Recently, Xiaohongshu has replaced the concept of buyer's agent e-commerce with "Lifestyle E-commerce", leading to various PR articles promoting the idea. "Lifestyle E-commerce" has become a buzzword in the e-commerce industry.

So, can Xiaohongshu represent young people? Can it represent their lifestyle?

Let's look at the data.

Xiaohongshu's user demographics: The platform has 300 million monthly active users, with a male-to-female ratio of 3:7. 50% of users are post-95s, 35% are post-00s, and 50% are from tier 1 and tier 2 cities.

According to QuestMobile statistics, there are only 419 million young people under 30 years old in China. Xiaohongshu covers most of them, making it a content community exclusively for young people.

Can Xiaohongshu represent young people of this era? I would say not yet. Despite having 300 million monthly active users, its user base is still relatively niche.

Let's do a rough calculation: Xiaohongshu has 300 million monthly active users, 70% of whom are female (about 210 million). There are nearly 100 million male users. Since there are 419 million young people under 30 in China, at least 100 million male youth may not use Xiaohongshu.

It's worth noting that this calculation is not rigorous, and Xiaohongshu cannot fully cover every young person. However, these numbers indicate that Xiaohongshu remains a content community platform with a distinct gender bias.

As a content community platform dominated by young female users, how will Xiaohongshu approach "Lifestyle E-commerce"? What are the limits of its commercialization?

These questions deserve in-depth exploration.

Lifestyle e-commerce is a good concept, but how do we implement it on the supply side?

Xiaohongshu's foundation lies in its content and tone. Its refined content tone is the essence of its traffic value.

I personally use Xiaohongshu, but after some time, I noticed that many posts often give an "unrealistic" feeling.

Whether it's young women showing off their figures in yoga pants or urban professionals sharing their sophisticated city style, people on Xiaohongshu share their carefully curated content, satisfying their sense of superiority through community sharing.

While curated content may not be entirely authentic, it's sufficiently stylish to evoke young women's aspirations for a bourgeois lifestyle. As a niche content seeding platform, Xiaohongshu excels, but for most people, it doesn't represent a universal lifestyle.

What is a universal lifestyle?

TikTok, Kuaishou, and video numbers represent people's lifestyles in the short video era. These platforms have a user base at least an order of magnitude larger than Xiaohongshu, making them truly universal applications.

On TikTok and Kuaishou, users see diverse people and events, offering a vivid and authentic life experience. Users often make purchases while scrolling through videos and watching live streams.

In contrast, Xiaohongshu mainly showcases curated "sophistication."

This "sophistication" is Xiaohongshu's platform tone and serves as a "bridge": High-tier users share their sophistication through content, while low-tier users are attracted to this sophistication, forming a traffic pool.

The depth of this traffic pool determines the extent of commercialization opportunities.

With over 20 billion in revenue, Xiaohongshu lags far behind leading e-commerce platforms but is decent among content platforms. However, if Xiaohongshu aims for an IPO, it must significantly expand its commercialization space.

According to Tianyancha APP, Xiaohongshu has reached Series E funding with a valuation of $17 billion, fulfilling IPO conditions. The market's perception of Xiaohongshu's future commercialization potential could impact its valuation in the secondary market.

The question is, how can Xiaohongshu expand its commercialization space?

There are two directions:

Xiaohongshu resembles Bilibili in that both are content communities with strong content tones, aiming to commercialize through e-commerce.

Bilibili's content generalization is a good example, but its commercialization hasn't been ideal post-generalization. Unlike Xiaohongshu, Bilibili has gaming revenue and premium membership income, offering more diversified monetization channels. Nevertheless, Bilibili's growth hit its ceiling early on.

Xiaohongshu is already making changes, such as adding tech and borderline content to attract male users and alter its user structure.

The question is, how will Xiaohongshu balance its content tone going forward? It may face similar challenges as Bilibili.

2. Explore possibilities in e-commerce and seek incremental categories.

In addition to cosmetics, Xiaohongshu also aims to expand into tech and trendy toys.

However, in these categories, "sophistication" is not a priority.

Not all young people aspire to a sophisticated lifestyle; many prioritize affordability. The booming secondary market is evidence of this.

Data shows that Xianyu has 160 million monthly active users, exceeding half of Xiaohongshu's. With a 20% year-over-year growth, Xianyu has become the largest trading platform for fan circles, doll collectors, and trendy toys.

Xianyu is already capturing the incremental market Xiaohongshu desires. There may not be much left to explore.

From a commercialization perspective, by introducing the concept of "Lifestyle E-commerce," Xiaohongshu subtly signals to investors that it can continuously expand categories on its monetization journey due to the diversity of lifestyles.

Is this truly the case?

The e-commerce industry has entered a stage of dividing the existing market, and redefining segments is the best way to capture a larger share.

"Lifestyle E-commerce" doesn't redefine segments but rather presents an appealing concept to investors in the primary and secondary markets.

While it's a good concept, it doesn't necessarily translate to a successful business. In today's e-commerce era, the more content-driven a platform is, the more scalable its e-commerce becomes.

More widespread content fosters e-commerce with better scale effects.

For instance, TikTok and Kuaishou have leveraged live streaming for e-commerce, which offers better scale effects than traditional shelf e-commerce.

Personalized content, on the other hand, nurtures e-commerce with stronger personalized demands.

