The commercialization of Xiahongshu

Produced ｜ Pai Finance

Text | Editor of Maria ｜ Paid Son

Xiaohongshu began to accelerate commercialization.

In May, Xiaohongshu launched the "Community Commercial Convention". The convention clearly emphasized that transactions on Xiaohongshu must be completed in the station, and they are not allowed to pass the transaction outside the station through the scenes of Xiaohongshu personal page, comment, and private message. In April, Xiaohongshu was also reported on layoffs.

The sound of Xiaohongshu's listing for a long time came out, but it has not been exactly time. Little Red Books who have always wanted to be a small and American business have gradually faded in the Internet celebrity economy. After the wave of new consumer brands has passed, they have to cultivate internal skills, standardize the content of the advertising content ecology, and make up the business.

Little Red Books with 200 million MAUs and a valuation of 20 billion US dollars have long been disturbed by commercialization. Advertising revenue growth is limited. , Taobao, Jingdong, Zhihu, Douyin and other large manufacturers are pressing step by step; in the business of weaken business, the e -commerce business has worked hard for many years.

Xiaohongshu, which is positioned in the "content community", still has not found the most suitable commercial path for you.

1. Core advertising revenue business declines

Established in Shanghai in 2013, the business of Xiaohongshu focused on cross -border e -commerce. The first product form was a PDF document "Little Red Book Outbound Shopping Raiders". This PDF document was placed on the Xiaohongshu website It was downloaded 500,000 times by the user in less than a month. In December of the following year, Xiaohongshu officially launched the e -commerce platform "Welfare Society".

2017 was the first turning point for the development of Xiaohongshu. Xiaohongshu ushered in the third "66th anniversary promotion", which exceeded 100 million sales for 2 hours and ranked first in the Apple App Store shopping download. At that time, Xiaohongshu users will exceed 50 million.

At that time, Qu Fang, the founder of Xiaohongshu, said in an interview with the media that "Xiaohongshu is not an e -commerce, but a playground." From the essence of internal strategy, users do not come to buy things. The content community is the underlying architecture to be built by Xiaohongshu. E -commerce is just a way to monetize vertical monetization.

Since then, Xiaohongshu has the positioning of the "content community". It turns out that this accurate positioning has also brought a rapid growth of traffic to Xiaohongshu. From the time of 10 to the month, it took 6 years to spend 6 years and 100 million to 200 million from the month.

In July 2019, the number of users of Xiaohongshu exceeded 300 million, and the monthly living exceeded 100 million. Since its development, Xiaohongshu has exceeded 200 million. Although it is not comparable to the short video platform Douyin and fast hands, it has also entered the content of the content. The first echelon of the community.

Capital smells the wind. The information of Tianyancha shows that Xiaohongshu has currently conducted 7 rounds of financing. The latest round of financing in November 2021 was $ 500 million in Series E financing, led by Temasek and Tencent. Shareholders followed, with a valuation of up to $ 20 billion.

The valuation of up to $ 20 billion was once questioned as a virtual high. Compared with the same category, Xiaohongshu is equivalent to 2 B, 16 Zhihu, and 4 Weibo (the market value of station B is 10.7 billion US dollars, knows $ 1.2 billion, and the market value of Weibo is US $ 5.3 billion).

The revenue of station B mainly relies on game live broadcast and advertising. Recently, it has begun to explore live e -commerce. Knowing the main knowledge payment, but the revenue is also an advertising business; Weibo and Xiaohongshu mainly depend on advertising, but Weibo, but Weibo, but Weibo The advantage is that Weibo searches is large and social influence is high. Although the valuation is higher than the peers, the commercialization ability of Xiaohongshu is worrying.

Tianfeng Securities Research Report shows that advertisements are the absolute revenue pillar of Xiaohongshu. In 2020, the advertising revenue of Xiaohongshu accounted for about 80%of the total revenue, with 6-800 million US dollars (about RMB 4.53 billion To. Some insiders revealed to the media that the annual revenue target of the Xiaohongshu advertising department in 2022 was 24 billion yuan, which was more than twice the last year, and "stress was great."

In the beginning of 2022, many Internet header companies advertising revenue was sluggish, and the advertising revenue of Xiaohongshu was also affected. According to data from Foresight Research Institute, in the first quarter of 2022, Internet advertisements increased slightly by 1.4%. Among them, Tencent's advertising revenue fell 18%year -on -year and Baidu fell 4%.

Under the chain reaction caused by the epidemic, the cosmetics market is becoming increasingly depressed. According to data from the National Bureau of Statistics, the retail sales of cosmetics products in March were 34.5 billion yuan, a year -on -year decrease of 6.3%, which is the first time that the retail sales of cosmetics market have fallen in two years. And beauty and beauty care are the two main categories of Xiaohongshu's advertising revenue.

