Self-operated e-commerce "small oasis" closes Xiaohongshu and wants to break through again by buyers.
On October 1, Xiaohongshu's self-operated e-commerce "Little Oasis" officially stopped operating and will be officially closed on October 31. Xiaohongshu's other self-operated e-commerce "Welfare Society" will also stop selling goods on October 16 and officially close the store on November 16.
In less than half a month, Xiaohongshu successively announced the closure of the e-commerce platform small oasis and self-operated store welfare agencies. By the time of stopping operation, the operation time of the small oasis was less than 2 years, and the welfare society has been operating continuously for nearly 9 years.
Xiaohongshu is determined to bid farewell to self-employment, concentrate on serving third-party sellers, bloggers and ordinary users of the platform, and strive to promote the transaction to open the "buyer era".
In the past year and a half, the number of buyers and managers of Xiaohongshu e-commerce has increased by 27 times, the number of merchants has increased by 10 times, and the number of users has increased by 12 times. Judging from recent trends, the success of the new e-commerce direction has also strengthened Xiaohongshu's determination to get rid of the "old burden".
Concentrate on the development of the three-party e-commerce ecology, another large-scale transformation attempt, can Xiaohongshu successfully break out of the positive cycle?
Establishment and withdrawal of small oasis: platform self-operation is difficult
As of October 1st, most product links have been closed in the platform self-operated e-commerce small oasis account store, and only two sports shoes are still on sale. As early as August 28th, Little Oasis account stopped high-intensity note updating, and only two video notes were updated in September.
Back in early 2022, Xiaohongshu launched a brand-new self-operated e-commerce "Little Oasis" shortly after canceling the external link with Taobao products. At the beginning, the product direction of the account was similar to that of "Welfare Society", and it was mainly engaged in beauty and skin care, fashion home and fragrance.
After the popularity of camping products in the summer of 2022, Xiao Oasis made every effort to transform and sell camping-related products. Most of the account contents were reprinted and advertised by other high-quality camping media numbers, and gradually gathered a group of fans to become the platform head camping vertical account.
According to the observation of New Consumer Daily, within one year of operation, the sales volume of "explosive" products in the small oasis was only about 5,000, and the products with cumulative sales volume exceeding 1,000 did not reach double digits. In addition, Xiao Oasis also launched WeChat WeChat official account and shopping applet in October 2022, but it was launched less than half a year ago, and fell into a substantial shutdown due to insufficient sales.
In contrast, welfare agencies still pay attention to beauty and skin care, fashion accessories, fragrances and other categories, and the cumulative sales volume of various head quality products exceeds 100,000. At the same time, under the live broadcast, notes and continuous maintenance, the daily interactive data of welfare society also belongs to the category of platform-related categories.
According to previous research reports, the revenue composition of Xiaohongshu platform consists of two parts, of which advertising accounts for 80% and e-commerce revenue accounts for 20%. According to statistics, in 2020, the e-commerce turnover of Xiaohongshu was less than 7 billion yuan. By 2022, the annual e-commerce turnover of the platform rose to tens of billions, mainly from the technical services of the live e-commerce platform and the extraction and operation services of third-party merchants.
Even in the e-commerce business, the revenue and influence provided by two self-operated vertical accounts are quite limited. In September, it was reported that "Little Oasis" and "Welfare Society" accounted for less than 10% of Xiaohongshu's e-commerce ecosystem, and they were only used as supplements for the three-way merchants, or even "ignored".
Self-operated e-commerce needs a platform to support teams such as product selection, supply chain, warehousing and logistics for a long time, while imported skin care products, beauty cosmetics and other products operated by welfare agencies also involve complex links such as customs clearance and import. Today, with the strong rise of the three-party merchants, it is reasonable for Xiaohongshu to resolutely choose to shut down two self-operated e-commerce accounts.
The welfare agency will stop selling soon: the wandering small red book e-commerce business
In the farewell letter of the welfare society, Xiaohongshu mentioned that the operators of the welfare society will screen out the target goods from the notes and comments on how to buy links published by users in the community and provide users with goods from all over the world.
