Commercialization has emerged as the foremost priority.

"Investor Network" Gravity | Han Yijia

With a burgeoning second-hand market and a newly acquired payment license, Xiaohongshu, initially a content-centric community, is poised to transcend its role as a mere 'grass-planting' (content-sharing) platform.

Recently, Dongfang Electronic Payment Co., Ltd. (hereinafter referred to as 'Dongfang Payment'), a payment institution, underwent significant industrial and commercial transformations. All original shareholders exited, and Ningzhi Information Technology (Shanghai) Co., Ltd. (hereinafter referred to as 'Ningzhi Info'), a wholly-owned subsidiary of Xiaohongshu Technology Co., Ltd., emerged as the sole shareholder with 100% ownership.

This strategic move signifies that Xiaohongshu has secured a payment license by acquiring Dongfang Payment, marking a pivotal step in completing its commercial closed-loop ecosystem.

Not long ago, Xiaohongshu initiated internal testing of its 'Quick Sale' feature, signaling its foray into the second-hand e-commerce arena. These initiatives underscore Xiaohongshu's ambition to forge a seamless ecosystem from content creation to transaction execution, as well as its renewed efforts to lay the groundwork for an Initial Public Offering (IPO).

Determination to Seal the E-commerce Loop

According to Qichacha, Dongfang Payment, established in 2008, operates within the non-financial institution payment services sector. Its business scope encompasses non-bank payment services, sales of communication equipment, and retail of computer software, hardware, and auxiliary equipment. Public records indicate that the company is a third-party payment institution authorized by the People's Bank of China to hold a 'Payment Business License.' Initially focused on internet payments, its business scope expanded to include Class I stored-value account operations in August 2024.

Upon acquiring Dongfang Payment, Xiaohongshu boosted its registered capital by 78 million yuan, bringing the total to 200 million yuan. Concurrent with this capital infusion, the company's legal representative and senior management underwent changes. Based on the reserve price for Dongfang Payment's equity transfer previously disclosed on the Shanghai United Assets and Equity Exchange, the company was valued at 148 million yuan, suggesting that Xiaohongshu may have paid this amount to acquire full ownership.

Per the 'Implementation Rules for the Supervision and Administration of Non-Bank Payment Institutions,' Dongfang Payment's Class I stored-value account operation license encompasses internet payments, mobile phone payments (including fixed-line phone and digital TV payments), among others. This means that future purchases on Xiaohongshu will no longer necessitate redirection to third-party payment platforms like WeChat Pay or Alipay.

The direct economic benefits of this strategic move are substantial. Assuming Xiaohongshu's Gross Merchandise Volume (GMV) surpassed 400 billion yuan in 2024 and applying a 0.6% payment channel fee rate, the platform would have incurred approximately 2.4 billion yuan in annual handling fees. Owning its payment channel will significantly reduce this expense.

More critically, the payment license will enable Xiaohongshu to form a closed loop of transaction data, granting it access to more comprehensive user payment behavior data. This not only facilitates product recommendation optimization and user experience enhancement but also strengthens the platform's control over cash flow, laying a solid foundation for subsequent financial business deployments.

Market analysts also posit that Xiaohongshu is likely to emulate other internet platforms by seeking additional business licenses, such as internet micro-lending, following its payment qualification acquisition. Targeting young users with a penchant for lifestyle pursuits, Xiaohongshu presents an ideal scenario for developing financial services like consumer credit. Future product offerings, such as 'monthly payment' plans and 'buy now, pay later' options, are virtually inevitable.

Investing nearly 300 million yuan in electronic payments underscores Xiaohongshu's resolve to accelerate its e-commerce ambitions.

Since the year's onset, Xiaohongshu has launched a commission-free plan for merchants with an annual GMV of under 1 million yuan across the platform and established Xiaohongshu E-commerce 'Market' as an independent business entity. Additionally, Xiaohongshu provides billion-level traffic and subsidy support for commercial creators and offers three major supportive policies for buyers.

Adjustments to its organizational structure further reflect Xiaohongshu's commitment to expediting commercialization. In August 2025, Xiaohongshu formed a 'Large Business Division,' headed by COO Ke Nan, integrating resources from the Business and Transaction Departments to foster the integration of 'grass-planting, traffic investment, and transactions.'

While fortifying its infrastructure, Xiaohongshu is actively expanding its business horizons. The second-hand trading market has emerged as its new frontier.

