Currently, nearly 20 products/features on the market have targeted Xiaohongshu, including some major tech giants like BAT. The earliest ones can be traced back to 2016. For Xiaohongshu, a web of encirclement is slowly closing in.

Author/Zhi Zi

Produced by/Xinzhai Business Review

Xiaohongshu has always been a unique presence in the internet industry, being one of the few platforms to achieve large-scale user growth in the past three years. In the internet industry, users mean everything, and Xiaohongshu's performance is hard to ignore for other companies. In fact, some major tech companies have already lined up their troops, forming a trend of besieging Xiaohongshu.

Just last week, it was revealed that Meituan is testing a service called "Local Food" in Beijing, Shanghai, and other places. Similar to Xiaohongshu, this service allows users and KOLs to share their takeout orders through content creation, enabling other users to discover products and merchants. This is not the first time Meituan has "snuck up" on Xiaohongshu. As early as early 2022, Meituan launched a feature similar to Xiaohongshu called "Truth" on its e-commerce page, showcasing users' product recommendations.

It is worth noting that ByteDance is also learning from Xiaohongshu, but it has set its sights on overseas markets. In 2020, ByteDance launched Lemon8, Known as “ Overseas version of Xiaohongshu ”. This product currently ranks among the top two lifestyle apps on iOS devices in the United States and within the top 20 of all iOS apps.

According to incomplete statistics from Xinzhai Business Review, there are currently nearly 20 products/features on the market targeting Xiaohongshu, including some BAT-level companies, with the earliest launches dating back to 2016. For Xiaohongshu, a web of encirclement is slowly closing in.

I. Two factions besiege Xiaohongshu, launching 20 products in six years

According to Xinzhai Business Review, the starting point for major tech companies to target Xiaohongshu was 2016, when NetEase launched the beauty and skincare community product "NetEase Aesthetics," firing the first shot in the siege of Xiaohongshu. This product, which once boasted the slogan "Zhihu of the beauty industry," ceased operations in 2019.

The next entrant was ByteDance, which launched "Xincao" in 2018. This is a product for sharing images and text, with a clear introduction stating, "A community where young people love to discover new things." The intended rivalry is obvious.

In terms of product form and content, Xincao is similar to Xiaohongshu. For example, its homepage also adopts a recommended and followed section format, with content focused on young people's lives. However, Xincao positions itself as a content community with UGC at its core, while ByteDance prioritizes PUGC content, with a deeply hidden content posting entry.

This poses two problems. First, while PUGC content may be of higher quality, it often lacks interaction with users, making the community less vibrant and turning it into a one-sided platform for influencers/KOLs. Second, if regular users want to post content, they need to click on a specific topic to find the content posting entry. In contrast, on Xiaohongshu, users can see the content posting entry directly on the homepage. As a result, while regular users can see a lot of content on Xincao, it is difficult for them to post their own content as easily as on Xiaohongshu, reducing the community's vitality.

Xinzhai Business Review observes that despite Xincao's failure, ByteDance remains undeterred and has shifted its focus to Douyin. In November 2021, Douyin launched a feature for sharing images and text, and later tested the "Explore" entry on the homepage, displaying images and text in a dual-column format. Currently, this section is renamed "Experience" and is located further back in Douyin's menu, but still accessible. Compared to the location of e-commerce sections, Douyin's attempt has not been entirely successful.

Despite setbacks for two major tech companies, other companies remain enthusiastic. According to Xinzhai Business Review, as of 2024, a total of 20 products/features targeting Xiaohongshu have emerged on the market. More importantly, almost all major tech companies in the industry have entered the fray.

These companies can be divided into two categories: those from the e-commerce industry, including Alibaba, JD.com, and Pinduoduo, with Alibaba showing the highest enthusiasm by participating four times; and those from the social media industry, such as WeChat under Tencent and Momo from Momo Group, with WeChat receiving higher attention. In March 2023, WeChat launched an image messaging feature, which was once dubbed "Little Green Book" by the industry.

WeChat's image messaging is similar to Xiaohongshu in form but differs in logic. Its distribution logic is similar to ByteDance's Xincao, both focusing on PUGC users. After the feature's launch, many WeChat official account authors adopted it. Additionally, WeChat launched the "See More" function, which also adopts a dual-column layout for images and text. Users can post content by simply clicking the "?" button at the bottom of the screen, similar to Xiaohongshu's logic.

Among these companies, Alibaba shows the highest enthusiasm. It has launched the "Stroll" channel within Taobao and introduced three additional products: Tangping, Yousha, and Chihuobiji. Apart from Stroll, which benefits from Taobao's support, the development of the other products has not been promising.

For example, Tangping positions itself as a home decoration UGC community, with the community serving as its foundation. Alibaba's ultimate goal is to build upon this foundation to provide consumers with a comprehensive home decoration business line encompassing design, production, customization, sales, and post-decoration services. Alibaba holds high expectations for Tangping, recognizing the massive yet digitally underpenetrated home decoration market. If Tangping achieves this goal, Alibaba can play a more significant role in the home decoration industry, not only adding a new financial growth point for the company but also enabling it to delve deeper into the industrial internet of the home furnishing industry. However, five years after its launch, Tangping has yet to gain significant traction.

II. Quarterly revenue exceeds $1 billion, Xiaohongshu sits on a gold mine

Looking at the major tech companies that have entered this market, almost all of them attach great importance to it. Strangely, despite few successful cases, enthusiasm remains high. Why? Xinzhai Business Review believes the reason lies in Xiaohongshu's "gold mine."