Xiaohongshu and Bilibili are more personalized platforms.

Data shows that in June this year, long-tail search terms representing users' specific, personalized demands accounted for over 60% of all search terms on Xiaohongshu.

What does this mean?

Xiaohongshu sees many personalized demands. Users often visit Xiaohongshu simply to "find answers," making it a "problem-solving" platform rather than a shopping one.

Of course, search implies demand, and Xiaohongshu's e-commerce business may differentiate itself. However, overly personalized demands can hinder scale effects.

Certain products may be harder to find on Xiaohongshu but readily available on Taobao.

A lack of scale effects in e-commerce platforms hinders supply-side development, making it easier to hit commercialization ceilings.

In e-commerce, the ceiling of commercialization doesn't lie in traffic but in supply. Pinduoduo achieved a scale comparable to Alibaba by optimizing supply, which Xiaohongshu aims to do with its "Lifestyle E-commerce" concept. However, the challenge lies in implementing this from the supply side.

Xiaohongshu's Commercialization Future: Are Categories the Ultimate Ceiling?

Xiaohongshu has advantages in e-commerce, as policy directions against internal competition provide space for its e-commerce endeavors. After all, Xiaohongshu can't afford price wars.

However, embracing the "Lifestyle E-commerce" strategy means sacrificing some platform tone. As soft ads proliferate, conflicts between user experience and commercialization will emerge, raising questions about sustained traffic growth with commercialization.

Currently, Xiaohongshu's commercialization has limited value.

For comparison, TikTok has 600 million daily active users and annual revenue of around 600 billion yuan, while Kuaishou has 270 million daily active users and nearly 100 billion yuan in annual revenue. Xiaohongshu has 100 million daily active users and over 20 billion yuan in annual revenue.

Xiaohongshu's daily active users are one-sixth of TikTok's, yet its revenue is only 3% of TikTok's.

The low value may stem from its revenue structure. In 2023, advertising still accounted for nearly 80% of Xiaohongshu's total revenue, with e-commerce struggling to carry the load. Clearly, selling products is more profitable than buying traffic since it's closer to transactions.

To enhance the value of e-commerce, Xiaohongshu must expand supply categories.

Xiaohongshu has unique advantages in cosmetics, stemming from its user demographics and the importance of content in cosmetics purchasing decisions.

However, even with these advantages, Xiaohongshu faces competition from giants like Taobao and TikTok in cosmetics.

All e-commerce platforms selling cosmetics eventually encounter the same challenge: once commercialization reaches a certain scale, further growth necessitates facing giants like Tmall. Similarly, e-commerce platforms specializing in tech will eventually compete with JD.com.

Giants have traffic and supply chain scales supported by robust logistics systems, which Xiaohongshu lacks. Therefore, Xiaohongshu's category expansion has limits.

These limits are evident in user experience: lack of price advantages, slow logistics, and limited product availability. Most users still prefer to search on Xiaohongshu and make purchases on larger platforms.

Essentially, Xiaohongshu is better suited as a seeding platform.

Category expansion is fundamentally a matter of demand scale. The higher the total demand for a category, the easier it is for platforms to expand into it.

However, expanding from one category to many may be challenging for Xiaohongshu.

Xiaohongshu's COO Conan said that "Lifestyle E-commerce" key lies in activating the power of people within the e-commerce ecosystem, creating life-like purchasing scenarios, and fulfilling personalized demands.

What does this mean?

Personalized demands are essentially long-tail demands. Xiaohongshu aims to aggregate these demands through influencer-generated content, realizing e-commerce monetization.

Under this logic, Xiaohongshu integrates e-commerce into its community, bridging the gap from reading notes and watching live streams to making purchases, further fusing community and e-commerce.

But what about the supply system?

As a personalized platform, aggregating long-tail demands may not offer high commercialization ceilings. The 300 million user base may not generate enough long-tail demands to support supply chain expansion.

It's not that Xiaohongshu can't achieve high margins; many long-tail products are high-margin. However, from an e-commerce industry perspective, this ultimately encounters the bottleneck of category expansion.

A product manager once said, "Communities are about people grouped by interests, while e-commerce is about products grouped by categories." Xiaohongshu focuses on people grouped by interests but may struggle to group products by categories.

On the one hand, while promoting "curators" and buyer's agent models, Xiaohongshu, TikTok, and Kuaishou share similar commercialization methods: live streaming, video links, ads, plus influencer marketing and ad placement platforms. There's nothing particularly unique.

On the other hand, e-commerce fundamentally relies on categories and scale effects. However, the buyer's agent model isn't highly attractive to merchants.

Xiaohongshu primarily appeals to small and medium-sized designer brands, but these are also being divided among giants, while major brands may overlook Xiaohongshu. Enhancing platform attractiveness is worth considering.

Transitioning to "Lifestyle E-commerce" doesn't significantly boost brand appeal. The key lies in category structure, which ultimately determines Xiaohongshu's commercialization ceiling.

From this perspective, Xiaohongshu's e-commerce endeavors may eventually contract to one or two advantageous categories, similar to past vertical e-commerce platforms.

Perhaps Xiaohongshu won't become another Taobao or TikTok but the next Vipshop or Mengxiang Technology. After all, history has shown that overly vertical or personalized e-commerce platforms ultimately lack imagination.