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INSIGHTS | Where is Xiaohongshu heading to?

After nearly 9 years since XiaoHongShu (aka RED or Little RED Book or XHS) was established in 2013 in Shanghai, this unicorn company recently announced that they have reached another milestone - 200 million monthly active users.

Free Download XiaoHongShu Report HERE

My team and I have been following up with XHS's development for years and working with hundreds of brands on XHS contents and campaigns. Today I want to share my personal thoughts on where XHS is heading to and what the platform's future will be. Hopefully this will be helpful for brands who have been or plan to be present on the platform.

Is XHS Replaceable?

XHS started from a shopping sharing community in 2013. Later on XHS implemented e-commerce section which connects to the social community and allows in-platform online shopping. We usually call XHS a social commerce APP. But I always think XHS's core value is its social community.

We have seen many attempts over the years from other Internet giants trying to build or copy a community like XHS - many of them failed. So to answer this question - is XHS replaceable?

- No, I don't think so.

And here's why:

A Decentralized Community

XHS has a decentralized community. To understand this, we need to understand the platform's algorithm - how they distribute contents to users. Basically the system puts "tags" for each user based on your behavior inside the platform. For example, if you read, like or comment on posts related to certain topics, it means that you are interested in these topics and the system will push more related contents to you based on your interests. In the end, each user can be seeing very different contents. This is very different from other social platforms. Although Douyin also distributes contents based on users' interests, the algorithm is still centralized - this is why we always see one type of video/music gets super hot overnight on Douyin.

Organic User Generated Contents

XHS's biggest value to users compared to other platforms is that you can find a lot of organic user generated contents here. That's why a lot of users will still go to XHS when they seek product reviews, tips or other people's opinions - because the organic content is trustworthy to them.

Long-tailed Effects

The decentralized community and large amount of organic UGC will benefit long-tail users, which is why we see so many micro KOLs or KOCs here. Long-tail users are important foundation of the community. Although they are small, they would still spend time to produce genuine and useful contents, because nice contents can bring them more exposure and help them grow. We don't always see a KOL getting thousands of followers in one night on XHS like on Douyin. Growing on XHS is slow but steady.

The most recommended note of「lululemon」was posted half year ago by user @桃乐丝儿who has only 184 followers,but the total engagement reached 6233.

What Are the Differences between XHS and Douyin?

XHS is facing a lot of challenges and competitions from other social platforms. It started as a social sharing community in the "image" era. Now moving to the "video" era, we see the rise of Douyin and Bilibili. To compete with other platforms, what are the niche advantages of XHS?

Like I mentioned above, XHS's core value is its genuine community and user generated contents. There is any important function on XHS that you don't see on Douyin - Collects.

On Douyin, people like, comment and share videos. But on XHS, people also collect posts - they feel the content is useful and save it for later. On Douyin, people like to see brainwashing contents with eye-catching effects and repeated music. Videos usually receive short-term exposure. While on XHS, it's possible to see long and detailed posts with a lot of collects and it's considered useful not funny.

About 2 or 3 years ago when XHS started to push video contents, there were a lot of Douyin-style videos. But now we see more XHS-style videos - not brainwashing but useful to users. This is why XHS is considered as a tool when customers seek product reviews and other people's opinions, while Douyin is more for fun and killing time.

Will XHS Keep Growing?

Now that XHS has reached 200 million MAU, a new question pops up - will it keep growing and how big can it be?

We see XHS focused more on beauty and fashion categories as a shopping recommendation community when they started. Now it has become more lifestyle, including all different categories related to your life - restaurants, travel, study, work etc. You can find so many posts sharing tips on how to find an internship or home decoration advice - something you may not find on other platforms.

Because XHS started from beauty and fashion categories, the majority users are female. Since last year, XHS started to expand its user base and attract more male users. I think this is a good move to grow, by producing similar lifestyle contents for male users, although not easy to achieve.

In 2019, XHS had announced the 100 million MAU milestone. After being quiet and controversial for more than 2 years, 200 million MAU is another important milestone. However, to keep growing won't be easy.

For example, Bilibili, starting as a niche ACG (Animation, Comic & Games) community and now expanding to be an online entertainment center for Gen Z, has reached 267 million MAU as of 2021. It was also being accused by old users that the community is not the same as before anymore. Being bigger seems in contrast with being niche. I think this year will be crucial for XHS.

Problems & Doubts

The biggest problem now for XHS (same as many other social platforms) is how to balance the commercialization and the community - how to make sure there are enough user generated contents to maintain the core value while commercialization. This has been a key question to be answered since 2 years ago.

XHS has been implementing regulation to keep the genuine community, including deleting accounts and blacklisting brands that violate the rules. However, the fast-changing regulations and algorithm were criticized by both users and brands. Although it's doubtful whether XHS is able to keep the community "clean", XHS still is and will be a platform brands can't miss.


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