Firstly, Xiaohongshu's business model is mature, allowing major tech companies to tap into this gold mine. The internet industry has three primary monetization models: advertising, e-commerce, and subscription fees. Xiaohongshu's core is its community, which, once it gains traffic, can naturally support advertising and e-commerce activities, forming the platform's primary revenue streams. In 2023, Xiaohongshu's overall revenue reached $3.7 billion, with advertising accounting for approximately 90% of this. The platform turned a profit, recording a net income of $500 million.

In 2024, Xiaohongshu's revenue growth accelerated further. According to the Financial Times, citing two sources, the platform's revenue for the first three months of the year exceeded $1 billion, with a net income of $200 million. In comparison, Xiaohongshu's revenue for the same period last year was $600 million, with a net income of $40 million.

Secondly, Xiaohongshu's success provides major tech companies with an opportunity to acquire new users. Established in 2013, Xiaohongshu did not attract the attention of major tech companies for a long time after its inception. At that time, the focus of the internet industry was on O2O, the sharing economy, and short videos, making the story of image and text communities less appealing to major tech companies and investors.

However, despite being overlooked by major tech companies, Xiaohongshu managed to acquire a massive user base. In 2018, Xiaohongshu had fewer than 50 million monthly active users. By 2023, this figure had grown to 312 million. Across the Chinese internet industry, few companies have achieved such growth in the past five years, except for video platforms like Douyin, Kuaishou, and Bilibili. More importantly, as major tech companies have entered a stage of sluggish user growth, Xiaohongshu's substantial user base is undoubtedly highly attractive.

For e-commerce platforms like Alibaba, Xiaohongshu also offers an additional benefit: increased user engagement. The essence of various business models in the internet industry is to compete for user time, which is crucial for monetization. If users spend a significant amount of time on a platform, it indicates high engagement, which is more conducive to monetization. Xiaohongshu excels in this aspect, ranking second in terms of user time spent among mobile social apps, according to QM data from March this year, trailing only behind WeChat.

Finally, Xiaohongshu's ecological value can help major tech companies enrich their ecosystems. Taking Douyin as an example, it launched an image and text feature in 2022, initially targeting creators' needs. Beforehand, Douyin's image and text section consisted of "BGM + Title + Multiple Images," essentially short videos. Now, its format is similar to Xiaohongshu's. Currently, Douyin has placed the image and text channel in its homepage recommendation section and transformed the left-side primary entry "Experience" into an image and text section.

III. Countering the siege: Being true to oneself is the greatest confidence

Just as major tech companies have been eyeing Xiaohongshu for some time, the platform has also been preparing for the "counter-siege" for a while. One of the more critical battles has been in e-commerce.

The foundation of e-commerce lies in people, products, and venues. For Xiaohongshu, addressing the latter two aspects is crucial. Generally, platforms have two options when venturing into e-commerce: either focusing on links, supporting e-commerce content and opening links to third-party e-commerce platforms to address product and venue issues, or building an end-to-end e-commerce system like Taobao and JD.com, which is the path chosen by Xiaohongshu. Currently, the "Shopping" section on the Xiaohongshu app is parallel to the homepage, indicating the platform's significant emphasis on e-commerce.

In Xinzhai Business Review's opinion, Xiaohongshu's approach to e-commerce is similar to Douyin's.

When other platforms venture into e-commerce after Taobao, JD.com, and Pinduoduo, they establish a theme to shape users' perceptions. The theme is aligned with users' established habits, helping them smoothly develop a consumption mindset. For Douyin, this theme is interest-based e-commerce. For Xiaohongshu, it's lifestyle e-commerce, centered around "seeding" (or "grass-planting"). As Yin Shi, the head of Xiaohongshu's e-commerce operations, puts it, lifestyle e-commerce involves merchants presenting products in various life scenarios, showcasing why certain products complement each other and enhance users' lives in those scenarios. Crucially, this lifestyle can be directly purchased.

As everyone knows, Xiaohongshu initially started as a "guidebook." The concept of "lifestyle e-commerce" aligns perfectly with this origin. In summary, Xiaohongshu's lifestyle e-commerce involves lifestyle-savvy e-commerce professionals (buyers, curators) creating, selecting, and pairing products to meet users' individualized needs. Thus, "curators" are at the heart of Xiaohongshu's e-commerce, analogous to live streamers in live e-commerce.

However, unlike Douyin, Xiaohongshu has yet to produce any influencers with over 20 million followers. Most have millions or tens of thousands of followers. For instance, Zhang Xiaohui, who does well in live streaming, has only 22.07 million followers. Zhao Lusi and Fan Bingbing are top influencers on Xiaohongshu but also have fewer than 20 million followers, currently at 18.2 million and 16.9 million, respectively.

For platforms venturing into e-commerce, superstar influencers are a powerful lever, as proven by Douyin and Kuaishou. However, while superstar influencers can benefit platforms, they also have drawbacks. Xiaohongshu's absence of superstar influencers actually aligns with its style. In the image and text era, Xiaohongshu also lacked superstar influencers, yet from a commercialization and monthly active user perspective, this approach has not only led to Xiaohongshu's success but also preserved its essence. Therefore, for Xiaohongshu, staying true to itself is the greatest confidence in countering the siege.