Xiaohongshu's office in Shanghai is designed to resemble a "small city-state," just as it positions itself as a "community" that shares lifestyles, arguing that every user is a "resident."
Under the community convention of "sincere sharing and friendly interaction", "residents" share food, drink and have fun in the APP, and by the way, look at the "neighbors" in the north and south of the sky to learn from it, creating an atmosphere of authenticity and non-falsification.
But the reality is that the content posted on it is related to "ghostwriting" and "filters" from time to time, although Xiaohongshu has been promising to rectify, but it has been repeatedly prohibited, such as the recent January 23, xiaohongshu was also reported to be fined 300,000 yuan for "violating the Law on the Protection of Minors".
Under all kinds of negative circumstances, Little Red Book had to carry out governance. For example, since December 16, 2021, Xiaohongshu has rectified the "false planting of grass", 57 brands such as Adolf and Koyoby have been banned, and more than 170,000 false grass planting notes have been processed.
In addition, Xiaohongshu also said that during the Spring Festival, key governance including online violence, rumor dissemination, "child cults" and "soft pornography" will be carried out.
Behind the repeated negatives is its logic as a commercial platform at work. After all, in addition to the identity of "community residents", users are also "platform users", which will be related to the market and consumption.
01 Initial growth
The birth of Xiaohongshu coincided with the rise of domestic cross-border e-commerce, which was established in 2013 and was originally aimed at sharing good things in the sea.
At that time, many outbound tourists did not know how to better cross-border shopping, nor could they find a suitable strategy. It is from this demand that Qu Fang sees business opportunities.
As a result, this Wuhan girl, who is particularly fond of tossing, quit her job in a foreign company and began the entrepreneurial road with her partner Mao Wenchao.
(Xiaohongshu founder Qu Fang)
Little Red Book gathers a group of users who are active in various shopping forums, and interacts with people in need through them to post global goodies or overseas shopping strategies. By January 2014, the number of users had reached 15 million.
In Qu Fang's vision, the Little Red Book is a "playground", and the people who use it must first think it is fun before they come back, and have the desire to spend money on it. So Little Red Book initially wanted to build a UGC-oriented vertical community.
The first test in business was in August 2014, Xiaohongshu launched a cleaning liquid from Greece to kill in a second, and cross-border e-commerce became the first stop for its traffic monetization.
By the end of 2015, Xiaohongshu had completed a series C financing, and in the past investors, there were Tencent, Jiyuan Capital GGV, GSR Venture Capital and so on.
Xiaohongshu, which developed e-commerce business, began to establish warehouses around the world, doing "welfare society" self-operated malls, and in addition to the Xiaohongshu community in the APP, there were more Xiaohongshu malls. Little Red Book is still expanding its categories, and the "urban white-collar women's lifestyle sharing community" has begun to take shape.
From April 8, 2016, cross-border e-commerce retail imports began to collect tariffs and import value-added tax and consumption tax on goods.
After a large wave of cross-border e-commerce platforms fell under the new regulations, Xiaohongshu also had to find a new way and carefully adjust the ratio of e-commerce to community content.
In 2017, there was a turnaround, and a group of stars began to share their daily lives in the Little Red Book, such as Lin Yun, who relied on "Mermaid" to become popular, released his own hair coloring failure, blew cheap fans, and Fan Bingbing revealed how much mask he put on in a year.
(Lin Yun)
The arrival of celebrities has led to the growth of Xiaohongshu users, which exceeded 100 million by May 2018. After more than two years, the capital has refocused on Xiaohongshu, and in June 2018, Xiaohongshu announced that it had received $300 million in financing led by Ali.
Perhaps this inspired Little Red Book to focus on community content, self-definition from cross-border e-commerce to lifestyle community, Slogan became "mark my life".
In order to achieve a breakthrough in the user circle, Xiaohongshu also sponsored popular variety shows such as "Idol Trainee" and "Creation 101". Up to now, the monthly activity of Little Red Book has exceeded 200 million, and there are more than 43 million sharing masters, most of whom are post-90s and post-95s.
