

On apps like Dianping, in the reviews of each store, we see real users’ comments and feedback, including picture presentation, which are all based on reality, without sophisticated typography and filters.

In response to this demand, Xiaohongshu is definitely not the user's first choice.

2. Platform side

(1) Operating costs

When discussing the development of Xiaohongshu's local business, we have to mention the operating costs.

No matter how smooth the link is, the cost of this thing is too high and the profit is insufficient, so it is still useless for the platform.

Unlike Xiaohongshu’s other businesses, the local life industry has always been an offline competition, although the platform is online on the surface.

This means that Xiaohongshu must have a large number of personnel to carry out merchant BD, which is undoubtedly a high cost for Xiaohongshu, which only has this one offline business.

(2) Merchant size

The size of the merchants is also an important factor in determining Xiaohongshu’s local operating costs.

In the past two years, the survival period of local businesses has not been long. Except for chain stores, most stores and Internet celebrity stores are often just short-lived.

This means that Xiaohongshu cannot achieve long-term profits from a single merchant, while personnel costs are always being invested. The efficiency ratio can be imagined.

Secondly, the original tone of Xiaohongshu is quality life and style.

This means that its attractive features are not low average order value and promotions (although in the past year, the sales of notebooks have gradually moved towards low prices and high volumes).

First of all, the most popular mom-and-pop stores and small shops are excluded. What are heavily marketed on Xiaohongshu are still Internet celebrity stores and Internet celebrity packages.

This can also be seen from the recruitment of the food and beverage store plan.

Speaking of price, it is precisely because of Xiaohongshu’s original tone that low-price group buying is not its main track, and store visits and reviews are the main content.

On Dianping.com, discounts are presented as the main content.

This goes against the essence of food group buying. Dianping’s redemption rate is obviously higher and faster than Xiaohongshu’s.

Even when checking in at popular online stores, consumers are more inclined to shop on low-price platforms.

Imagine the same meal, Xiaohongshu costs 89 yuan, Douyin or Dianping costs 85 yuan, which one would you choose?

So from a long-term perspective, users will continue to plant seeds on Xiaohongshu and pull them out on Dianping as they did in the past.

The closed business loop that it is proud of has suddenly lost its appeal to merchants. The number of merchants willing to participate has been discounted again on the original basis, and the number of merchants that will ultimately remain can be imagined.

And how can these remaining merchants support Xiaohongshu's huge labor operating costs in the local life sector?

3. Merchant side

As the foundation for supporting and participating in the local life section of Xiaohongshu, merchants also benefit very limitedly from this conversion chain.

(1) Operating costs

For merchants, operating costs remain the primary consideration.

As mentioned earlier, the largest number of mom-and-pop stores are not highly compatible with the Xiaohongshu platform due to their overall tone.

In fact, in addition to the tone, operating costs also determine that family-run stores will not choose Xiaohongshu.

The cost of cooperating with an expert on one of their notes can easily be hundreds or even thousands of dollars, which is undoubtedly too high for a mom-and-pop shop that can achieve daily profits by relying on nearby residents.

Compared with other ordinary businesses and even Internet celebrity stores, Xiaohongshu's operating costs are not low.

The core logic for local life merchants to judge operating costs is write-off, while impulse consumption and deliberate remote consumption only account for a very small part of local consumption.

As mentioned above, most users first have clear needs, then search and judge, and finally place an order.

This logic is similar to how we purchased products on Tmall in the past.

However, the redemption rate of push-based and passive group purchases is not high.

This results in merchants being unable to obtain excessive profits in an ecosystem like Xiaohongshu, and they are even unable to offset the costs of cooperating with influencers.

(2) User matching

In addition to the user matching problem of Xiaohongshu caused by the store tone mentioned above, Xiaohongshu’s original push also determines the low user matching.

Neither the personalized push of historical reading nor the popular push can satisfy the three basic user matches required by merchants to maximize redemption - distance, demand and time.

That is, when users need it, my notes will be pushed to users who are nearby and have similar tastes to me at the first time.

Xiaohongshu’s current push mechanism cannot achieve this.

From the perspective of the same needs, Dianping is undoubtedly more complete. After all, in terms of content sorting and presentation, it has already reflected the issues that local group buying consumers are most concerned about, such as distance, taste rating, per capita consumption, and recent discounts.

After so much analysis, most of the problems can actually be attributed to Xiaohongshu’s current content push method and information presentation.

Compared with developing local life business, Xiaohongshu has more important things to accomplish at this stage, such as improving the commercialization of the platform, monitoring the effect of grass-planting, and stabilizing the closed loop within the site.

The original content is not yet perfected. It remains a question whether Xiaohongshu still has the energy to compete with offline entities and group buying apps such as Dianping.com, and how it can break through these difficulties and achieve growth from local life.

Author: Bobo, WeChat public account: Bobo’s cooking class