It is not only the original intention of the establishment of the welfare society, but also the deep reason for the launch of the small oasis to leave a large number of community demand for planting grass in the platform and transform it into commodity turnover.
In 2014, the self-operated store "Welfare Society" of Xiaohongshu, which purchased through the global cross-border supply chain, was officially launched, and its products covered many products preferred by Xiaohongshu users, such as beauty, clothing, home, mother and baby. At the beginning of its launch, Welfare Society once marked Netease Koala, JD.COM Global Buy and other self-operated cross-border brands of similar e-commerce.
However, as a community operation platform, Xiaohongshu needs to always take care of users' usage habits and content experience, but on the other hand, it needs commercial content such as e-commerce and advertising to survive.
In the game of community balance, Xiaohongshu's response and promotion speed to e-commerce operation is far less than other platforms. With the sudden negative policy of cross-border e-commerce, the welfare agency has changed from the initial "95% of the goods on the shelves will be robbed" to one of the e-commerce income-generating supplements other than brands, live broadcasts and members.
At the same time that the development of e-commerce in Xiaohongshu suffered setbacks, the expansion of domestic e-commerce consumer market peaked in 2017, and live delivery became a new outlet for Taobao and Aauto Quicker. Founder Qu Fang insisted on retaining the characteristics of the platform itself. "Xiaohongshu is not an e-commerce, but an amusement park."
Compared with selling goods, Xiaohongshu has survived the operational pressure year after year by relying on a large number of commercial advertisements and financing. By 2018, Xiaohongshu had successively completed five rounds of financing, with accumulated financing exceeding RMB 3 billion, and the company's valuation reached about RMB 21 billion. At this time, Xiaohongshu has become one of the unicorn companies with the highest valuation in China, and the rumors of the impact of listing and the pressure of financing institutions have also become a topic of long-term concern.
Just when the outside world speculated that the revenue of Xiaohongshu's e-commerce failed to reach the target, in 2019, Xiaohongshu quickly integrated internal e-commerce, technology, supply chain and other businesses, set up a brand number department to provide services for brand entry and advertising, and set up a "welfare agency" with complete functions such as commodity purchasing and marketing, warehousing and logistics, and customer service, and completed a new commercial transformation.
In the next few years, with Xiaohongshu trying to broadcast live, short videos and implementing the strategy of "integrating the number of stores", the third-party merchants, brands and KOL have a stronger presence on the platform.
Although the self-operated e-commerce welfare agency is mainly engaged in products that platform users like, such as skin care, beauty, jewelry, etc., its influence in the beauty and skin care track, especially its price attractiveness, is gradually declining compared with the brand number and KOL that know more about marketing. The status of the welfare society has also become more and more embarrassing.
Fully promote the "buyer era"
In August, 2023, Xiaohongshu made another internal organizational adjustment, and integrated the live broadcast business department and the e-commerce business department, which were independent at the beginning of the year, into a trading department, becoming a first-level department parallel to the Ministry of Commerce and the Ministry of Community, preparing for the new commercialization model.
On August 24th, at the link E-commerce Partner Week held by Xiaohongshu, Xiaohongshu COO Conan said in his speech that among Xiaohongshu daily users, there are nearly 40 million users who intend to buy every day, and there are a large number of users whose purchase needs have not been met.
For small red book users, it is the most common interaction for fans to buy the same paragraph under KOL notes. However, for a long time, a large number of shopping needs have been drained to other e-commerce platforms outside the station, and it is impossible to complete the transformation of shopping into a "pain point" for Xiaohongshu. Self-operated e-commerce, "one shop", live broadcast with goods, short video hanging links, etc. are all efforts made by Xiaohongshu to complete the transformation.
In 2023, the rise of KOL, Angel and Zhang Xiaohui, the head of Xiaohongshu live broadcast, made merchants see the potential of the head of Xiaohongshu platform. In June this year, the turnover of a single market in Angel exceeded 73 million yuan, which made many high-quality merchants outside the station take the initiative to seek cooperation with goods.