Recently, Xiaohongshu commenced internal testing of its 'Quick Sale' feature, enabling certified users to post links for selling idle items beneath their notes. The platform imposes a 0.6% basic software service fee on each transaction. This initiative aims to transition the longstanding cross-platform trading model of 'chatting on Xiaohongshu and purchasing on Xianyu' into an in-platform closed loop.

These adjustments address Xiaohongshu's persistent challenge: despite possessing a high-quality community and robust grass-planting capabilities, transaction conversions frequently occur off-platform.

Can Community E-commerce Distinguish Itself?

Tracing Xiaohongshu's developmental trajectory, a clear evolution emerges: from its inception as an 'overseas shopping guide' to a 'lifestyle community,' then to a 'consumer decision-making platform,' and finally extending towards a 'transaction ecosystem.'

In 2013, Xiaohongshu commenced as an overseas shopping guide, catering to users' queries about 'what to buy.' Subsequently, by fostering a community where users could share shopping experiences and usage reviews, it constructed a content ecosystem moat. In recent years, Xiaohongshu has continuously bolstered its transaction capabilities, introducing features like self-operated e-commerce, curator concepts, and buyer live streaming.

Xiaohongshu's founder, Zhai Fang, once articulated the platform's ideal state: 'E-commerce is responsible for earning money to support the family, while content is responsible for looking beautiful.' The acquisition of the payment license signifies the completion of another crucial link in the transaction closed loop, as Xiaohongshu accelerates its metamorphosis into a community e-commerce platform that harmonizes transactions and content.

However, Xiaohongshu still confronts formidable market pressures. In the payment sector, WeChat Pay and Alipay remain the dominant forces. The current payment license can only partially mitigate third-party costs and is unlikely to entirely supplant the two major payment platforms. In the second-hand e-commerce arena, Xiaohongshu faces stiff competition from Xianyu's entrenched position. Xianyu's monthly active users surpassed 200 million in March 2025, ranking first in growth among e-commerce apps.

Meanwhile, Zhuanzhuan announced in September 2025 that it would exit the C2C 'free market' business and fully transition to the C2B2C 'official verification' model, underscoring the persistent challenges of the C2C model in terms of quality control, fulfillment, and return rates.

Despite its rapid commercialization pace, Xiaohongshu still grapples with multiple challenges on its developmental path. Compared to industry-leading platforms, Xiaohongshu's differentiated advantage lies in its highly engaged community atmosphere and high-quality user base.

Beyond the grass-planting effect of the notes themselves, the 'reverse verification' mechanism in Xiaohongshu's comment section fortifies trust barriers, rendering advertising and e-commerce conversions more certain. This characteristic enables even a note with only 300 views to attract over 30 inquiries in niche areas like second-hand idle transactions.

This also makes balancing content and commerce Xiaohongshu's top priority. The platform's paramount challenge lies in harmonizing commercialization with community tone.

Zhai Fang's vision is idealistic—she aspires for commercial endeavors to not detract from the community's essence. However, as Xiaohongshu's commercial reach extends further, akin to a speeding vehicle where a slight steering wheel adjustment can shift lanes, balancing commercialization and content necessitates more precise maneuvers.

Secondly, infrastructure deficiencies cannot be overlooked. Compared to e-commerce behemoths like Alibaba and JD.com, Xiaohongshu remains relatively nascent in core e-commerce infrastructure areas such as supply chain, logistics, and after-sales services. In the second-hand e-commerce sector, Xiaohongshu must enhance supporting mechanisms like express delivery integration, withdrawal processes, after-sales evaluation, and traffic allocation.

For Xiaohongshu, the prospect hinges on its ability to successfully navigate the unique path of 'community e-commerce.' It need not emulate Taobao or Douyin but rather must demonstrate that a robust and sustainable transaction ecosystem can flourish within a community built on sharing and trust. Xiaohongshu embodies a potential avenue for community-driven commercialization—not relying on absolute traffic scale but cultivating high-quality community relationships to achieve a virtuous cycle of content and transactions.

With a payment license in hand, Xiaohongshu now stands at a pivotal juncture: one path leads to the purity of the content community and user trust, while the other leads to the grand aspirations of a commercial empire and capital expectations. Its exploration may redefine the boundaries and possibilities of content community commercialization. (Produced by Sihui Finance) ■

Source: Investor Network