Article | Lu Jiu Business Review
After years of vacillation in the commercialization route, Mao Wenchao seems to have finally made up his mind to further enhance the profitability of Little Red Book.
The participation of various commercial talents is one of the appearances. Representative figures, such as Zhao Weichen, former director secretary and general manager of Enterprise Development and Investor Relations Department of Card Transfer Technology, joined Xiaohongshu as the head of commercialization; Another example is Yunfan, who has many years of experience in community operation and commercialization, taking over Xie Yunwei's position as the community content leader. Whether it is a commercial department or a content department, the commercialized flavor of Little Red Book is even stronger than before.
At the performance level, Little Red Book also showed the momentum of breaking the game. According to the Financial Times, the foreign media, in 2023, Little Red Book will achieve an operating income of 3.7 billion US dollars, up 85% year on year; The net profit was 500 million US dollars, while the net profit loss in the same period of the previous year was about 200 million US dollars. This is also the first time that Little Red Book has turned losses into profits since it was founded 10 years ago.
It is worth noting that in the current revenue structure, the proportion of revenue from commercial advertising is still as high as 70% - 80%, while the proportion of e-commerce business as the future revenue is still low. This is the most powerful way to realize and promote its valuation.
However, since the slogan of "Buying e-commerce" was launched last year, Xiaohongshu has no "top stream anchor" in e-commerce business except for Zhang Xiaohui and Dong Jie; The top management of the overlapping department changes frequently, and the process of Xiaohongshu's e-commerce business has never been accelerated.
There is no doubt that the commercialization process represented by the buyer e-commerce is one of the balance points that Little Red Book has found between the community atmosphere and business value. Buying e-commerce is crucial to Xiaohongshu's commercial future.
So when using Little Red Book in practice, the e-commerce scenes commonly encountered by ordinary users tend to turn into the following two situations: one is the information flow e-commerce ads for common goods based on their own information flow characteristics, and the other is the good thing notes printed by individual users - it is not necessarily physical goods such as cosmetics and shoes, but also the preset parameters for mobile phone photography High definition mobile phone wallpaper and other "piecemeal" products. The per customer price is lower than that of general e-commerce products, but the repurchase rate is high.
Generally, these notes either bring their own shops or lead to some scenes with credit functions such as Xianyu, Taobao, WeChat, etc. in private conversations. There is no other reason. The current e-commerce infrastructure of Xiaohongshu is not comparable to other old e-commerce platforms, so users can buy the products displayed by Xiaohongshu through other platforms to achieve a complete e-commerce consumption experience.
According to the observation of Lu Jiu's Business Review, the "fragmentary" commodities with high order rate in Little Red Book are generally classified as follows according to the scene.
In the office learning scenario, the PPT template is more common. Taking the notes below as an example, a year-end report PPT template with a unit price of 139 yuan has sold nearly 8000 copies in less than half a year. Of course, this is the unit price that can only be sold on the premise of original template. If it is not original, the price is usually about 10 yuan.
In personal interest scenes, another common category is virtual goods represented by mobile phone wallpaper and camera parameters. Whether these commodities are involved in the Xiaohongshu e-commerce scene can also be divided into two situations, one is used and the other is not used.
For example, the mobile wallpaper purchased by Lu Jiu's business review can be realized in the following way: first, display the wallpaper sample on the cover of the notes. If you want to collect the original picture, you need to like it first, and then "ask for pictures" in the comment area. The form is as follows
After receiving the mobile wallpaper as scheduled, Lu Jiu's business review found that the original pictures sent by the private message, except for the "trial installation" of the mobile wallpaper, the rest, such as the tablet and computer versions, need to be paid for, and other wallpapers are placed in the blogger's home page shop. After checking, we found that the wallpaper unit price of its homepage shop was almost within 5 yuan. On the premise of good wallpaper quality, the threshold of "impulse consumption" is actually very low.
The same is true for the preset parameters of mobile phone photography. Bloggers usually release mobile phone photos under this parameter "in pieces" on the cover of their notes, and then drain them in the personal ID or comment area. After Lu Jiu's business review spent 8 yuan to place an order, they obtained more than 20 mobile phone specific photo parameters. For "Handicapped Party", if 8 yuan can make mobile phones become photo gods, most people are willing to pay this price.
However, in the process of transaction, Lujiu Business Review found that, except for the inquiry process, most transactions took place in Xiaohongshu. For example, this purchase of photo parameters, only the inquiry was made at the Xiaohongshu private message window, and then it would be diverted to WeChat, and the subsequent payment and "delivery" were also made on WeChat.
Of course, this is not the only medium. Archery enthusiast Xiao Yu told Lu Jiu about the business review. He has painted a very beautiful bow shaped manipulator on Xiaohongshu before. The blogger is in the same city with him. He has a shop in Xiaohongshu, but he has sent private messages several times without getting a reply. Finally, he contacted the blogger through private messages.
After communicating the product details, Xiaoyu chose to look at the finished products offline first, and then went to the Bow Club where the blogger was located. After communication with the club, it was found that the bow frame is an integrated 3D printing material, which also requires a construction period. Therefore, the one-time payment form of ordinary e-commerce cannot be successfully traded.
