Introduction to Xiaohongshu

Sat, 09/21/2019 - 19:34
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Which e-commerce platform would you first consider for your online business when entering the Chinese market? The famous Taobao, Tmall, JD.com, or your localized personal brand page? All these are great channels that could pave your way to the Chinese market, but these are not the only options that your business can consider. 

Becoming one of the fastest-growing social e-commerce apps in China, Xiaohongshu is winning over the hearts of young Chinese users. In fact, if your business is targeting Generation Z or Millennials; or selling FMCG, fashion and beauty-related products, this is an app you must keep your eyes on.

If this is your first time hearing Xiaohongshu, better late than never. 

In this post, you will learn:

  1. What is Xiaohongshu
  2. How does Xiaohongshu work 
  3. What makes Xiaohongshu so popular and successful in China
  4. What is the meaning of the “Xiaohongshu” brand name

 

* Important note before reading

Since July 29th, 2019, Xiaohongshu has been pulled from major Chinese app stores. While no specific causes have been listed for the current move, industry experts predict that this action may be linked to lax regulation of fake reviews, illegal ads (e.g. tobacco products, prostitution), and manipulation of view rates, etc. On August 1st, Xiaohongshu officially acknowledged the forced removal of its app from the stores. Regardless of what the exact cause is, Xiaohongshu has announced that it will fix its problems to cooperate with the regulators.

A month after the ban on app download, Weibo rolled-out a new platform focused on social commerce whose resemblance to Xiaohongshu is hard to miss. Thus, they named the app as “Oasis (绿州, lvzhou)” using green as their platform color.. The quick launch of this Xiaohongshu-like platform is predicted as Weibo’s aim to turn the current momentum into their opportunity and the industry is keen on how the new competitor will re-shape the existing social e-commerce market of China. 

(Oasis app was also taken down from the app store since September 4th due to design copyright issue. The story of the Oasis app will be explained in detail in another blog post shortly)

With 250 million registered users, getting-to-know Xiaohongshu is worth-while as it remains powerful in China. While we wait for the app to return to stores, let's explore all you need to know about Xiaohongshu.

 

What is Xiaohongshu?

In brief, Xiaohongshu is a $3 billion valuated unicorn company with 85 million MAUs, which first started as a small online community for young Chinese shoppers to share their shopping know-how and product reviews. The online community now became what is known as a cross-border social e-commerce platform, threatening Chinese giants such as Taobao. 

A cross-border social e-commerce platform? Complex as it sounds, it is hard to define the category of this app into one specific genre or even to find the same app in the Western world. However, if to find one, it can be said that Xiaohongshu is a true combination of Instagram, Pinterest, and Amazon. The advantages of each app from the West are so well-mixed that it is no joke that Xiaohongshu may now be in a position to guide the next business model to the original app makers. Nevertheless, to really seize the market at Xiaohongshu, you should not simply think that this is a Chinese version of the apps that you already know.

Comparison of Xiaohongshu, Instagram and Pinterest's interface.
Home pages of Pinterest and Xiaohongshu in order (left); account page of Instagram and Xiaohongshu (right)

 

How Does Xiaohongshu Work 

No matter how familiar the app’s interface looks to you, Xiaohongshu is different. This is simply because the app offers many features and functions in one app and because they create a completely different consumer decision journey.

Xiaohongshu, at a glance, looks like Instagram and Pinterest but functions more like web portals (cross-functional platform), meaning that the app works as a launching point to enter the online world to do browsing, searching, socializing, and shopping altogether. Therefore, the young Chinese go on Xiaohongshu multiple times per day whether to buy the trendiest red lipstick, check out a review of new snacks or see friend’s updated social feeds. 

Here’s an idea of how Xiaohongshu users use the platform.

 

Socialize and interact 

Nicknamed as the Chinese-version of Instagram and Pinterest, Xiaohongshu offers similar social media functions. From individuals to celebrities, one can create content and post them on its social account, and can also like, share, and pin posts. It is no exception for brands too. Verified brands can manage an official brand account to promote their brands and engage with customers. Xiaohongshu is also a popular and effective place for influencer marketing in China.

Socializing and interacting on Xiaohongshu

 

Browse and search 

Like portal sites, Xiaohongshu provides browsing function, allowing users to get exposed to trending search words and hot topics so they could linger inside the platform by randomly checking them out. Users can also search for information just like search engines using various forms of tags. This is possible because Xiaohongshu is known for its content being informational and more detailed than the other social media platforms that are filled with snacking content. Xiaohongshu’s originality as a product review and shopping “know-how” community has contributed to creating such blog-like posts. Hence, Xiaohongshu calls its content as “notes” (笔记).

 

Online (social) shopping

Identifying its business as a social "e-commerce" platform, Xiaohongshu's seamless in-app shopping experience is one of their crucial services. Thus, online shopping service is the biggest advantage owned by the company. Of course, you might like to refute that Instagram and Pinterest are also social media apps supporting e-commerce, and that online shopping is nothing special to Xiaohongshu. Partly true, however, Xiaohongshu is different in the sense that it operates an online store and supports a one-stop shopping journey. (cf. Pinterest and Instagram cannot be accessed in China without VPN.)

Xiaohongshu operates an online store within the app and there are largely two types of stores. One that is self-operated by Xiaohongshu and the other that is operated by registered brands. Xiaohongshu works as a middleman for brands that are not sizable enough to manage online stores and sell selected goods to its customers. It also accepts licensed brands (individuals with no brand license cannot apply) to register on its online store to directly sell their products. Therefore, Xiaohongshu does not only exist as a bystander selling advertising products to brand sellers but takes active actions to create sales. As of March 2019, Xiaohongshu sells more than 200,000 SKUs. (link)

&otherstories on Instagram
User's shopping journey on Instagram

Seamless shopping journey is another great advantage offered by Xiaohongshu. That is, where many Instagram and Pinterest shopping posts directs users to the brand's online pop-up store hosted outside of the app when purchasing a product, shopping at Xiaohongshu makes this process a lot simpler with the help of in-app online store. Users are not required to exit the app and hence are able to shop quickly with saved mobile payment information.

