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Established in 2013, Xiaohongshu, which translates to the “Little Red Book” or RED,began as an app for users to submit reviews and share overseas shopping tips with other users.It provides an all-in-one platform with both social media and e-commerce functions for its China users. This social E-commerce app now has over 200 million registered users as of 2019. If you’re in the field of e-commerce, you should definitely learn how to master the platform created by this billion-dollar startup rapidly taking over China.
With a focus on beauty and fashion, it acts as a platform for people to post and share shopping tips, product reviews and lifestyle stories (in the form of pictures, videos and text). The platform has developed into a trusted source for advice and recommendations from other users and like-minded people. It has successfully created a thriving community user interactions/engagement, careful curation, and authentic information sharing.
Noticing users’ demand for buying foreign goods, RED launched its own cross-border e-commerce platform, the “RED store” in 2014. It connects Chinese consumers with global brands by enabling users to buy overseas products directly through the app. Since then, RED has formed strategic partnerships with many overseas brands including Lancôme, Swisse and Innisfree.
With the business model of a social e-commerce platform, RED achieved great success in recent years, especially in 2015, when it grew its GMV from approximately 1 million RMB to over 100 million in just 6 months. It’s continuously growing and now has over 200 million registered users as of 2019. In 2018 its topline revenue was RMB 1.49 billion and it projects to earn nearly RMB 3 billion in 2019!
According to its official website, RED has reached 200 million registered users as of Jan. 2019, with those born in the post-90s and post-95s as the most active users. From statistics, over 50% of users were under 30 years old, while more than 80% of them are female. With young urban females who value quality as the main user demographic, RED serves as an effective platform for selling and advertising skincare, cosmetics and fashion products. Given that the app is extremely popular among China’s Generation Z, RED is an ideal marketing platform for brands who would like to target a young and sophisticated demographic.
RED has successfully created an online interactive community through having their users share informative content including product reviews, OOTDs, and make-up tips.
Apart from creating your own content, users can also “Save” posts, interact with others through “Likes”/“Comments”, or even press “Follow” to subscribe to a particular user/brand that they like. RED also lets users share posts externally through Weibo/Wechat,which is rare given how some platforms in China punish users for linking to rival platforms.
To maintain high-quality content, RED doesn’t allow self-advertisement or verbal abuse.With an emphasis on “authenticity”, it further fosters trust and honest sharing among users by enforcing these policies. So much so that descriptions such as “No.1…” or “The best…”are strictly prohibited on all brand stores or advertising!
Apart from sharing and commenting, RED uses a recommendation algorithm to create a customized homepage based on users’ browsing and search history. It also offers an“Explore” feature based on this same data. This function allows users to focus on topics they are interested in and sort out unwanted information. “Nearby” shows hot topics according to the user’s location, while “Follow”shows latest posts from subscribed accounts.
Thanks to its engaging features, RED has successfully built a tight bond among its like minded users, lovingly calling themselves “小红薯” (literally Little Sweet Potatoes in English).According to its official website, RED had 30 million monthly active users in 2018, three times more than the previous year.
The app’s user-generated content led to the emergence of several Key-Opinion Leaders(KOLs) becoming active on the platform. Similar to KOLs (Influencers) on Instagram,most of them share useful tips and interesting content about beauty and lifestyle. These KOLs work with brands to promote products to followers resulting in increased brand awareness, user engagement, and followers. Examples of RED influencers include Austin Li, nicknamed The Lipstick Master/Brother （口红哥）, who tries on luxury brands’ lipsticks such as Gucci and M.A.C. He has accumulated 3,169,800 followers and his comments are constantly shared by other lipstick lovers. Apart from those who became famous after joining RED, some celebrities such as Nana Ou-Yang, have also opened their own accounts on RED, which has helped to further boost the app’s traffic and credibility.
So how do KOLs foster WOM marketing? In fact, a single share from a user on RED already brings online exposure to your product. Once your product is shared by a user, other users will be able to view details about its features, benefits and prices. If other users find it attractive, they may even further share it within their social circle, with the possibility of it going viral! It significantly raises brand awareness and helps to generate customer leads.
RED brought its app to the next level by launching an e-commerce platform, called the “RED store”, which allows users to purchase the products directly from merchants after reading reviews. With the store, users no longer need to worry about the authenticity of the products (a huge concern in China’s e-commerce industry). The feature greatly reduces consumers’ search and time cost, and further encourages the “Read-Like-Buy” cycle within the app.