Image source @ Visual China
Wen 丨 Financial Story Club, author 丨 Li Meiqin, editor 丨 Wan Tiannan
Under the background of the byte system + kuaishou system + BAT pattern has been determined, the little red book that can also break through obliquely is favored and highly regarded by capital.
After the E round of financing received $500 million, the valuation of Xiaohongshu has climbed to $20 billion, equivalent to 126.5 billion yuan. In the 2021 global unicorn list released by Hurun, Xiaohongshu also ranked among the top, ranking among the top ten unicorns in China and ranking 16th in the world.
Official data shows that Xiaohongshu currently has more than 200 million monthly lives, and more than 7 have become post-90s users.
200 million months to support the valuation of 20 billion US dollars, is the Little Red Book expensive?
By analogy, Weibo, also a community, has a market value of only $7.746 billion, while as of the end of the third quarter of last year, Weibo had 573 million monthly active users, of which Gen Z accounted for 75%. According to this calculation, the value of each user of Xiaohongshu is about 7.4 times the value of Weibo users.
Compared with the next B station, as of the third quarter of last year, the monthly active life of the B station reached 267 million, and its latest market value was 13.639 billion US dollars, so it is estimated that the single user value of Xiaohongshu is also about 2 times that of the users of the B station.
The fact that Xiaohongshu users are so valuable is due to the strong grass attributes of the platform.
Conscientiously operating the community, achieving high traffic growth, boosting the monetization of both merchants and bloggers, in this content dividend harvest carnival, Xiaohongshu acted as a flexible starting platform. Have done cross-border e-commerce, involved in live streaming with goods, pay for the user is limited, "planting grass is difficult to pull grass", the road of e-commerce has not yet been through the little red book, its ecological closed loop has not drawn a circle.
The latest news shows that Xiaohongshu has adjusted the organizational structure again, and the original community department and the e-commerce department will be merged into a new community department, which seems to have lowered the weight of the e-commerce department. However, Xiaohongshu responded that based on business needs, it is a normal adjustment.
The Little Red Book has not been hit, the giants have come in, and Douyin, Taobao and even Zhihu have successively launched grass planting communities. Under the siege of the big factory, is the security barrier of the Little Red Book high enough? Is the foundation stable at a high valuation of $20 billion?
How to cultivate the first grass community?
According to Cao Kexuan's "Why is the Little Red Book Red", The Little Red Book was established in June 2013, the original product form is the PDF version of the overseas shopping guide, less than a month after the launch, the download volume exceeded 500,000, at this time the Little Red Book is more or tool attributes.
In December of the same year, Xiaohongshu launched an app that provides graphic and text notes, initially called "Hong Kong Shopping Guide", and later renamed "Xiaohongshu" in 2014.
Born "prosperous", taking advantage of the tide of overseas travel during Christmas and Spring Festival, Xiaohongshu has accumulated seed users who imitate existing high-quality notes to create, share and interact.
In this way, on the basis of the tool attributes, Xiaohongshu has expanded the community attributes and precipitated a relatively high-quality real shopping experience content.
Since then, Xiaohongshu has set the tone of its UGC consumer word-of-mouth community, and the "planting grass" gene has been integrated into the blood of Xiaohongshu.
Until now, Xiaohongshu still has a strong community and strong tool attributes, and the priority that most Xiaohongshu users expect from its content is still practicality, "useful" first, aesthetic second.
A research report released by Dongxing Securities in August last year revealed that 90% of Xiaohongshu users had searched for Xiaohongshu before purchasing. According to a survey by Ai Media, nearly 60% of users use Xiaohongshu for the purpose of "understanding product introduction and user experience". In 2020 alone, Xiaohongshu generated an average of nearly 100 million searches per day.
This is also why the filter family has, only the Little Red Book filter is broken, can be on Weibo hot search, because the user of the Little Red Book "love deeply, the responsibility of the cut", adding oil and vinegar filter, damaged the original establishment of the trust mechanism.
"Financial Story Club" also followed up with 8 users (4 men and 4 women), 7 of whom used the Little Red Book as a tool, including searching for recipes, wearing, visiting stores, decoration strategies, skin care knowledge, looking at hairstyle recommendations, looking for illustration materials and so on.
Since a male user in Tianjin, even buying a car will refer to the Little Red Book Raiders. He believes that although Xiaohongshu is not as good as a professional website in terms of parameter introduction, it can see the real experience of others and the purchase price, etc., which can "assist in decision-making."
Guo'er, who works part-time as a blogger on The Little Red Book, as a waist master, is not only a professional content sharer on the Little Red Book, but also earns extra money in the amateur, and is also the content audience of the Little Red Book.
Guo'er will look for strategies on the Little Red Book, looking for offline discount information, etc. The content she produced is also more practical, belongs to the pan-life category, recently the home is being renovated, searched for other people's strategies, she herself also created and shared a decoration note.