Finally, Xiaoyu used the idle fish as the trading scene, because the idle fish can pay the deposit first, and then pay the balance after being satisfied. At the same time, the blogger's sesame credit score was also used by Xiaoyu as a reference for "whether to trade".
It can be seen that whether it is a physical commodity or a virtual electronic commodity, Xiaohongshu still has some way to go to provide users with a complete and comfortable e-commerce experience relying on the e-commerce "infrastructure" so far.
Of course, there are many elements of e-commerce experience itself, and the bottom layer lies in its ecosystem construction. Only a few items involved in the above cases are listed below.
The first is the user's trust in the business. With the precise recommendation of the Little Red Book algorithm, it is not difficult for users to plant grass when they are pushed notes. However, there is a common problem with several commodities mentioned above. In addition to the content of grass planting itself, Little Red Book only relies on the qualification review for general businesses, and has no other means to "win the trust of consumers".
In other established e-commerce platforms such as Xianyu and Taobao, they already have rating tools such as sesame credit as a means for users to select businesses. In fact, camera parameters and mobile phone wallpaper of a few yuan have little impact. When it comes to food, clothing and other products with a unit price of more than 100 yuan, users will consider more factors when placing orders. However, at this stage, Little Red Book's "hard infrastructure", such as a series of trading services based on credit rating, is lacking.
One exception is that the "buyer" or the star anchor endorses his influence and past performance. For example, Dong Jie or Zhang Xiaohui's team, they either bring high price brand goods or niche designer brands, which usually have stores on Taobao or other channels. In other words, Xiaohongshu can indirectly let users enjoy the infrastructure of other platforms through the planting of grass by these "buyers".
However, it is difficult for other small red book original businesses to own it directly.
Then to logistics and return. Some users who shop on Xiaohong Books told Lujiu Business Review that most of the current logistics of Xiaohong Booksellers rely on the rookie system, namely, three connections and one arrival for terminal distribution. Shunfeng and Jitu also meet occasionally. Before the systematic cooperation, the distribution of Xiaohongshu e-commerce was about the same as that of Taobao before 2017, and the basic experience was quite good.
So where is the gap? To be specific, at present, if Xiaohongshu wants to return or replace the goods, it is still the business that provides the return address and sends it back by the user at his own expense. However, in the old e-commerce such as Taobao, the current rookie logistics has been able to pick up the goods on the return interface at one time, without any additional operations.
The threshold for this is still that the user's credit score reaches the specified level. Obviously, this is an ecological infrastructure that Little Red Book cannot make up in the short term.
It should be noted that these gaps do not affect the user's "grass planting" in the first half of the shopping decision. However, in the "grass pulling" stage, due to the lack of various e-commerce ecological infrastructure, users will inevitably be diverted to other e-commerce platforms, whether subjective or objective, leading to the situation of "little red books planting trees, others enjoying the cool".
As a grass growing content community, the value of Little Red Book is recognized by the brand, capital and users. Otherwise, it cannot be explained that the scale of users has still achieved a counter trend growth and become a common "promised place" for brands and advertisers when the Internet market has been in stock for many years.
Part of this value comes from the continuous creation of kocs active in Little Red Book and the excellent algorithm recommendation level of Little Red Book itself, and the other part comes from the search scenarios based on user spontaneity and platform support. This is one of the reasons why Xiaohongshu has replaced Zhihu and Baidu as the search engine for young people.
The latest data shows that the creators of Little Red Book Monthly Live exceed 20 million, and the daily average number of published notes exceeds 3 million. 70% of the users of Little Red Book Monthly Live will search frequently, and the daily average number of search queries is nearly 300 million. 88% of all search behaviors are active searches.
The "breadth" of this part of content has become a difficult balance - on one side is the user's trust in the content of Little Red Book and the community atmosphere, on the other hand is the platform's grasp of the degree of commercialization. Before the change this year, Little Red Book to a large extent tilted the balance to the content, but the consequence was that it was not profitable for a long time. This year, the overall acceleration of the commercialization of Little Red Book seems to change this situation.
But problems also follow. On the one hand, based on the traditional double column layout of Little Red Book, users have more choices than the single column layout such as dithering. If there is too much commercialized content, users' rejection of Little Red Book content will increase, and the community atmosphere will also decrease.
On the other hand, the "strong content but light users" feature of Xiaohongshu has also led to one thing, that is, users pay more attention to content than to bloggers themselves. In other words, a note is easy to explode, but it is more difficult to convert attention than other platforms.
The necessary condition for these buyers to reach a large scale is that they have a large fan base. However, the long chain of transformation of users' attention by the platform itself will inevitably lead to the "primitive accumulation" process of these anchors, which is longer than that of dithering and other platforms. For commercial teams, both time and money costs are greater investment. Not to mention the aforementioned lack of ecology, it also forms an obstacle for users to directly shop on the Little Red Book.
Of course, at present, all the actions of Little Red Book are making it easier for users to place orders. Little Red Book e-commerce is still trying to make a unique path of its own. However, Alibaba, JD, Pinduoduo and other old brands of e-commerce are not slow to change, and the change speed of Tiaoyin e-commerce is even faster than that of Xiaohongshu. How much time does the market leave for Xiaohongshu e-commerce?
