China’s Xiaohongshu is making room for a thriving e-commerce market

Xiaohongshu, a platform also known as Red with 300 million monthly active users, held a two-day conference last Wednesday and Thursday in China’s e-commerce hub Hangzhou, his Alibaba city, attracting online retailers, brands and influencers to open stores. on its platform. Alibaba owns the South China Morning Post.

Due to the city’s sweltering heat, the area was bustling with traders displaying everything from durable goods such as custom-made sofas, clothing and homewares. to edibles such as snacks and soft drinks. Influencers also came to the event, looking for collaboration opportunities.

“Last year, the number of sellers with monthly sales exceeding 5 million yuan on Xiaohongshu increased 3.5 times, and the number of users purchased increased 4.3 times,” Yin Shi said. , head of Xiaohongshu’s e-commerce unit. at the top. As part of the initiative, Xiaohongshu will relocate its e-commerce unit to Hangzhou, the capital of Zhejiang province known as a hub for influencers, from its main office in Shanghai.

As its fortunes rise, the social media platform is trying to turn user attention into revenue using its “e-commerce” model. Since last year, influencers such as Chinese actress Dong Jie, Hong Kong celebrity Teresa Cheung Xiaohui, and Taiwanese singer Annie Yi Nengjing have been at the forefront of e-commerce.

“Xiaohongshu has a large number of high-quality lifestyle users, especially women, who are very loyal to the platform,” said Dean Yang, co-founder and co-founder of Hangzhou fragrance brand Emonster. “These users are our target audience.”

Although there are less than 40,000 followers on Xiaohongshu, several Emonster products have sold nearly 10,000 units each. An ad from a high-end search engine can generate hundreds of thousands of yuan in value – although high-end sellers often charge a 30 percent commission.

According to Xiaohongshu, the number of online shopping users grew 6.3 times last year, and the average price remains above 500 yuan (US$69). Eno, which sells handicrafts aimed at a younger audience, tried Douyin, but gave up after realizing that users were not expected. Xiaohongshu’s customers have proven to be more sophisticated than cheap. He said Xiaohongshu’s average price is 4,000 yuan, which is five times that of other platforms.

Xiaohongshu’s e-commerce business is just getting started. The company made a profit of US$500 million last year on revenue of US$3.7 billion, mostly from advertising, according to a Financial Times report in March. In comparison, e-commerce giant Alibaba reported 927.5 billion yuan in revenue by 2023.

Xiaohongshu is still a small player in the market, but it has carved out a niche for itself.

“Different platforms attract different user groups,” Zhou Qi, a fashion editor turned brand owner and lifestyle actor, said in an interview after the conference. “Only the right platform, combined with the right products, hosts and users, can achieve harmony.”