Based on this usefulness and mutual assistance, The community stickiness and activity of Little Red Book is very high.
QuestMobile report shows that as of May 2021, Xiaohongshu daily active / monthly active is 34%, more than the B station, the average daily use time of users reached 47 minutes, maintaining rapid growth.
According to official information, as of November 2021, Xiaohongshu has more than 300 million users, 200 million monthly active users, and 43 million sharers. As of March 2021, the number of little red book notes has exceeded 300 million.
From the perspective of the richness of the community's content, the content on the Little Red Book has covered 15 industry fields, of which Changhong TOP5 is food, home, mother and baby, makeup, clothing, etc.
It is also based on the efficient grass planting attributes, the new brand = 5000 small red books + 2000 Zhihu Q&A + Weiya Li Jiaqi with goods + short video platform planting grass, as if it has become a universal formula for new players to take the position. With the blessing of Little Red Book, new brands such as Perfect Diary have stood out.
However, as serial entrepreneur Diaoye said, the new brand built by the three axes of "burning VC money + little red book bedding + losing money in the live broadcast room to sell traffic" has no "ecological niche". Today, the stock price of Perfect Diary's parent company, Yixian E-commerce, has fallen from a high of $25 to about $1.45;
The little red book was originally created with the Amway gene, which is a strong community and strong tool attributes, which also makes it a natural fertile soil for "planting grass", forming a barrier to the strength of the little red book.
However, hundreds of millions of users are happy to go out to consume after reading the content, and it is not enough to make a wedding dress for the brand and other e-commerce platforms, which may be the next challenge facing Xiaohongshu.
Flooded traffic, is it difficult for e-commerce to succeed?
From the community to the closed-loop road of e-commerce, Xiaohongshu does not want to go.
Most content platforms are born without e-commerce genes, and it is normal not to be able to close the loop, but the consumer atmosphere laid by Xiaohongshu from the beginning has actually brought it opportunities.
In December 2014, the Xiaohongshu e-commerce platform "Welfare Society" was launched, and by 2015, sales had reached 700 million yuan in 6 months - although this achievement was a dime compared to the head e-commerce. But compared with vertical e-commerce, it is also quite impressive, at that time, cross-border e-commerce rookie Yang Wharf, in 2014, the sales of the whole year was only 700 million yuan.
By the second quarter of 2016, Xiaohongshu's market share in self-operated cross-border e-commerce was 16.3%, ranking third, and the first place NetEase Koala, the difference was less than 1%.
However, in 2017, Xiaohongshu's e-commerce business was no longer in the limelight, and its market share continued to decline. Analysys data shows that all the way down to the end of 2020, in the field of cross-border e-commerce, Xiaohongshu's market share is only 2.4%.
In fact, it is not only the Little Red Book family that has moved down.
2014 is known as China's "first year of cross-border e-commerce", Vipshop International, Jumei, Darling, Fengqu Haitao, Honey Bud, Tao World and other new players blossomed, but the giants entered the sweep, ending their good time.
Liu Nan, CEO of The honey bud that also tested the "e-commerce + community" route, once sighed, "The cross-border dish is too big to be occupied by startups." ”
Ellie, a former employee of Xiaohongshu, told Financial Story Club that the dilemma encountered by Xiaohongshu's e-commerce business at that time was that it was difficult to solve the shortcomings of "genuine supply (guarantee), system and supply chain".
These shortcomings have also led to a surge of complaints.
According to the "2017 Double 11 and Black Five Sea Amoy Consumer Complaints and Experience Report" released by the China E-commerce Research Center, during the "Black Five" period in 2017, Xiaohongshu once topped the list with a complaint rate of 46.54%, far exceeding the second place of 11.15%. The main problems of the complaint are: suspected sale of counterfeits, slow delivery, difficulty in returning goods, etc.
On the one hand, compared with the Little Red Book, the giants can give more reliable product protection, and consumers who change their hearts and face are migrated to other head platforms at zero cost; on the other hand, the subsidy is better than one, and the cost of obtaining and retaining customers on the platform is getting higher and higher.
In contrast, The Little Red Book can't afford to burn money, the price war can't win, it's difficult to spend energy and money to accompany the run for a long time, so it has to actively seek changes and put the focus of business back into the community, and it is not surprising that the e-commerce business is stranded.
Nowadays, the pattern of e-commerce head has been determined, and Xiaohongshu is just one of many long-tail players.
Now, most users open the Little Red Book, and may have limited impulse to sweep the goods. Ai media survey shows that the purpose of "buying goods of the Little Red Book Mall" accounted for only 28.73%.
Among the 8 users followed up by "Financial Story Club", 4 (2 men and 2 women) are weak consumption willingness, using the Little Red Book as a tool or entertainment; 4 (2 men and 2 women) have a strong willingness to consume, but they are keen to do strategies, pay attention to cost performance, and will complete the purchase of multiple prices, but they have never considered buying goods in the Little Red Book.
