Our reporters Li Kunkun and Li Zhenghao report from Beijing
Recently, it was reported that Xiaohongshu may be listed in Hong Kong in the second half of 2024 at the earliest, which has once again aroused widespread attention from the outside world about Xiaohongshu. However, the reporter of "China Business Daily" asked Xiaohongshu to confirm the matter, and the other party said that there is no plan to go public.
In fact, as early as November 2021, Xiaohongshu received a total of $500 million in financing from Alibaba, Tencent and other investors. By 2023, when Sequoia China bought Xiaohongshu shares in a few transactions, its valuation had fallen to $14 billion. The industry believes that how to enrich the story of its community e-commerce before listing and obtain a higher market valuation is a problem that Xiaohongshu needs to solve urgently.
The UGC content community is growing rapidly
"Most of my impression of Xiaohongshu is that it sells all kinds of cosmetics, clothes, shoes and hats, accessories, etc., which is quite petty bourgeoisie...... When watching Douyin, you can also see that Internet celebrities recommend products that attract traffic to Xiaohongshu to buy. A Xiaohongshu user told this reporter, "I used to download Xiaohongshu, but now I don't." I don't like the style of the above things.,Before, it was because I had to look at the ratio of various tea drinks above.,The rest of the content feels like a generation gap when I look at it again.。 For example, after a paragraph, there is not much content after removing emojis and emojis. ”
According to public data, as of the end of 2022, Xiaohongshu has more than 260 million monthly active users, of which more than 70% are "post-90s" users, and 50% of users are from third-tier cities and below. At the same time, the number of sharers exceeded 69 million, and the average daily exposure of notes reached 30 billion. The growing popularity of lifestyle digital assets has attracted more and more brand merchants, with more than 173,000 business and brand accounts registered on the Xiaohongshu platform by the end of 2022. Focusing on the accumulation of UGC content assets, Xiaohongshu is becoming a gathering place for more and more users to have a diverse lifestyle, as well as a life encyclopedia for more and more cross-generational people.
After ten years of development, Xiaohongshu has now laid out three major business segments: content community, brand marketing and e-commerce transactions.
Xiaohongshu has always been committed to making UGC content more based on real-life records and sharing, and stimulating the enthusiasm for active content creation in the community, so as to provide users with "useful" value close to themselves.
The content of Xiaohongshu community currently covers various lifestyle fields such as fashion, food, beauty, personal care, fashion, education, knowledge, travel, home furnishing, mother and child, and pets. In 2021, the number of Xiaohongshu user notes published increased by 134% year-on-year. Among them, community sports increased by 889%, life records increased by 356%, automobiles increased by 306%, games increased by 284%, technology and digital increased by 179%, education increased by 279%, workplace industry increased by 566%, food increased by 126%, decoration increased by 138%, home furnishing increased by 269%, and pets increased by 157%.
Jiang Han, a senior researcher at Pangu Think Tank, said in an interview with this reporter: "At present, I don't find any special bottlenecks in Xiaohongshu, but now community platforms actually have some similar problems, such as information cocoon problems, content homogenization problems, commercialization problems, etc., but these problems are also inevitable problems in development and are being gradually solved." ”
Make efforts in community e-commerce
In terms of community e-commerce, from content consumption to life practice, Xiaohongshu's business ecology has grown from users' daily sharing and interaction, and is also serving the diversified lifestyle needs of more users.
In December 2023, at the Geek Park Innovation Conference 2024, Xiaohongshu COO Conan publicly stated that five years ago, he was very firm in his stance that Xiaohongshu would not do e-commerce. "At that time, I was from the perspective of the community, but now, I am in charge of the e-commerce business. ”
At present, the main modes of content community commercialization are, one is e-commerce that converts traffic into GMV, and the other is advertising. Xiaohongshu has built a stable community ecology, but its e-commerce commercialization has always been tepid. In 2020, advertising revenue accounted for about 80% of Xiaohongshu's revenue composition, and e-commerce revenue accounted for about 20%.
The three business steps of general merchants in Xiaohongshu are: creating an account, sending notes, and interacting with users on the content they create, finding buyers, doing live broadcasts, and doing a good job of planting and warming up the products before live broadcasts, opening stores and broadcasting, stabilizing operations, and developing the ability to operate in multiple fields.
So far, Xiaohongshu has established a reputation in the community with the help of the real experience and sharing of more than 50 million sharers, to influence the consumption behavior of more users, and users can share their consumption experience and then influence the brand and other users in reverse, forming a positive cycle. Based on this, Xiaohongshu has also become an incubator for popular products and future brands.
According to public data, as of December 2021, the Xiaohongshu community has brought together 140,000 brands from more than 200 countries and regions around the world. The number of domestic brands on Xiaohongshu exceeded 78,000, and the number of user searches for domestic brands exceeded 1.2 billion, with a total of about 6 billion discussions, and the number of discussions increased by more than 100% year-on-year for two consecutive years. Including beauty and skin care brands Perfect Diary, Name of Nature, Gu Yu, Hua Xizi, etc., clothing and footwear brands Zhizhi, Maia Active, Ubras, etc., more and more new domestic brands are "popular" on Xiaohongshu.
Conan has said that individuals such as Xiaohongshu buyers and managers have become key players in Xiaohongshu's e-commerce. They have the expertise and ability to deeply understand the needs of users, so they can better convey the value of their products, build trust with users, and continue to provide services to users. They are the connectors between the product and the user, and many users make their first purchase on Xiaohongshu through these individuals.
In the past year or so, Xiaohongshu has integrated e-commerce into the community, opening up the whole link for users to read notes, watch live broadcasts and place orders and purchases, realizing the organic integration of the community and e-commerce. According to Conan, in the past year and a half, the scale of Xiaohongshu's e-commerce buyers and managers has increased by 27 times, the number of dynamic sales merchants has increased by 10 times, and the number of purchasing users has increased by 12 times.
In August 2023, Xiaohongshu integrated its e-commerce business and live broadcast business to form a new trading department, which is a first-level department with the community department and the commerce department. Previously, the e-commerce business was a second-level department under the Ministry of Community, and the live broadcast business was an independent department.
Jiang Han believes that the future development prospects of Xiaohongshu are positive. With the popularity of the Internet and consumers' pursuit of quality life, people's demand for content platforms like Xiaohongshu will increase. At the same time, Xiaohongshu has established a good brand image and user reputation, and has a large number of loyal users, which provides a solid foundation for its future development. Of course, Xiaohongshu also needs to continue to balance the quality and commercialization of content, as well as strengthen the management of copyright protection.
In addition, Xiaohongshu is also making efforts to AI. As early as March this year, Xiaohongshu began to prepare an independent large-scale model team, with core employees from the NLP technical team of the advertising business. In addition to the establishment of a large model team, Xiaohongshu also has a number of independent departments to promote the implementation and exploration of AIGC at the same time.
For Xiaohongshu, AI algorithms can be used to provide personalized content recommendations for users based on their interests and behavior patterns. This will not only help users discover more content of interest, but also increase their stay on the Xiaohongshu platform.
For example, AI can help Xiaohongshu optimize content creation. Users can automatically generate content with the help of AI technology, thereby lowering the threshold and cost of content creation. This will also help attract more creators to Xiaohongshu's platform and promote diversity and innovation in content creation. In addition, AI can also help Xiaohongshu better connect users and content creators. By analyzing the user's behavior and interests, we can find the user group that matches the creator, so as to improve the dissemination effect and influence of the content.
(Editor: Wu Qing Proofreader: Yan Jingning)