300 million monthly active users, but still "difficult to make money". Little Red Book, which lacks a "sense of purpose", must give more answers in commercialization.
Author | Hu Trace Edit | Luo Lijuan
"Xiaohongshu has become the life search portal for ordinary people, accounting for 60% of daily user searches and 300 million daily search queries." At the Little Red Book WILL business conference, Little Red Book COO called Conan and said.
Image source: Official courtesy
In order to solve the "metaphysics" problem of grass planting efficiency, Xiaohongshu tries to quantify grass planting with data. To this end, Xiaohongshu launched "TrueInterest". For business partners, by quantifying the depth and active behavior of Xiaohongshu users, a new grass evaluation system is formed, so that grass marketing can be measured and optimized.
Making grass planting more "scientific" has also become Xiaohongshu's goal this year.
In his bones, Little Red Book is emotional.
It likes to compare communities to cities, referring to users as residents, and has introduced community conventions as rules for the survival of "cities."
This kind of sensibility fills Xiaohongshu's community and content, and also affects Xiaohongshu's corporate culture.
Inside Xiaohongshu, founder Qu Fang made a "potato name plan" because she was afraid of being called boss by employees, and each employee needed to give herself a "new" name, her name was Mulan, the COO was Conan, and the CMO was called Zhiheng... Unlike Ali's flower names, each potato name needs to have a source and allusion, and a "Potato Name Committee" has been established for this purpose.
It is also this sensibility that not only makes the management structure of the enterprise more flat, but also helps the growth of the Xiaohongshu community and the formation of user stickiness.
But the other side of the coin is that Xiaohongshu lacks the "wolf" goal orientation of Pinduoduo and ByteDance. This makes Little Red Book always pushed.
For example, in the advertising business, or after a large number of demand appeared, Xiaohongshu kept up with the development of tools, and gradually launched platforms and tools for commercialization such as fries, dandelion, spotlight, and lingxi. In terms of e-commerce, Xiaohongshu was even slower, tried live e-commerce and self-operated e-commerce, and only opened up content and e-commerce last year, and explored the e-commerce model with Xiaohongshu's characteristics.
300 million monthly active users, rumored floating valuations, pressure to go public... In the tenth year of its founding, Xiaohongshu's "sensibility" seems to have become a shackle that must be broken, it needs to accelerate the commercialization of the community, and it also needs to pick up e-commerce again.
1
Liberal arts students solve "science" problems
At the Xiaohongshu Will Business Conference on February 23, in response to the problems caused by the failure of traffic play faced by the marketing industry, Xiaohongshu launched "TrueInterest".
The so-called "planting grass" is believed to be: communicating the value of the product with consumers.
But growing grass is also "metaphysics", it is an episodic and uncertain way of marketing. It is difficult for brands to judge whether their grass marketing is really accepted by consumers, which affects consumers' decisions, so it is difficult to improve the efficiency of grass planting by adjusting the direction of marketing investment.
The "grass value" tries to give more certainty to the "grass planting". According to Xiaohongshu, there are 11 kinds of deep reading and deep interaction user behaviors involved behind the planting value, including long-term reading, buying reviews, saving pictures, sharing, and searching for product words. Through these 11 behavioral indicators, the platform measures grass planting based on commodity granularity in the whole field.
At present, TrueInterest will be equipped on the dandelion platform to further help business partners find grass content and high-quality bloggers suitable for their products.
If this value is effective, it will also be a great supplement to the commercialization of Xiaohongshu's community. At the same time, the basis of "grass value" is Xiaohongshu's own big data algorithm, and its launch also means that Xiaohongshu is exporting its own data insight capabilities to the outside world in an attempt to monetize this ability.
At the WILL business conference, Conan is giving a speech on stage Image source: All-weather technology real shot
A founder of Xiaohongshu's ISP channel service provider once said that Xiaohongshu is essentially a "liberal arts student" platform, focusing on community and content, while there is still room for improvement in "science" capabilities such as data capabilities and delivery tools.
In the liberal arts, at present, Xiaohongshu has 20 million + monthly active creators, an average daily release of 3 million+ notes, and an average daily search query of nearly 300 million; In 2022, monthly activity exceeded 200 million, and the per capita daily usage time increased from 26.49 minutes in 2018 to 55.31 minutes. Xiaohongshu has shifted from simply pursuing content increment to "qualitative change" in which content diversification and governance community ecology go hand in hand.
In the past two years, Xiaohongshu has worked hard to answer the questionnaire for science students.
In terms of delivery tools, Xiaohongshu connected the "fries" function in the early years, and users can increase the exposure of notes after placing fries.