In other words, users come to Xiaohongshu mostly for "search purposes" rather than "purchase purposes". From this dimension, the Ecology of the Little Red Book "Human Goods Yard" was half painted and stopped abruptly.
Little Red Book "People's Freight Yard" Status Quo Map
The ecology is incomplete, and it also blocks the entry of some brands that want both sound and sales.
Coffee brand entrepreneur Li Min told "Financial Story Club" that the company currently has a budget on Douyin, but has not yet settled in Xiaohongshu, "I feel that the number of people who buy things in the Xiaohongshu mall is very small, so we will not invest too much energy, live e-commerce with sound and sales, we pay more attention." ”
In terms of e-commerce ecology, at present, Xiaohongshu has not yet found a feasible way to break through, according to the "Good Look Business" report, in 2020, Xiaohongshu e-commerce GMV of about 1 billion US dollars (including self-operated e-commerce and third-party e-commerce), e-commerce revenue accounted for about 15%-20%; advertising business revenue of 600-800 million US dollars, accounting for about 80% of the total revenue.
Can live e-commerce become a take-off?
The live e-commerce at the outlet may be the breakthrough point for Xiaohongshu to complete the commercial closed loop.
According to dongxing securities research report, the xiaohongshu live broadcast room has high unit price, high conversion rate, high repurchase rate, and low return rate: more than 30% of the average unit price per game is more than 200 yuan; the head KOL sales conversion rate is 21.4%, higher than that of Douyin Kuaishou; the repurchase rate of some live broadcast rooms is 48.7%; moreover, the grass attribute in the Xiaohongshu live broadcast room is stronger than the price comparison attribute, and the user's price sensitivity is not high.
But in fact, whether the above ideas can be landed, there are still doubts - how many Xiaohongshu users will be converted into live broadcast audiences? According to a report released by Ai Media Research Institute, the main purposes of Chinese users using Xiaohongshu are as follows:
As can be seen from the above figure, Xiaohongshu users usually have a clear search purpose, either to enrich knowledge or to view the strategy - lengthy live broadcast is not the best form to meet the above needs, in terms of efficiency experience, it is not as good as graphics, short videos and so on.
The 8 users interviewed this time did not watch the live broadcast of The Little Red Book, of which 4 people, the content preference is more like graphic text and long video, and almost never watch live broadcast.
The lack of head anchors to settle in also makes it difficult for Little Red Book to create a strong live broadcast field. In the view of Li Min, the founder of the coffee brand mentioned above, the biggest resistance of Xiaohongshu relying on live e-commerce to break through is that "similar to Li Jiaqi or Luo Yonghao, there is no big anchor with strong appeal, and Xiaohongshu has none."
At present, live e-commerce has become a red sea, and the entry threshold has also been greatly raised. The pattern of tao, jitter and fast three points has been determined, and the B station with strong content creation ability has also launched its own shopping function.
According to ping An Securities data, in 2020, the GMV of Taobao Live, Douyin Live and Kuaishou Live will be 400 billion+, 500 billion +, and 381.2 billion respectively, and in 2021, the GMV of Douyin E-commerce will be 1 trillion yuan. In 2020, the overall GMV of Xiaohongshu e-commerce is still less than 7 billion.
Wu Rui, a senior practitioner of live e-commerce, analyzed to the "Financial Story Club", "E-commerce is mass consumption, not high-end consumption. Eating, wearing, and three rural areas are the main heads of GMV. And these are not the mainstream of amway content. ”
Zhao Haobin, co-founder of Beijing Shichuang, who has been engaged in new media marketing for many years, believes that live e-commerce is impulse consumption, price war is the main means, If the live broadcast traffic is not high, the GMV of the conversion transaction is limited, in front of the brand, there is no bargaining advantage, and the transaction volume cannot come. Under such repetition, it is difficult to break through the prisoner's dilemma.
The ecological painting is not round, and the sense of security is not strong
At present, the current commercialization of Little Red Book mainly focuses on planting grass and monetizing by charging advertising service fees on the dandelion platform.
According to dandelion background information, Xiaohongshu's two-way commission to merchants and talents is 10% each (MCN signed talents are settled by institutions); in addition, merchants can put information streams for business notes through keyword bidding, or choose value-added services such as "brand cooperation +" (a kind of guaranteed delivery mode) to increase or ensure the exposure of notes - these constitute the revenue market of Xiaohongshu.
According to the requirements of the Little Red Book, all grass promotion needs to be completed through the official dandelion platform, which is called "filing" in the industry, and grass promotion that has not been "reported" is regarded as "illegal marketing".