And under the end of the epidemic, the brand party has reduced marketing budgets and reduction needs. With the perfect diary of the popularity of Xiaohong's platform, the sales and marketing costs in the Q4 quarter of 2021 were 1.08 billion yuan, a decrease of 300 million yuan from the previous year.

In terms of commercialization, Xiaohongshu has been looking for a second growth curve that suits him, and has tried live broadcasts, e -commerce and other businesses one after another, but in addition to grass -growing business, reliable continuous growth is temporarily seen.

2. The "grass planting mode" fails and is besieged by the giant

Xiaohongshu is the originator of the "grass content community", with ultra -high sticky content producers on the platform. Dongxing Securities Research Report shows that 90%of Xiaohongshu users have searched the little red book before buying.

For the brand, the user value of Xiaohongshu is higher than other platforms in terms of advertising business value. For example, Zhihu MAU is 100 million, and Xiaohongshu is 200 million, which also means that the advertising value of Xiaohongshu's monthly active user is three times that of Zhihu. Earlier, a set of methodologies were rumored to be. If the new consumer brand wants to rise rapidly, it needs to go through a unified marketing three -board ax. One of them was to find KOC 5,000 in Xiaohong Bookstop.

Although Xiaohongshu has a unique brand value, its too traditional and single revenue structure has led it to rely on the supply of upstream brands for many years and lack the ability to resist risks. Once the upstream brand has a revenue crisis, Xiaohongshu will fall into a passive situation.

For Xiaohongshu, the greater crisis is that it is difficult to maintain the balance between the content community and the realization of commercialization.

Industry insiders analyzed that the distinction between business and community content is inherently difficult. For users, of course, it is hoped that business is business, sharing is sharing, but for a product, it does not show traces, and the sharing mode is promoted. The effect is often better than direct promotion and directly describe product effects.

Like Xiaohongshu, inserting commercial advertising in the content is also the mainstream method of self -media breakthroughs. Product maps that are exquisitely good, superimposed various stickers and emoji packages, and attach a comparison map before and after use. On the platforms such as Xiaohongshu, there are countless grass posts.

But with the increase of marketing intensity, the credibility of Xiaohongshu's notes has declined rapidly. After the National Day holiday in 2021, Xiaohongshu's "Filter Attractions" incident rushed on the hot search. A netizen brushed the "Pink Beach" of others punching in Xiaohongshu. After arriving at the scene, he found that the beach was actually earthy. Subsequently, the "People's Daily" stated that "don't let the filter out of mouth and reputation."

Earlier, in October 2020, Xiaohongshu was involved in the criticism of "the platform's false and wealthy content was flooding, and there was vulgar and soft pornographic content." Subsequently, he had to launch a "woodpecker" plan that was strictly beaten by bad information content.

However, repeated rectifications have not fundamentally resolved the false information on Xiaohong books, and even the content released by real users has misleading consumers after careful editing. Earlier this year, Xiaohongshu was once exposed to the negative of the audit, which led to the negative of minors "being brought".

In 2021, Xiaohongshu officially launched the dandelion platform, requiring the content of all brand cooperation to trade through the platform. According to all -weather technology reports, Xiaohongshu will charge 10%of the platform service fee from the brand as a platform, and take another 10%when settlement with KOL, two -way commission.

In contrast, the commission of station B and Douyin are only 5%-7%. Under the high commission, some brands choose to bypass the platform, reach cooperation with KOL and KOC directly, and release "soft and widely widely published on Xiaohongshu. "". Earlier, the topic of "Little Red Book Planting Grass Note on Anti -4 yuan" appeared on Weibo hot search. Several media disclosed that the small red book has a very mature industry chain, with a quotation ranging from 3-5 yuan.

The traffic of Xiaohongshu started with "grass culture", but the content community was gradually recovered by traffic. Excessive marketing has caused the brand to be tired of making Pin Xuan on Xiaohongshu. It is difficult to replicate the old diary for new brands.

Under the pressure of public opinion, Xiao Hongshu opened a wave of governance of the brand and persuaded many brands. At the end of 2021, Xiaohongshu banned 29 suspected false marketing brands including Doffen, Luding, and half acres of flower fields.

The rectification has been accelerated since 2019. Xiaohongshu released new regulations in May and June of the same year, regulating the MCN institutions that produce content production of KOL, and requested to pay a deposit of 200,000 yuan in institutions.

The rules of punishment have also been upgraded. It states that if the business institution settled in the process of violating the platform, Xiaohongshu will terminate cooperation and deduct margin. Among them, the "private order" punishment is the most serious, and the 200,000 yuan deposit is deducted directly. In addition, "cooperative relationships" and "data fake" will also deduct 100,000 yuan in margin.

