Xiaohongshu needs to move quickly to attract new users and keep brands interested.
The eight-year-old Chinese lifestyle app Xiaohongshu (aka Little Red Book or RED) is a leading user-generated content (UGC) platform that is sometimes referred to as the “Instagram of China,” though the app — like many fellow Chinese platforms — is no one-trick pony. One key reason Xiaohongshu has attracted scores of new luxury brand users, among them Louis Vuitton, Gucci, Celine, Saint Laurent and Givenchy, is its reputation for driving e-commerce sales via the FOMO-like phenomenon of “growing grass” (种草), a Chinese internet term that refers to the experience of seeing a product owned by others and wanting it too. For this reason, Xiaohongshu is a popular destination for brands to place advertisements or collaborate with Key Opinion Leaders (KOLs).
Leveraging what has emerged as one of the most powerful consumer trends over the past few years, in April 2020 Xiaohongshu launched its own e-commerce livestreaming e-commerce initiative to encourage more of its roughly 300 million users to make purchases in-app rather than via third-party sites. The performance of this and other sales-centric initiatives helped Xiaohongshu secure a $500 million investment in November 2021 and double its market valuation from $10 billion to $20 billion within a matter of months.
However, recent developments — chiefly intensified competition from other platforms and Xiaohongshu’s own internal issues — could considerably hinder the development of the platform’s e-commerce aspirations.
On December 16, ByteDance, the parent company of short video platform Douyin (the China market version of TikTok), launched its new “Douyin Box” (抖音盒子), a fashion-focused e-commerce platform that is heavy on user-generated content (UGC) for segments such as streetwear, luxury, and beauty. The platform also has an “explore” page that displays products like a traditional e-commerce site and synchronizes users’ browsing records from the Douyin app. Continue to read the full article here
