Source: Gingko Finance
Beyond the content community, how far is Xiaohongshu from an IPO?
Recently, it was reported that Xiaohongshu may launch a Hong Kong IPO as soon as the second half of next year, and will plan another round of financing before that. On December 26, Xiaohongshu responded to the rumors, saying that the company has no plans to go public.
When it comes to the development of content products, we will always return to the contradiction between community ecology and commercial promotion, which is especially obvious in Xiaohongshu, which started with a strategy: focusing on the value of "people", starting from the "usefulness" of content, and growing into a "lifestyle guide" for countless users.
After a long period of "inaction", in the second half of this year, Xiaohongshu first integrated the e-commerce business and the live broadcast business, set up a new trading department, upgraded the level of the e-commerce department, and then removed miscellaneous items and officially closed the "Welfare Society" and "Little Oasis". With the theme of "The Buyer's Era", the platform began to send a signal to the public to accelerate the pace of commercialization.
Storytelling is ultimately an output at the conceptual level, and as a key part of the e-commerce ecosystem, merchants need to see more operational certainty. Compared with the standardized operation and strict traffic mechanism of other e-commerce platforms, Xiaohongshu's content ecology emphasizes more natural traffic, and it is more difficult to benchmark accurate conversion data with strong community attributes, and merchants are still looking for an operation methodology exclusive to Xiaohongshu.
On the other hand, the platform is more proactive in commercialization, and is focusing on improving the efficiency of grass planting and transformation, presenting a clearer growth path for merchants. The e-commerce market is a sword and a sword, and this special representative of the "slow economy" has finally put on a preemptive posture after years of precipitation.
"Prioritizing" the content community
In the eyes of the outside world, whether it is a content platform or an e-commerce platform, Xiaohongshu always needs to be singled out.
CMO Zhiheng once pointed out that the essence of Xiaohongshu grass planting lies in "people", not traffic. This value orientation shapes Xiaohongshu's "decentralized" traffic distribution mechanism, incentivizes the creation of bloggers at the waist and tail, and provides more diverse and richer high-quality content, thus forming Xiaohongshu's unique KOC ecosystem.
In fact, as early as 2013, "planting grass" was born in the embryonic form of the Xiaohongshu community, but at that time it had not yet become a label promoted by the platform. In the five years since, Grass has grown freely on the platform, until more and more brands have paid attention to the influence of users' spontaneous grass planting.
To avoid erosion of the content community, Xiaohongshu has been restrained in commercialization, so it has lagged far behind its peers until 2019, when it began to focus on commercialization in the marketing space.
Thanks to Xiaohongshu's years of "rule by inaction", the platform's content community construction has become quite mature, and the trust of users has become Xiaohongshu's moat.
According to iiMedia Research, in 2023, the main reasons why Chinese Xiaohongshu users trust the content recommended by the platform are high quality graphic content (72.0%), detailed and rich content (59.2%), authentic and credible product reviews (51.9%), and trust in Xiaohongshu bloggers (43.8%).
The high level of trust strengthens the user's reliance on the platform, and when searching on the platform, the user finds people who are facing the same problem as themselves, and they share their personal experiences through posts and exchange experiences in the comment section. Compared with the centralized distribution mechanism of traditional search engines, Xiaohongshu provides a new paradigm in the composition of search content and information distribution, so as to match more efficient systems and attract more active users.
As a result, enhanced search has become a dark line parallel to the encouragement of "planting grass". Search itself was once the first entry point to the Internet, and it is still the key to connecting all kinds of interactions. According to the data, by the end of 2022, Xiaohongshu had 260 million monthly active creators, 20 million monthly active creators, and 3 million+ daily notes published. 60% of Xiaohongshu's daily active users actively search on the platform, and the average daily search query volume is close to 300 million.
Behind the huge search volume is the demand that has been sorted out by many subdivisions of the platform. In order to sort out the more complex conversion path than interest e-commerce such as Doukuai and accelerate the pace of commercialization, Xiaohongshu proposed the concept of "buyer e-commerce", which further consolidates the tonality of the platform through the discourse of the fashion circle, and at the same time, it can also be distinguished from the influencer ecology in the traffic mode.
With the gradual formation of the overall idea of grass planting, the search value has been placed on the strategic high ground, but for merchants, the unique platform tonality means that the business template of interest e-commerce cannot be directly applied, and the implementation at the operational level is still not difficult.