The brands from the door of Xiaohongshu turned to other "little red books". Little red book e -commerce based on "grass" has suffered siege of other platforms. For example, Tencent's "Little Goose Fighting", "Penguin Hui Buy", Ali's "Taobao Shop", Pinduoduo's "Fighting Circle", JD.com's "Grass Show" and so on. "Grass" section. It is reported that the monthly work of Taobao has exceeded 250 million, and the daily life exceeds 50 million.

In comparison, the advantage of Xiaohongshu is that the content community is earlier, and the user's "grass" mentality has been developed; the siege of the big manufacturers is more of a business layout, and it may not be able to make Xiaohong again. Book.

3. The business of pulling grass is not easy to do

Xiaohongshu has always hoped that users can complete the closed loop from "planting grass" to "grass" in the platform.

In 2019, Xiaohongshu is working on e -commerce. In April 2020, Xiaohongshu's live broadcast function was officially launched, and the first live broadcast was supported by LVMH. Unfortunately, the results were very small. Even less pitiful.

Beginning in 2022, Xiaohongshu began to try to pull the weaken business, adding links with the transformation of e -commerce in the station in the notes.

Like the original Douyin, it cooperates with other e -commerce platforms to rely on its mature brand merchant resources and global supply chain system to build an e -commerce ecosystem through cooperation. At present, Xiaohongshu has reached a cooperation with cross -border e -commerce platforms to make "welfare agencies", but the effect is very small. The habit of completing the purchase of the purchase in the station has not yet been developed. Buy outside the station. "

According to the previous report of Ai Media Consultation, the GMV GMV in 2020 was less than 7 billion yuan, and the overall commission ratio of e-commerce was 15%-20%. It is expected that its e-commerce revenue is about 1 billion yuan to 1.4 billion yuan. In 2020, the overall 2020 The income is 5 billion yuan-7 billion yuan.

In addition, according to the Ai Media Consultation report, in 2020, Douyin Live E -commerce GMV exceeded 500 billion yuan, Taobao exceeded 400 billion yuan, and the fast hand was 381.2 billion yuan. Obviously Xiahongshu's GMV is far lower than other three platforms.

In order to further build a commercial closed loop, Xiaohongshu began to learn Douyin to cut off the "external chain".

In August 2021, Xiaohongshu announced that it has officially implemented a "store integration" mechanism to provide a platform for the brand to provide a "direct consumer" opportunity. At the same time, the platform will close the recommendation function of good things, and the authority of linked Taobao links in the labels.

On May 6, 2022, Xiaohongshu launched the "Community Commercial Convention", which showed the commercial intent. In the Convention, Xiaohongshu emphasized that the transaction is completed on the platform to protect the rights and interests of both parties to buy and seller. On the 6th, a blogger who had more than 500,000 fans in Xiaohongshu said that Xiaohongshu did not want bloggers to drain traffic to third parties, otherwise there would be punishment. "I just heard before, I have started to implement recently. If the drainage may be restricted,"

However, letting merchants stay in Xiaohongshu Station is not very attractive. In infrastructure construction, Xiaohongshu e -commerce is far from.

The upstream of Xiaohongshu's e -commerce business lacks the supply chain in depth, the downstream lack of payment systems and performance capabilities,

After cutting off the external inversion, Xiaohongshu e -commerce also faces the "bidding" of short video e -commerce platforms such as Taobao, JD.com, Pinduoduo, and Douyin and Kuaishou.

In terms of smashing money subsidies, it is difficult for Xiaohongshu to fight with several other platforms. Xiaohongshu's self -operated business "Welfare Club" frequently encountered the opponent's price war. Xiaohongshu's limited SKU often refuses the user. After the user completes the "grass", the user flows to the third -party platform to complete the purchase.

In addition, the products sold on the Xiaohong Book platform also need to pay commissions to the platform. It is understood that the sales of more than 10,000 or more were drawn at 5%of the commission, and the live broadcast was drawn to the anchor to withdraw 20%of the platform service fee.

Due to the incomplete supply chain system, it is caught in the fake storm, and the logistics system is not complete, which has led to problems such as slow delivery, delivery, and poor after -sales experience.

On the black cat complaint platform, many complaints refer to posts such as the difficulty of receiving goods, selling fake goods, and poor after -sales experience of the Little Red Book Welfare Club.

The e -commerce of Xiaohongshu did not go smoothly, but after the advertising business reached a bottleneck, the business closed loop of "planting grass" to "grass" was the fate of Xiaohongshu that could not escape.

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