Author | Yang Dian Dong Jie
Edit | Qiao Qian, Yang Xuan
36Kr exclusively learned that Xiaohongshu recently ushered in Jiang Yuan (nickname: Yunfan), the head of community content, Yunfan works in the content operation department of Xiaohongshu, responsible for all content in the community, and reports directly to Seiya. Yunfan previously worked for another community platform and has many years of experience in community operation and commercialization.
In December last year, 36Kr learned that Xie Yunwei (nickname: Kappa) was about to leave his job. A number of Xiaohongshu employees told 36Kr that Yunfan is the successor of Kappa, the former head of community content in Xiaohongshu.
Kappa used to be the senior director of operations of NetEase Media, and during his tenure at Xiaohongshu, he managed the "Lighthouse Project" and introduced PGC (Professional Generated Content) to Xiaohongshu, helping Xiaohongshu complete the breakthrough of DAU from tens of millions to 100 million.
Ten years after its establishment, Xiaohongshu has been restrained and cautious about commercialization, carefully maintaining the content value and community atmosphere of Xiaohongshu. Since last year, Xiaohongshu has accelerated its commercialization in an all-round way, and every business has begun to accelerate in search advertising, live e-commerce, and local life.
Judging from the data, Xiaohongshu's user growth in 2023 is indeed a bit weak. QuestMobile data shows that in January 2023, Xiaohongshu's average monthly DAU scale will be 68.38 million, and by December 2023, Xiaohongshu's average monthly DAU scale will reach 92.62 million, with a slight decline in the month-on-month growth rate in March~June and October~November.
This shows that Xiaohongshu, which is accelerating the pace of commercialization, is entering the throes that many content communities have fallen into—traffic has been taken away by e-commerce business, and the community atmosphere has been diluted by advertising.
Previously, the Financial Times reported that in 2023, Xiaohongshu's revenue will reach $3.7 billion and its net profit will reach $500 million, compared with 2022's revenue of $2 billion and a loss of $200 million. This is largely due to the diversification and efficiency of the advertising business, as well as the incremental growth brought by the e-commerce business.
But after making a profit, Xiaohongshu has not become easier.
Focus on vertical communities and continue to improve the advertising monetization rate
36Kr learned that Xiaohongshu's annual DAU in 2022 will be 84 million, 106 million in 2023, and an average DAU of about 114 million from January to February 2024, and Xiaohongshu will continue to grow users in 2024, with the goal of reaching 130 million DAUs.
Xiaohongshu insiders told 36Kr that Xiaohongshu has recently laid out a lot of vertical communities, and games and pan-knowledge are typical, and these two verticals were originally the base of Station B.
Not long ago, Xiaohongshu officially released the "Xiaohongshu Game Monthly", actively promoting the value of Xiaohongshu grass to game products, which mentioned that with the continuous improvement of Xiaohongshu's original content form, the game category has gradually occupied the popular highland of Xiaohongshu, and the reading exposure of game-related content has increased by 402%.
Community content and advertising business empower each other, and the layout of the game vertical is also intended to target game advertisers.
A clear trend is that more game manufacturers are willing to put on Xiaohongshu. At the end of last year, Xiaohongshu and "Genshin Impact" started a theme linkage, and in April this year, "Genshin Impact" moved the previous check-in activity on Weibo to Xiaohongshu.
Reflecting the demand for talent, Xiaohongshu is also interested in looking for candidates with relevant backgrounds. 36Kr has learned that Zhao Weichen, the former secretary of the board of directors and general manager of the corporate development and investor relations department of Yika Technology, will join Xiaohongshu and report to CMO Zhiheng.
Zhao Weichen will be the head of Xiaohongshu's Internet commercialization, expanding customers in e-commerce, online services, games and other fields, which may account for nearly half of the commercialization of other large manufacturers, but Xiaohongshu has rarely had a layout before.
At present, Xiaohongshu's advertisers are mainly concentrated in the consumer goods industry. An analyst told 36Kr that in 2023, Xiaohongshu's advertising revenue will account for the highest proportion of beauty care (18%), followed by fashion (12.5%), food and drink (10%), home decoration (8.7%), mother and child (7%), gold jewelry (6%), automobiles (5.3%), and daily chemical department stores (5.1%).