But inside the platform, Conan doesn't want to duplicate the head anchor of Little Red Book with mature business anchor operation modes such as Li Jiaqi, Xiao Yangge and Guangdong couple. Xiaohongshu expects to start from the content and build a consumption scene in various ways to attract consumers with similar interests and tastes to complete the sales, which is also the "buyer model".
"Little Red Book does not have a live e-commerce, only a flashlight dealer." When talking about the differences between buyers and anchors, Conan believes that although they all bring goods, the live broadcast of Little Red Book is not a low-cost model. The core advantages of buyers are not price, but aesthetic, style and personalized value experience.
The conversion rate of the little red book platform will not be driven by explosive harvesting. Buyers and brands need to find the most suitable operation and content style, whether it is notes, short videos or live broadcast channels, and gather users who need segmentation to maximize the conversion.
The data shows that in the past year and a half, the number of buyers and managers of Xiaohongshu e-commerce has increased by 27 times, the number of merchants has increased by 10 times, and the number of buyers has increased by 12 times.
At the link e-commerce conference, a foreign brand of food health revealed to the New Consumer Daily that although it has entered the China market for several years and its operation in Tmall e-commerce is also very successful, opening up small red book sales still allows them to see new growth channels.
At present, the marketing of this food brand in Xiaohongshu is still mainly based on KOL advertisements. However, with the continuous growth of sales of its brand's Xiaohongshu stores, the follow-up brands will invest more operators to specialize in Xiaohongshu channels and consider joining Xiaohongshu live broadcast.
However, judging from the feedback from the merchants at the e-commerce site, the growth of the turnover and transformation of Xiaohongshu e-commerce really surprised them. The platform operation actively assisted the merchants to connect with grass bloggers and buyers, and also allowed them to enjoy the first batch of platform delivery bonuses. However, in the minds of large and small brands, Xiaohongshu is still only regarded as a high-quality publicity platform, and the prospect of e-commerce sales remains to be seen. Only by seeing more commercial value is it worth investing heavily.
"A note released has become an explosion, and the sales volume of Little Red Book stores has increased, but in fact, the sales volume of Tmall and JD.COM will also increase accordingly. (Growth rate) is basically flat. " The above-mentioned dietary health brands revealed to the New Consumer Daily that consumers' shopping platform choices are scattered and do not prefer specific e-commerce.
For Xiaohongshu, it is undoubtedly good news to be one of the many e-commerce platform options for consumers, but it also makes it face the major e-commerce giants. Problems such as how to innovate Little Red Book, how to continuously attract consumers to stay and buy again, how to reach more potential consumers, and how to maintain the platform style remain to be solved.
Judging from the current KOL scale of the platform, every blogger has the potential to become a buyer. Therefore, during the e-commerce conference, Xiaohongshu officially proposed the "Million Buyers Plan" and will invest 50 billion traffic to support more Xiaohongshu buyers.
In 2021, Xiaohongshu once again announced that it had received $500 million in financing, and the company's valuation jumped to $20 billion, reaching the highest level in history. Participating institutions include Temasek Temasek, Tencent Investment, Alibaba, Tiantu Investment and Yuansheng Capital, and a group of old shareholders once again strongly supported Xiaohongshu.
However, with the passage of time, the slow commercialization has caused the pressure on Xiaohongshu to increase sharply under high valuation. At the end of 2022, there were rumors that the valuation of Xiaohongshu had fallen sharply.
Recently, it is reported that Sequoia China has bought shares in Xiaohongshu, but its valuation has dropped by 30% compared with 2021, and the latest valuation is about 14 billion US dollars (about 100 billion yuan).
For Xiaohongshu, the monthly active users of the platform have already exceeded 260 million, of which over 70% are post-90 s active consumers, and most of them are concentrated in first-and second-tier cities, but they are still an "e-commerce blue ocean". When to try to unload the "baggage" that restricts the commercialization of content, highlight and guide users into shopping carts, live broadcast rooms, merchant stores, etc. in the APP, and show more commercialization elements, which is very urgent for the actual development of the company.