With the platform's grass-growing characteristics prominent, the rise of new consumer brands such as Vitality Forest and Perfect Diary has proved the advertising value of Xiaohongshu, and countless new and old brands, MCNs, and bloggers have come to Xiaohongshu to compete for the huge cake of the "grass planting" economy. Xiaohongshu also launched the dandelion platform.
It's a port between brands, bloggers, and users. On this platform, brands can find KOLs and KOCs for content placement, and Xiaohongshu bloggers can also receive advertisements through the platform for commercial monetization. In the past, the platform required bloggers to have 5,000 followers to be able to accept orders, but recently the threshold has been further lowered, reaching 1,000 fans can accept orders.
In this process, Dandelion takes a 10% service fee from the dealer's order.
In May last year, Xiaohongshu further launched a "one-stop advertising platform" - spotlight platform. It integrates Xiaohongshu's information flow advertising, search advertising and other resource scenarios, brand merchants can purchase keywords and place advertising content at the forefront of the page after users use the search function; Ads can also go directly to the feed stream, appearing on the user's home page.
In short, "dandelion" and "spotlight", one focuses on creator content planting, and the other focuses on brand advertising.
In terms of monetizing data capabilities, "planting grass value" is not Xiaohongshu's first attempt.
At the Business Ecology Conference in December 2021, Xiaohongshu launched the "IDEA" marketing methodology, namely: Insight to see needs, Define to define products, Expand to seize the track, Advocate to support the brand.
Simply understood, Xiaohongshu discovers potential demand and provides it to brands through the judgment of community content and trends, so that brands can have more accurate judgments on demand, so as to adjust marketing strategies and reach users.
Image source: All-weather technology real shooting
Last year, Xiaohongshu launched its supporting business data platform "Lingxi".
The "Grass Value" launched this time is undoubtedly an upgraded version of "IDEA".
However, it may be difficult to judge whether Xiaohongshu's data capabilities can support considerable commercial monetization. Some practitioners pointed out: "Dandelion display of likes, collection data is not accurate" and "the value of thousands of melons in data is higher than dandelion". Whether the data-based data insight and analysis capabilities on which the value of Lingxi and grass are based can be accurate remains to be seen.
2
Xiaohongshu-style "characteristic e-commerce"
The more troublesome business of Xiaohongshu's commercialization is e-commerce.
In Xiaohongshu's revenue structure, it is mainly composed of advertising (community commercialization) and e-commerce. In 2020, the two accounted for 80% and 20% respectively. With Xiaohongshu's renewed efforts in community commercialization in the past two years, the income gap between advertising and e-commerce has continued to widen.
The tepid e-commerce has caused a huge gap in Xiaohongshu's commercial closed loop - brands are placed on Xiaohongshu, bloggers produce content on Xiaohongshu, and users are "planted" on Xiaohongshu, but the final transaction link is on a third-party platform. This also greatly reduces the commercial value of Xiaohongshu.
To complete this closed loop, it is imperative for Xiaohongshu to make efforts in e-commerce.
However, it is not easy for content community platforms to do e-commerce, and Xiaohongshu, like content communities such as Station B and Zhihu, e-commerce has always been the role of "runner".
An important reason lies in the platform's "content first" gene: management tends to give content a higher priority, and commercialization needs to make way for content; Users gather on the platform because of content, and it is also difficult to reverse habits. This also makes e-commerce appear in the content community, whether it is external links, shelves or live broadcasts, which makes the platform and users feel awkward.
Image source: All-weather technology real shooting
Xiaohongshu tries to explore "characteristic e-commerce" that combines its content advantages.
In the second half of 2021, Xiaohongshu cut off external links, and then launched the "number store integration", opening up the store system on the site, opening up public domain traffic to small and medium-sized merchants and individual merchants, and shortening the distance between content and transactions.
In 2022, Xiaohongshu continued to make efforts, first adjusting its organizational structure and merging the community with e-commerce. Such an adjustment seems to downgrade the e-commerce business, but led by Conan himself, it actually puts e-commerce in a more core position.
The e-commerce team led by Conan spent a year doing "infrastructure", that is, improving the entrance and page of e-commerce on the premise of user experience, and exploring how to combine e-commerce with community content.
In Xiaohongshu's latest version of the grayscale test, some users found that the important "shopping" entrance on the homepage disappeared and was replaced by "video". Shopping entrances are "scattered" and permeated into more places.
One of the important scenarios is "product notes", where merchants can intervene in product links in published notes, so that what users see is what they get. Through the analysis of user preferences, product notes can also enter the feed stream of community content to achieve exposure.
It is not difficult to see that the core of Xiaohongshu e-commerce is placed on "content". Merchants can get more popularity by continuously outputting high-quality note content and getting enough likes and comments. The platform attributes of Xiaohongshu also allow merchants to introduce their brand concepts, ideas and stories through graphics and text.