In addition to games, in 2024, Xiaohongshu will focus on vertical tracks such as automobiles, digital 3C, trendy toys, mother and child, non-K12 education, pan-entertainment, and local life.
36Kr also learned that in 2023, Xiaohongshu's ADS (ad loading rate) will be 10%, and the goal for 2024 is to increase by 2 percentage points to 12%. This means that in the future, there will be more ad-related content in the information flow on the homepage of Xiaohongshu.
In the context of making efforts in multiple vertical tracks and improving the advertising loading rate, according to 36Kr, Xiaohongshu has set an advertising revenue target of 22 billion in 2024 and 19 billion in 2023, an increase of 15%.
E-commerce has accelerated, and local life has been strategically adjusted
In August last year, Xiaohongshu integrated e-commerce into the community, opened up the transaction link from watching live broadcasts to placing orders and purchases, and drove into live broadcast e-commerce. 36Kr learned that Xiaohongshu's e-commerce GMV target for 2024 is to increase by nearly 90% year-on-year, and e-commerce commission income to increase by 50%.
The biggest differentiator of Xiaohongshu e-commerce is "goods". Driven by Pinduoduo, Taotian and Douyin e-commerce have taken "low price" as the core strategy of e-commerce, and Xiaohongshu still emphasizes quality, design, and niche, and this part of the business is characterized by high unit prices, but low ceilings.
For example, last year's Double 11, the unit price of Zhang Xiaohui's live broadcast room reached 1695 yuan, and the home furnishing categories that Xiaohongshu focuses on, beds, cabinets, and sofas are all large items, and the characteristics of the category determine that the unit price of customers is not low, according to Xiaohongshu, the unit price of the entire Xiaohongshu home furnishing industry has reached more than 800 yuan.
However, the vast majority of Xiaohongshu e-commerce products are still relatively affordable or low, which has lowered the overall customer unit price level. An analyst told 36Kr that the unit price of Xiaohongshu live e-commerce is about 240 yuan, even so, it is still high compared to other platforms. For reference, Huachuang Trading Co., Ltd. cited data from the Bureau of Statistics and the Post Bureau to show that the average unit price of major e-commerce companies is declining, and the average unit price of parcels on the whole network in January ~ February 24 was 78.3 yuan/piece, down 28 yuan/piece from the same period last year.
"How to do the e-commerce business of the public, Xiaohongshu has not precipitated enough methodology. A former employee of Xiaohongshu e-commerce told 36 Krypton.
According to Xiaohongshu, in the past year, the number of merchants with an annual transaction scale of more than 100 million in Xiaohongshu e-commerce increased by 500% year-on-year, and the number of merchants exceeding 10 million increased by 380% year-on-year. But there are also some brands that have a conservative attitude towards Xiaohongshu e-commerce, and a new consumer brand with a scale of 30-4 billion told 36Kr that the current goods will still be given priority to Douyin e-commerce, and the tens of millions on Xiaohongshu are too small.
At the same time, Xiaohongshu also has a new strategic plan for local life. 36Kr learned that in 2024, Xiaohongshu Local Life has established three major development strategies, involving three aspects: urban layout, track selection, and marketing play:
- In terms of urban layout, Xiaohongshu will directly deploy across the country, focusing on first-tier Internet celebrity cities such as Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou, Chengdu, and Nanjing, step by step, and then gradually extend to the second- and third-tier sinking markets.
- In terms of track selection, priority is given to categories such as coffee, bread and homestays that focus on high-end routes, catering to the preferences of the core customer groups of the Xiaohongshu platform.
- In terms of marketing methods, online support + offline incubation will be carried out for event marketing for business influencers or users, so as to enhance the brand voice of the platform and lay a solid foundation for promoting local life business.
In April last year, Xiaohongshu opened an official account "Tupapotu" to publish content operations and support measures related to local life, which is regarded as Xiaohongshu's official entry into local life. At that time, the investment categories of the "Food Power Hair Shop Plan" released by Xiaohongshu in "Tupao Potato" mainly included light food, bread and desserts, tea and coffee, Western food, Japanese and Korean cuisine, etc., and the first batch of open cities were Shanghai, Guangzhou, Beijing, Shenzhen, and Chengdu.
Judging from the current adjusted strategy, Xiaohongshu is more focused on local life categories this time, and the urban layout is wider and more sinking. Xiaohongshu officials said that the relevant data in the article is untrue.