02 Commercialization troubles
Although the reputation is expanding, how to achieve commercialization has always bothered it. Although Xiaohongshu has always emphasized that the pace of realization can be slower, it is saddled with the expectations of investors and it is impossible to always lose money and make money.
Qu Fang was also waiting for an opportunity. In May 2018, the number of users of Xiaohongshu exceeded 100 million, and the number of monthly active users was close to 30 million. Such a user scale gives Qu Fang confidence.
Perhaps to put it bluntly, the time is ripe for traffic monetization. There are two roads in front of Xiaohongshu, which are also the directions that most content communities try, that is, e-commerce and advertising.
According to general logic, the Little Red Book is naturally suitable for trading. After all, Xiaohongshu originally recommended products on the top, some users "planted grass" on it, interested users then placed orders, felt easy to use, generated trust, repurchased again, and completed the closed loop.
But the truth is that most of the users who use Xiaohongshu go to Taobao and other platforms to place orders after Xiaohongshu is "planted". Little Red Book exists more as a recommendation platform.
More importantly, the number of users of Xiaohongshu itself is not enough to support its "discussion" with other e-commerce platforms.
"E-commerce pays attention to the scale effect, and it is impossible to make money without a certain scale." Internet analyst Ge Jia told the market that e-commerce often has to survive a long period of losses, resist various pressures, rise to a certain scale, and then have a price advantage and then make money.
Until now, the user scale of Xiaohongshu has been difficult to become the capital for price wars with other e-commerce platforms. Not to mention, to do e-commerce but also to solve the supply chain problems, there was a period of time on the negative body of the little red book there is a "fake".
Little Red Book also does live streaming with goods, but it is not satisfactory from the perspective of data performance. In addition to the small number of viewers, many live broadcast content is not mainly based on goods, but more about exchanges and sharing.
In contrast, advertising seems to be more suitable for little red books. Zhong Xuegao and brands such as Perfect Diary rely on the Little Red Book to promote the circle also illustrate this point.
Taking Zhong Xuegao as an example, this ice cream brand, which was only established in 2018, can quickly gain popularity, initially relying on "planting grass" on the Little Red Book. At the same time that the first batch of products were listed, Zhong Xuegao found a large number of Xiaohongshu KOLs and ordinary people to experience products, and published his feelings on Xiaohongshu.
In just three months, Zhong Xuegao had more than 4,000 relevant notes on the Little Red Book, and quickly went out of the circle. Even Lin Sheng, the founder of Zhong Xuegao, said that if you want to be a brand, you must do Internet celebrity delivery.
The success of Zhong Xuegao and Perfect Diary has made Xiaohongshu a good example in the eyes of other brands, and they all want to use Xiaohongshu as a "grass planting artifact" to achieve self-value growth.
Xiaohongshu himself is aware of this, Qu Fang once compared Xiaohongshu to a gold mine, "many people want to dig", so Xiaohongshu's action must be accelerated.
Xiaohongshu defines 2019 as the first year of commercial exploration, and in October 2019, Xiaohongshu had more than 100 million monthly active users, began to cooperate with more brands, and also had an MCN cooperation plan.
Xiaohongshu positioned itself as a "new brand incubator" and established a commercialization model of "from merchant to key opinion consumer to consumer" (B2K2C).
In this model, brands establish word of mouth in the community by influencing the key opinion consumers (KOCs) in the Little Red Book, and influence the consumption behavior of users. Users then share the consumer experience, which in turn affects the brand and other users in reverse, thus forming a positive cycle.
The pattern looks good, but it also attracts "false grass". To this end, Xiaohongshu launched the third round of false grass planting on January 19, and banned offline merchants and brands such as Yushe Impression, Anyu Hotel, Guangzhou Shuguang Beauty Hospital, Youtianlan, Zhichu, Oudebao and so on. In the previous two rounds of governance, Xiaohongshu has banned 68 fake grass planting brands and offline merchants.
From the data point of view, advertising has become the main source of revenue for Little Red Book. In 2020, Xiaohongshu advertising revenue of 600 million to 800 million US dollars, accounting for about 80% of the total revenue; e-commerce GMV is about 1 billion US dollars, and e-commerce revenue accounts for about 15%-20%.
