This is a new series with a focus on explaining emerging platforms born in the Asia Pacific to the rest of the world. The Drum will look at what are their differences and similarities with their counterparts, explain what kind of ad formats are available to brands on the platforms and how brands can monetize.
A Chinese social media platform that blends shopping, e-commerce, user-generated content and reviews, Xiaohongshu (known in English as Little Red Book), was founded in 2013 by Charlwin Mao and Miranda Qu to "inspire lives".
Users can record their life in the form of short videos, pictures and words. They can also interact based on their interests like beauty, fashion, food, travel, fitness and many other aspects.
According to Statista, as of July 2019, the platform had a total of approximately 300 million registered users as its user number tripled in one year since mid-2018. Around 35% of users were between 31 and 35 years old, while around 85% of users were female.
This means the app’s building momentum presents a massive opportunity for global brands looking to build their online presence in China, which has been a notoriously elusive market to break into, says Anna Tolette, a content marketing associate at Synthesio.
“Brands should care about Xiaohongshu because its success reflects widespread and fundamental changes to how Chinese consumers make purchases,” she tells The Drum.
“The Chinese consumer of today is looking to upgrade his or her lifestyle and is willing to pay a premium to do so. These same consumers, more than others in the world, rely on trusted recommendations before finalizing their purchases.”
She adds: “The Xiahongshu experience supports all aspects of these new consumer dynamics. To know and succeed with Xiaohongshu is to know and succeed with China’s new and ever-evolving purchasing behaviors.”
Like many Chinese-based apps, there is a tendency to compare them with their Western counterparts, says Ivars Krutainis, general manager at Mindshare China, noting that people used to compare Xiaohongshu with Instagram.
This is because Xiaohongshu and Instagram are lifestyle platforms and have the ability to create hot topics. However, that is where the similarities between both platforms end.
Xiaohongshu's seed users are a group of people who love travel and consumption. As compared with Instagram, Xiaohongshu is closer to consumption and is the community platform with the strongest "grass planting" mentality in China. At the same time, Xiaohongshu has its own unique innovation.
“As early as 2015, it started the community plus e-commerce mode, providing users with one-stop closed-loop from aware/interest (grass plant) to placing an order to sharing of the user experience,” Krutainis explains to The Drum.
Tolette suggests that Xiaohongshu is a blend of Instagram, Pinterest, and e-commerce, as it combines the aesthetically pleasing visual layout of Instagram with the authentic user reviews, as one would expect to find on Amazon.
She also points out that Xiaohongshu users post and share photos and videos of certain products with reviews and tips for other users to read, comment, and save to their boards.
“However, the platform is different in the way that users create and interact with longer, blog-style reviews of products. Chinese consumers rely heavily on reviews and testimonials from friends, family, and Key Opinion Leaders (KOLs), and Xiaohongshu has provided a platform for this type of discussion,” she adds.
Brands looking to target and convert consumers on Xiaohongshu are able to create their own profiles on the platform and make themselves a resource for potential curious buyers.
They can tap into the two main commercial models provided by Xiaohongshu, which leverages on KOLs and running advertisements after the platform opened up for advertising in early 2019.
For KOLs, Xiaohongshu has established strict policies for them to post commercial content. Influencers have to register on the platform and submit a certification to get the right to do commercial posts.
For ads, brands can buy two kinds of commercial placements: five-second full-screen video opening, which is common for apps in China or feeds ads, which are integrated commercial posts in the content, similar to paid ads on Instagram.
Xiaohongshu also provides the service of developing customized pages to send out product sampling and collect leads.
One brand that has had success breaking into the Chinese market on Xiaohongshu has been Louis Vuitton, who uses its posts to help break down the functionality of their bags for consumers.
For example, it explained how the material of a bag feels, how much it can hold, and what colors are available in one post. Consumers can comment and share buying tips and real reviews, giving the products more legitimacy.
Additionally, using KOLs and celebrities to endorse products and review them adds another dimension to the product’s allure to buyers.
Brands looking to follow in Louis Vuitton’s footsteps need to understand Xiaohongshu is a bridge between the brand and the young generation of consumers, explains Krutainis, where the brand can find its users and potential consumers and establish a connection with them.
“Brands can also accumulate a large number of consumer word-of-mouth to let users speak for the brand,” he says.
“Users of Xiaohongshu prefer high-frequency in-depth interaction and real product sharing rather than preaching. Many new brands at home and abroad have completed brand accumulation from 0 to 1 from Xiaohongshu, and achieved rapid development with the help of the Xiaohongshu platform and ecology.”
He continues: “Feeds ads are considered the most efficient way to do advertisement on Xiaohongshu as it more naturally integrates into the content feed. Advertisers are advised to create user-friendly and relevant content with clear opportunities for interaction.”
“We don’t recommend brands to launch or tease new products on Xiaohongshu before there is organic or related content available, given that platform is primarily driven by product reviews and recommendations.”
Tolette adds that brands targeting consumers on Xiaohongshu should make it a point to be authentic on the platform.
Individuals are looking for specific information that can help them weigh the decisions that they will make about purchasing expensive luxury products. Partnering with KOL’s whose opinions that consumers’ value also has a huge impact on the opinions of Xiaohongshu users.
Xiaohongshu will continue to be one of the most important lifestyle and product recommendation communities for young Chinese women in the near future. The platform has shown strong social influence, especially in the beauty and fashion industries.
It recently entered discussions with Alibaba, the biggest e-commerce platform in China, to have closer cooperation and has just announced a new e-commerce live-streaming platform.
This comes as no surprise considering the success of Alibaba’s Taobao’s live-streaming efforts for the annual Singles Day shopping festival. This initiative generated $2.85 billion in revenue for Taobao.
If Xiaohongshu successfully builds strong links between its loyal social community and the biggest e-commerce platforms in China such as Taobao and Tmall (currently not integrated), it will continue to grow in size and influence.