E-commerce is booming worldwide, led by China.
The Chinese country has the largest internet community in the world and also represents the largest e-commerce market. According to Statista in January 2020 online revenues in China reached a value of 1002 billion dollars, more than double the market US e-commerce which is 420 billion dollars. An important part of this growth comes from cross-border e-commerce and focuses mainly on fashion and luxury goods. Foreign natural and organic products are also equally popular, and the only way to buy these products right now is through cross-border.
In addition to the well-known e-commerce platforms owned by Alibaba (Tmall and Taobao), more and more often among the players of cross-border e-commerce, we hear the name of, XiaoHongShu.
XiaoHongShu, literally “Little Red Book”, or simply Red, is an e-commerce application specialized in international luxury goods, mainly fashion and beauty, created in 2013 by Miranda Qu and Charlwin Mao.
I know what you are thinking … but it has the same name as Mao’s famous “Little Red Book”, widespread in China in the 60s and 70s. Well, even if the name may mislead, the platform shares only popularity with the famous book.
Initially born as a place where users shared opinions on products purchased abroad, the application now has over 300 million users, of which 84 million are active on a daily basis. Three billion impressions are created on Xiaohongshu every day through a wide range of media, including photos, texts, and short videos, earning a place in the TOP5 of the most popular and promising applications in China.
The application covers various areas related to lifestyle, firstly cosmetics and beauty, then fashion, food, travel, entertainment, reading, fitness, and childcare.
How did it happen that a review platform has become one of the most prosperous social-commerce sites of the last decade?
Word of mouth is the most effective method of selling in China, in fact, the constant scandals and frauds make users rely on recommendations rather than advertising in the purchasing decision-making process. The founders of XiaoHongShu immediately understood the potential of the application dedicated to foreign brands and have allowed the marketing of the products since 2014, only one year after its opening.
Despite the opening of e-commerce, the application has maintained its main function: it is a social community committed to the detailed and reliable review of foreign luxury goods. Users continue to do extensive product research and post comments on their purchases. These reviews include photos and videos, thus promoting the consumer experience and interaction with the product before purchase and use.
The success of XiaoHongShu was also confirmed during the Covid-19 emergency with an increase in active daily users of 35% compared to the first quarter of 2019. In addition, the average daily time spent on Red for each user increased by 44, 9% during the Chinese New Year, also thanks to the new live-streaming function included on the platform.
Who uses XiaoHongShu?
- 300 million registered users
- 80% female users
- 60% IOS users
- 60% Users in Level 1 and Level 2 cities
- 70% Post-90 users
- 90% of users learn about brand / product information through Xiaohongshu
- 200K + Content generated every day
- Main interests: Lifestyle
The majority of users are well-educated young women in level 1 and level 2 cities between the ages of 25 and 35.
Most users love to enjoy life, buy foreign products, travel, and share photos of their lives.
Why choose XiaoHongShu?
Online advertising in China has become extremely expensive, the average cost per 1000 impressions is estimated to have increased by 286% from 2015 to 2018. The most popular online sales platforms have very high management and marketing costs. The result is an increasing pressure on marketers in an attempt to achieve an acceptable return on investment. Social commerce offers new perspectives to reach consumers thanks to the powerful formula of peer-to-peer communication and the influencer campaigns that reach consumers. Statistics confirm the trend and according to an Accenture study 70% of Chinese consumers made purchases through social media platforms, 54% of Chinese consumers believe that products recommended by others are more reliable i and 47% would prefer to buy products recommended by others even if they were to have a higher price.
In other words, today’s Chinese consumer is looking to improve his lifestyle and is willing to pay for it. These same consumers, more than others in the world, rely on the recommendations of other buyers before finalizing their purchases.
XiaoHongShu allows brands that approach the Chinese market for the first time to test their performance without investing in excessively high budgets. Furthermore, thanks to its social nature, the platform allows not only to sell but also to build a brand identity, which can be spent over time.
To do so, it is necessary to collaborate with agencies that can help you exploit the right cultural channels in order to strengthen emotional narration and give value to the brand.
How to do promotion on XiaoHongShu?
Although RED has a relatively small market share compared to the leaders of cross-border e-commerce – Alibaba’s Tmall Global (28%), Kaola (21%), Tencent’s JD.hk (14%) and VIP.com (10%), it has found its market niche and its place among the big names.
Foreign companies can open their own shop on Red and insert the related products. The platform is home to nearly 10,000 third-party e-commerce merchants and offers over 100,000 different products.
Let’s see what are the main promotion strategies implemented on the Little Red Book:
Keywords and viral content
Unlike WeChat, Xiaohongshu’s content distribution algorithm is set up so that users can view content from accounts they don’t follow in the news feed, this allows you to reach new users easily, but at the same time requires great attention to the keywords used.
In addition, the platform rewards posts with high engagement that go viral on Xiaohongshu. Unlike Tmall, where a user is looking for a specific asset, Xiaohongshu users tend to be “inspired” by what is proposed in the feed, so having good visibility will be your number 1 mission.
Collaboration with KOL
Like all social media, visibility on Xiaohongshu is enhanced by collaboration with KOL. Remember, however, that the algorithm rewards only popular posts, so you must pay close attention to the type of KOL you decide to use. The contents of the KOLs may underperform if they are not engaging for consumers. Therefore, it is essential to invite KOLs of all levels to be more efficient.
Collaboration with KOC
Unlike WeChat, Red gives much more freedom to interact with users, for this reason, it is an extremely fertile ground for collaborations with KOCs. XiaoHongShu users are known for their willingness to engage and will likely ask questions and share their experiences on user posts.
Seeding is an essential and extremely effective strategy on XiaoHongShu, as it allows you to reach high-end consumers who are trying to be inspired by new trends without investing exorbitant budgets in KOL campaigns.
The content value should be at the heart of the brand strategy with XiaoHongShu, regardless of whether it is distributed by the brand itself or through KOL and KOC. The posts with the best search ranking are those that add real value to users. Tutorials, product comparisons, in-depth reviews, before/after comparisons are all essential contents to engage users and stimulate conversation.
How much does it cost to open a shop on XiaoHongShu?
Like all e-commerce platforms, XiaoHongShu also has its fixed costs:
When creating an account, a deposit is requested, the amount of which depends on the type of activity carried out. This amount also depends on the type of online store that the company wants to create. The average deposit amount ranges from 3,000 to 3,500 euros.
The deposit does not include the design and management costs of the platform which vary according to the agency with which you decide to work.
Red also charges a commission on each sale on the platform which varies according to the products that are sold but is on average 10-15%.
These payments must be added to the costs related to marketing, advertising, and influencers which, as we have seen, are fundamental to guarantee the platform’s performance.
Does that seem a lot to you? The management of XiaoHongShu is definitely cheaper than any strategy implemented on Tmall Global or JD.
In short, XiaoHongShu is an excellent choice for companies that decide to access Chinese social commerce without investing a huge budget.
XiaHongShu’s experience supports new purchasing dynamics in consumers in China. Knowing and being successful on this platform can be the springboard that allows you to access the large Chinese online market.