User's shopping journey on Xiaohongshu

User's shopping journey on Xiaohongshu
User's shopping journey on Xiaohongshu

#HashtagCulture

The tagging culture of Xiaohongshu is another big merit that keeps the users inside the platform. Here, users not only use hashtags but also tags of (store) location, brand, product, movie/ tv series, and other users' accounts. Therefore, when a user finds a product that he or she is interested in buying, one can easily find purchase information or even buy the product directly inside the in-app online store without having to ask for product information in a comment and search for an online store that sells it. Xiaohongshu’s unique tagging culture is also an underlying feature that is bettering the search function of the app. 

Tagging on Xiaohongshu

Grey circle taps are: location, brand, product, movies, account tags in order. 

* If you’re interested in using Xiaohongshu as a marketing tool, keep in touch. We'll be posting the second article in the Xiaohongshu series next week.

 

What makes Xiaohongshu so popular and successful in China

Xiaohongshu was established in 2013 and has now become China’s leading social e-commerce platform. It continues to be one of the fastest-growing companies in China, threatening many existing social media and e-commerce platforms. (source in English

 

User number and its demographic

Celebrating its 6th anniversary this year, Xiaohongshu announced that its registered users are now more than 250 million and monthly active users are 85 million. The number of their users easily exceeds a population of a nation and this is huge considering that this app is mostly known and used in China alone. Its large number of users itself makes it an attractive marketplace for brands around the world. 

What’s more interesting than the large user number is the demographics of their user base. According to Xiaohongshu, more than 70% of its users are those born in the post-90s. This is important because China represents one of the world's largest post-90s demographics in the world, and together with high consumption power, they are extremely mobile-savvy in terms of shopping, socializing, and creating content. This young active user base naturally makes the app’s culture trendy and savvy. Therefore, most brands targeting Millennials or Generation Z try their best to create a positive remark in this world of Xiaohongshu, as it is an app with a concentrated age group. 

In addition, around 90% of its users are women with high purchasing power, especially those who believe quality is important. (link) For this reason, Xiaohongshu has become a popular and effective marketing place for fashion and beauty brands. If your business is mainly targeting men, no need to worry since 10% of 250 million users is still a big market to seize. 

 

Loyal users 

Success and strength of Xiaohongshu largely comes from its loyal users. As introduced in the beginning, Xiaohongshu began from a small online fan community who shared their shopping experience. It was them who was able to bring in new audiences to the platform and create a sense of inner-community. Though the company has now become a cross-border e-commerce platform, it still retains its original identity as a social community for sharing product reviews and shopping hacks. Thus, Xiaohongshu community is becoming even stronger with the inclusion of more Instagram-like social media features, allowing word-of-mouth and influencer marketing. 

 

Reliable brand image with quality “authentic” products 

Unwanted selling of counterfeit goods by sellers has always been a big issue for many Chinese online retailers. Therefore, winning the customer perception as a reliable company selling real goods has been a key success point for big platforms in China. Xiaohongshu was also one of the companies that was able to tackle this concern. 

Turning its business as a cross-border e-commerce platform has easily solved the issue by allowing brands from overseas to directly sell their products to their users. Also its self-operated online store has enabled Xiaohongshu to directly control authentic goods from reliable small-to-mid-sized brands. Xiaohongshu online store has strict guidelines and does not accept individual sellers or those with no brand license and distribution rights. The company also heavily exposed authentic good trade mark (正品) on product images to communicate that its products are sourced from official brand partners. 

 

Efforts to manage and diversify brand experience 

Xiaohongshu’s efforts to keep sellers’ brand image and diversify brand experience are another reason why it is favored by users and brand marketers. 

Xiaohongshu brands its stores both online and offline. That is, as Xiaohongshu largely deal with brands from fashion and cosmetic categories, especially those that are highly reliant on selling emotional values, it is managing its online store by showing products in categories or by toning down the store product images (e.g. avoiding catchy or messy designs that stand-out too much). Simply put, brand partners can avoid a situation where their branded products are sold next to items like plumbing tools. Xiaohongshu is also using branded red delivery parcels to amplify offline brand experience.


Source: Jingdaily.com

Xiaohongshu is also expanding its experience to offline areas. Since 2018, it has opened three offline stores, named as REDHOME, at major cities to deeply engage with customers and maximize their brand experience. Offline stores has became a new touch point for Xiaohongshu and its brand partners to promote their brand values.
 


Source: Jingdaily.com

 

What is the meaning of “Xiaohongshu” brand name

Xiaohongshu, as pronounced, stands for three Chinese characters which are 小 (xiao), 红 (hong) and 书 (shu). When translated it means “the Little Red Book” and it's sometimes referred to as the "RED" app, but the brand name can imply many different meanings in China.

Xiaohongshu references to Mao's Little Red Book

In Chinese history, the Little Red Book is also known as Mao’s Little Red Book. It was a pocket-sized red book that included famous speeches and writings from Chairman Mao Zedong. The books were distributed by the government during the Cultural Revolution in China to spread the key ideology and all people during the time were legally obliged to carry with them. Though this political history likely has no connection with the current brand name, however, the familiarity of “The Little Red Book” for the Chinese may have helped the brand to easily build brand awareness.

 

Next up: Learn the eseentials of marketing on Xiaohongshu

 

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