A bald candle sold on Little Red Book Image source: Screenshot of the product
It is also under the influence of this trait that most of the merchants who currently choose to work on Xiaohongshu are non-standard products, such as independent designer products, creative goods under popular culture, etc.
It is understood that since the second half of 2022, Xiaohongshu's e-commerce has had a wave of rapid growth, and product notes and live broadcast are the most prominent growth scenarios. In last year's Singles' Day, Xiaohongshu e-commerce GMV increased by 62% year-on-year. Recently, merchants who have begun to have a multi-platform layout said that they are considering "all in" Xiaohongshu e-commerce.
However, Xiaohongshu's current e-commerce still has many problems unsolved.
Its settled merchants are mainly individuals, small and medium-sized brands or small team stores, while the big brands that can really attract traffic are vacant. There is no advantage in price, and some users said that after Xiaohongshu was planted with grass products, they searched on third-party platforms and found that the same product Xiaohongshu sold for more money.
In terms of service, Xiaohongshu's e-commerce has been criticized. Search for "Xiaohongshu shopping" in Xiaohongshu to find a large number of complaining notes. Some users complained that after placing an order in Xiaohongshu, they received Pinduoduo's logistics information; There are also users who complain that they bought goods after grabbing coupons on Xiaohongshu, some of them could not be transported by logistics, and some were canceled with abnormal orders.
For Xiaohongshu, the path of content + e-commerce has gradually become clearer, but to run the e-commerce business, Xiaohongshu still needs to fight a long battle.
3
Xiaohongshu needs a "sense of purpose"
For the past 2022, Conan believes that the biggest change in Little Red Book is that Little Red Book is gradually moving to the public - more and more people are using it, and it has also entered more and more ordinary life scenes.
For 2023, Conan said that this year will still make the "grass value" thorough. In the past few years, Xiaohongshu has sorted out the form of commercialization as a whole, but commercialization is still in its infancy. This year, get ready to "run".
Xiaohongshu plan, in brand marketing promotion, to make the brand services that have been served more fully, and at the same time cover more enterprises and brands.
In e-commerce, we will increase our efforts and will combine the trend trends of the community, such as sports, outdoor, fashion, etc., to invite merchants that have formed a certain scale effect in vertical fields to enter Xiaohongshu, and will also negotiate cooperation with small and medium-sized brands with growth potential to help brands grow together.
Image source: All-weather technology real shooting
However, whether for the community or for e-commerce, Xiaohongshu has not put forward clear, quantifiable goals.
Zhang Peng, founder of Geek Park, said: "The commercialization process of Xiaohongshu is not a one-stroke painting. Qu Fang also said when communicating with him: "We may still be relatively intimidating overall, and we didn't calculate when we first did this." ”
When users grow, a gray content cooperation chain is built between MCN, talent, and brands, and Xiaohongshu launches "Dandelion". When the brand's information flow advertising increased, Xiaohongshu launched "spotlight". When it was found that the brand evaluation of "planting grass" was metaphysics, Xiaohongshu launched Lingxi and Planting Grass Value.
In terms of decision-making, Xiaohongshu has always been a role where demand has emerged, and enterprises have pushed products and services.
Zhang Peng believes: "It has always been the times that pushed Xiaohongshu away, not Xiaohongshu taking the initiative to seize the times." This passive nature also makes it difficult for Xiaohongshu to be as wolf-oriented as Pinduoduo and ByteDance.
In the era of being pushed by capital and Internet giants, Xiaohongshu's passivity has made it more and more questioned.
After Xiaohongshu completed the E round of financing, its valuation reached 20 billion US dollars, exceeding the total market value of Station B + Zhihu + Weibo. In November last year, the market reported that Xiaohongshu's valuation in the private equity market had shrunk.
The most important thing inside and outside the industry is when Xiaohongshu will go public and the secondary market's judgment of its value.
In March 2021, Yang Ruo, former managing director of Citigroup's TMT investment banking division in Asia Pacific, joined Xiaohongshu as the company's CFO, and Xiaohongshu was once rumored to be going public in the United States. However, Xiaohongshu denied this rumor, and then the information about its listing came to an abrupt end.
In September last year, Yang Ruo left Xiaohongshu and joined Fosun Group.
In the tenth year of its establishment, Xiaohongshu has become more and more "cautious", and it has become less and less likely to disclose its revenue and user data. It is understood that this kind of data also has a higher level of authority within Xiaohongshu. Not only that, the founders and management of enterprises are also appearing less and less in front of the media.
Less talk, less mistake; Do more, try more. The "sensibility" of Xiaohongshu needs to make way for commercialization and capitalization after all.
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