Merchants in the mist
At present, there are two main dilemmas for merchants, one is that Xiaohongshu's business logic is different from that of other platforms, and some merchants are "unadaptable";
Xiaohongshu's grass planting logic, emphasizing "delivering value through word-of-mouth", focuses on community interaction and user subjectivity, which is quite different from traditional e-commerce platforms and other traffic platforms, resulting in different ways of content marketing between the two.
In the context of traditional e-commerce, user portraits and traffic allocation mechanisms are important tools for marketing, and the platform depicts user portraits according to the traces of use, and then pushes similar advertisements to drive repurchases. This type of marketing model may be a little more mechanical than word-of-mouth, but it is more efficient.
Douyin's marketing is mostly pure effect advertising, while Xiaohongshu is more inclined to brand advertising, focusing on the shaping of brand image and the transmission of product culture.
The traffic platform represented by Douyin has set the operation template of interest e-commerce, and merchants have become Xi to the traffic-centered operation mode, and now it takes time to re-adopt another set of operation logic, and it also requires cognitive changes.
Xiaohongshu's user activity is high, and the platform tone is suitable for brand value transmission concepts, so most advertisers are optimistic about its content marketing value, but due to the community-based marketing logic, conversion data is not easy to obtain, and it is difficult for merchants to Xi clear operation methods. This drawback once made Xiaohongshu's marketing a kind of "metaphysics", that is, in the context of people praising its marketing effectiveness, no one could figure out the quantitative value of planting grass.
On the other hand, the grass planting model directly integrates the e-commerce business into the content community, weakening the existence of service providers.
In general, the platform ecology shaped by the content community is more flat, because the strong interaction model excludes redundant intermediate links and pays more attention to the direct communication between brands and users.
From a practical point of view, the soft and wide marketing of different products has its own grass planting channels and word-of-mouth delivery paths, which is difficult to reproduce on a large scale, and third-party service providers also have pain points such as data security and privacy issues, opaque cost structure, lack of personalized customization capabilities, and inconsistent service quality.
After abandoning the business model of service providers, merchants are still looking for a way out of how to use the community to export their brands, establish long-term value, and optimize the market layout in line with the consumption characteristics of Xiaohongshu users.
Problem solving, starting with quantification
At the "WILL Business Conference" at the beginning of this year, Xiaohongshu proposed the indicator "TrueInterest Grass Planting Value" to measure the user's "True Grass Planting" behavior, which covers two reference values of in-depth reading and deep interaction, the former includes three data of image and text reading ≥ 10s, video viewing ≥ 30s, and completion, while the latter includes 11 user behavior data such as favorites, positive & purchase comments, screenshots, sharing, following, saving pictures, and searching for product terms.
At the second business conference at the end of the year, Zhiheng, CMO of Xiaohongshu, said that "planting grass has become the third type of marketing paradigm", and creatively proposed the Xiaohongshu crowd anti-funnel model. Vice President of Technology Bagpipe announced that it will open up data cooperation to promote the global transformation of Xiaohongshu grass planting, and at the same time increase the openness of the search field.
Starting from quantification and improving the transparency of grass planting effect with more dimensional data indicators is the first step for the platform to clear the fog for merchants. Opening the search field to the outside world will help consolidate the positioning of the platform's "life guide", deepen users' impression of the life search engine, and have the opportunity to further explore potential user needs and business value.
Following the logic of grass planting, Xiaohongshu is going further and further in breaking free from the traffic-oriented marketing model.
As a latecomer, Xiaohongshu's business route design continues the style of pursuing differentiation to avoid falling into homogeneous competition, and the network value of the community can accommodate more diverse needs, which is also an important reason for Xiaohongshu to break out of the encirclement in the content track.
But the flip side of diverse communities is that personalized content can be less "efficient" in the pursuit of scale. The niche, boutique, and personalized identified by Xiaohongshu are more suitable for the operation of non-standard categories, and "adapt measures to local conditions" for businesses in different vertical categories, but Xiaohongshu is obviously not satisfied with only doing small and beautiful business.
The Securities Times pointed out that judging from the current financing process and valuation, Xiaohongshu's potential is favored by the capital market. With the value concept of focusing on "people", Xiaohongshu has taken a different path to introduce content products to a new stage. Ten years of "planting grass", once digging gold, how effective the "people" will be will become the key test of the platform's anniversary node.