Wang Xuan, who works for a marketing company, told Financial Story Club that almost all platforms have brands bypassing the official delivery, which is nothing more than "limited budget and luck".
Compared with other platforms, Xiaohongshu's governance is extremely strong.
In 2019, Xiaohongshu banned 21.28 million accounts and handled 4.4357 million illegal notes. From September to October 2020, Xiaohongshu's "Woodpecker Project" disposed of 7,383 accounts and 213,000 notes in the first month of its launch.
The aforementioned Little Red Book waist master Guo Er told the "Financial Story Club" that the punishment measures of the Little Red Book include restricting the flow of tweets, ranging from restricting bloggers from publishing articles for 7-15 days, and banning the number.
Due to the blurring of the line between "real planting" and "illegal marketing", Little Red Book's first woodpecker action accidentally injured hundreds of innocent notes.
Guo'er had experienced this kind of accidental injury, was limited to one month, and then did not want to update for three or four months. "At that time, as long as I wrote skin care products, I would be blocked, and the complaint was sometimes useful and sometimes useless, which felt very chilling."
But "illegal marketing" is still repeatedly prohibited.
At the end of December last year, Xiaohongshu banned 29 brands to rectify this problem, including Lu deqing, Nivea, Dauphin, and Half Mu Flower Field.
At the beginning of January this year, Xiaohongshu banned 21 brands including "Fangke, Keyoubi, Adolf, and Runbaiyan", and the official account @ Potato Butler also announced the results of the rectification.
The reason why illegal marketing is difficult to prohibit is nothing more than "large benefits and small risks".
From the perspective of interests, it mainly involves the input cost and effect, and involves the interests of merchants, middlemen and bloggers.
For merchants, going through official channels will be a 10% commission on the platform, and the offer of bloggers will be higher. A little red book master told the "Financial Story Club" that "the promotion price that is not reported to the official is about 40%-80% of the reported price.".
For the talented people, to receive the report to write more daily articles, 1 report, to update 5 daily articles. This ratio is not easy for creators, and it is even more difficult for those who want to make efficient money.
Second, the filing notes will be advertised. Many brands prefer soft implantation, worried that the target audience will be repulsive when they see the advertising logo.
From the perspective of risk, although the Xiaohongshu rectification efforts are large, the accuracy of the remediation still needs to be improved.
It can be seen from the inevitable "accidental injury" of each community rectification that the ability of Xiaohongshu to distinguish between "real grass planting" and "grass planting promotion" is not perfect at present.
Coupled with the increasing ability of bloggers to disguise, it is more difficult to distinguish between business notes and non-business notes.
According to the 20 news agency, many suppliers now only provide samples and picture materials, and then let the talents write their own copywriting, editing and shooting, making business notes more like a real experience.
Guo'er also told "Financial Story Club" that he would occasionally receive some promotion orders that were not reported, provided that the promotion object was a big brand and a product that he really needed. She will present it in the form of a comparison of multiple brands, "without adding obvious biased words, so that the platform basically cannot recognize it."
The "promotion" that is more restrained than the real "planting grass", the platform continues to strengthen the crackdown, may damage the ecology.
Third, the grass planting track is also becoming more and more crowded, and the Little Red Book is the first choice for merchants to plant grass, but it is not the only choice. Taobao, Douyin, Jingdong, and Pinduoduo have all been involved to varying degrees.
Taobao shopping tested a new feature - a lawn mower - within October 1 last year. Previously, it was revealed that one-third of Taobao's orders came from planting grass, and Taobao's monthly active users had reached 250 million, surpassing Xiaohongshu's 200 million.
Taobao's ambition to plant grass does not stop there. On January 24, according to Tech Planet news, Taobao launched the interest community App "Youhao" that can grow grass. This standalone app drives social interaction with interest, creating an interactive platform similar to circles.
At the end of last year, Douyin released a plan to plant grass in graphics and texts, providing hundreds of millions of traffic support. In addition, JD.com and Pinduoduo have launched "grass planting shows" and "connoisseurs help you choose" respectively.
Compared with Xiaohongshu, Douyin takes the lead in traffic and users; compared with Xiaohongshu, the e-commerce giant has created an e-commerce closed loop from planting grass to pulling grass, of course, the two grass labels are far less distinct than Xiaohongshu.
On the one hand, the giants entered the siege; on the other hand, the Little Red Book was pursuing content generalization, and the "planting grass" gene was diluted.
In summary, as the well-deserved first kind of grass community, for Xiaohongshu, only relying on 200 million users to "plant grass" to support a valuation of 20 billion US dollars, I am afraid that the foundation is not stable enough, the confidence is not enough, next, whether Xiaohongshu will continue to adhere to the community attributes, or will make up for the e-commerce ecology, it is still unknown.
Note: At the request of the interviewees, Guo'er, Ai Li, Li Min, Wang Xuan, and Wu Rui are pseudonyms.