In November 2021, Xiaohongshu also completed a round of financing of 500 million US dollars, and the post-investment valuation has reached 20 billion US dollars, and the market value of B station and Zhihu is only about 10 billion US dollars and 2 billion US dollars.
03 Traffic anxiety
Although the market value is high, the anxiety of The Little Red Book is still there, that is, whether it can be long-lasting by advertising.
"From the perspective of revenue composition, Xiaohongshu is equivalent to a diversion tool." Li, who is engaged in related industries, wants to tell the market that the benefit of making money from advertising is high profits, but the problem is that traffic will decay.
Ge Jia analyzed that if a community wants to retain users, content quality and community atmosphere are crucial. On the one hand, commercial projects cannot be too many to ensure user experience, on the other hand, it is necessary to give people expectations and exciting content, such as Momo for dating, Douban for gossip interaction, etc.
Xiaohongshu has been complained about by users too many advertisements, and watching experience posts has seen a soft wide, which invisibly affects the user experience.
In addition, the enthusiasm of Little Red Book bloggers is also a problem. Food blogger Ah Fen told the city that as long as he receives business orders through the Little Red Book, he will be commissioned. There are also those who want to take orders privately, but as long as the brand is reported to the Little Red Book, the blogger must also report, and the Little Red Book will charge 10% of the service fee for the brand and the blogger.
More importantly, traffic attenuation itself is an inevitable event.
"Generally, the traffic of a platform will decay by 15% in three months." Ge Jia explained that for example, the traffic of a platform at the beginning is 100,000, and then it begins to "volume", the loss of old users, new users can not come, the overall size of users will decline.
In the past, many platforms will do the same, often making up for the loss through growth. That is, by spending money to buy traffic, to cover the loss of users. At the same time, in this process, develop user habits, cultivate repeat customers, and take a two-pronged approach to ensure user growth.
After the expansion of user scale, it can even reduce commercial advertising, so that the user experience is better, more users are retained, and with negotiated capital, the advertising cost earned will continue to increase.
"But it's different now than it used to be." Ge Jia sighed, "Today's flow is as expensive as oil. ”
As the growth of the number of netizens is slowing down, the number of new users is decreasing, so that many platforms can only "make a fuss" from the stock.
Feedback to Xiaohongshu, as an APP with a high proportion of female users, such accurate vertical traffic is relatively more difficult to find
"It is difficult to say that it is commercial, but in fact, the traffic is not easy to obtain." Ge Jia said.
Perhaps also the thirst for traffic, Little Red Book has been having problems in recent years. For example, the much-maligned "Tobacco Gate", "Black Medical Beauty", "Filter Attractions", and the "Content Infringement "Protection of Minors Law" that just happened not long ago, etc., are not the mud and sand in the development of traffic platforms?
Li wants to analyze from another perspective, although Xiaohongshu is a community that shares lifestyles, in the end, it is not absolutely just needed. So, if you want more traffic to come in, this kind of thing seems to be difficult to avoid.
In contrast, WeChat users have exceeded 1.2 billion, Douyin daily active users have long exceeded 600 million, and Xiaohongshu's monthly active users of more than 200 million indicate that it is still only a niche vertical APP.
This is also why at this stage, the brand side tends to use it as a publicity position, rather than the main position. "Many new brands and small brands lack hot start resources, if you go directly to Taobao and other platforms, basically there is no chance to get ahead, first go to Xiaohongshu to do product publicity." But if you really want to sell goods, you will still go to a platform of a larger magnitude. ”
The Little Red Book has become a suboptimal choice, which is also its contradiction. As a content community with more than 200 million monthly active, the scale of selling goods is not large enough, and it may also lose money; advertising earns more, but the traffic will decay, and when the life cycle arrives, the brand will leave.
Xiaohongshu is also very aware of this, and is constantly trying to break the circle, hoping to open up more dimensions of users. However, "oranges are oranges in Huainan, and oranges in Huaibei are oranges", and the ecology on which the platform is based is not something that can be changed in a day or two.
(Li Xiang and Ah Fen appear in the text are pseudonyms)
(Author 丨 Huayu, Editor 丨 Han Zhongqiang)