Xiaohongshu's commercialization directions for 2025.

Author | Wen Changlong

Editor | Yang Zhou

"From a tool perspective, if Douyin is version 5.0, then Xiaohongshu is currently at version 3.0. However, over the past year, Xiaohongshu has been rapidly catching up and making significant strides." This was shared by the head of an MCN agency with a long-standing presence on both Xiaohongshu and Douyin.

In her view, this disparity in tools presents numerous opportunities for many brands. Douyin primarily caters to big brands in a "money game" where return on investment (ROI) is increasingly diminishing. Conversely, on Xiaohongshu, brands and merchants can still achieve substantial impact with minimal effort through content.

A notable case from Foshan's ceramic tile industry involved a small team achieving nearly RMB 100 million in sales conversions solely through building a Xiaohongshu official account matrix for content seeding and lead generation.

This trend from seeding to conversion is anticipated to intensify in 2025.

According to 36Kr, Xiaohongshu's commercialization arm has recently outlined three key directions for 2025:

Firstly, the industry scope will broaden from focusing solely on consumer goods to addressing the needs of multiple industries, with a particular emphasis on breaking into clue industries like life services.

Secondly, in terms of commercial product capabilities, greater emphasis will be placed on optimizing seeding placements, measuring seeding effectiveness, and directly delivering business leads to customers.

Thirdly, the ecosystem will become more open, facilitating direct connections with various platforms, merchants, brands from different industries, and MCN agencies.

Xiaohongshu's commercialization is evolving from "seeding" to "business success." This transformation reflects not just data integration and tool upgrades but also an overall shift in the platform's commercial ecosystem.

Based on current information, Xiaohongshu is likely to reveal more details at the WILL Business Conference in 2025.

01 Continuing the Build-Up of 'Infrastructure'

The shift from focusing on the consumer goods industry to addressing multiple industry needs, along with increased emphasis on optimization and measurement post-seeding, is driven by the urgent demands of the platform's customers.

Liang Tianyangzi, founder of home MCN Qichuan Technology, shared that their cultural tourism clients fall into two categories: government cultural tourism projects focused on regional exposure and scenic spot promotion, and privately operated hot spring resorts prioritizing the commercial closed loop, aiming not just for brand promotion and search positioning but also for in-app ticket or travel package sales.

As these clients' expectations of the platform rise, MCNs have likewise raised their expectations.

"Merchants accustomed to advertising on Douyin are more concerned with ROI and require clear insights into the placement effect on Xiaohongshu, such as the direct sales generated by investing RMB 2 million or 3 million per month. This type of data is crucial because only by providing clear conversion data can we help merchants understand the effectiveness of their placements on Xiaohongshu," she elaborated.

This sentiment was echoed by the head of another leading integrated marketing agency.

"Current clients are increasingly less interested in pure exposure and more focused on category penetration, store visits, and conversion ROI on Xiaohongshu. Many clients believe that an ROI below 1.5 makes the marketing investment unprofitable, hence KPIs and goals are more centered on actual conversion results."

Previously, Xiaohongshu lacked adequate commercialization tools and faced criticism for a mismatch between its commercialization infrastructure and growth rate.

When customer needs and platform capabilities are mismatched, the need for change becomes urgent.

Xiaohongshu recognized this issue soon after officially launching its commercialization in 2019 and has been committed to addressing the challenge of measuring seeding effectiveness. Despite launching several initiatives, the biggest hurdle remains the inability to access sales data from other platforms.

This issue is gradually being resolved as Xiaohongshu endeavors to establish a closed loop within the platform through multidimensional commercialization infrastructure.

Externally, Xiaohongshu has formed partnerships with Taobao Union, JD.com, and VIPSHOP to create Xiaohongxing, Xiaohongmeng, and Xiaohonglian, respectively, linking seeding data with conversion data from external e-commerce platforms. This helps merchants accurately track the impact of seeding on actual sales, addressing the long-standing issue of "non-quantifiable seeding".

Simultaneously, tools like "Lingxi" are gradually being made available to more merchants, transitioning from a whitelist mechanism to enhance the transparency and efficiency of brand placements. In the second half of this year, Xiaohongshu integrated scattered functions into a unified e-commerce marketing platform like "Chengfeng," forming a comprehensive e-commerce tool chain and improving merchant efficiency.

02 Brands Embrace New Strategies

Currently, Xiaohongshu's commercialization logic is shifting from emphasizing "upstream indicators" to seeking results from "downstream," gradually transitioning from focusing solely on metrics like exposure and clicks to actual business goals such as sales conversions and order revenue. This undoubtedly addresses the pain points of current brands and merchants by clarifying the measurement of seeding effectiveness.

This logic aligns closely with the "performance advertising" of mature e-commerce platforms, offering not just advertising services but also assisting merchants in directly achieving business success through closed-loop solutions.

On the Xiaohongshu platform, merchants can currently utilize tools like Xiaohongxing and Xiaohongmeng for data feedback and seeding result assessment. However, beyond measuring external platform effectiveness, another way for merchants to directly observe the impact of their placements is to enhance direct conversions within Xiaohongshu. This allows merchants to handle seeding, traffic investment, store opening, and sales entirely within the Xiaohongshu platform, improving conversion efficiency from placement to sales while enabling direct measurement of placement effectiveness.

With the formation of a closed loop between e-commerce and commercialization within Xiaohongshu, new strategies and brands are emerging. They are starting to directly commercialize on Xiaohongshu, integrating the platform's e-commerce functions for self-broadcasting (brands directly opening stores and conducting live sales on the platform) and collaborating with bloggers for "seeding" (stimulating consumer desire through blogger recommendations).

These brands are also expanding their influence by increasing commercial traffic investment and adopting a more proactive market penetration approach, rather than solely relying on driving traffic to other platforms.

Yangzi cited two specific cases: one from Foshan's ceramic tile industry where a team, through a combination of Xiaohongshu and the KOS matrix, achieved annual sales of over RMB 100 million for a single product solely on Xiaohongshu, demonstrating robust private domain conversion capabilities; the other involves a high-end kitchen appliance brand that achieved an impressive ROI and an overall excellent production input-output ratio by attempting to close the loop with store broadcasts on Xiaohongshu.

Furthermore, with the improvement of commercial infrastructure, a significant number of "curators" are entering the Xiaohongshu platform. Unlike ordinary merchants, curators often prioritize product personalization and philosophy. They comprehensively introduce product features through images, texts, videos, live broadcasts, and other forms to attract specific, loyal audiences.

In the current market environment, curators have deviated from the traditional "price war" competitive path, blazing a new development trail by emphasizing brand philosophy and personalized products, distinguishing themselves from traditional business models centered on price competition.

By enhancing its commercial infrastructure and opening up its ecosystem, Xiaohongshu is gradually approaching a mature commercial ecosystem. Admittedly, Xiaohongshu still has a way to go before reaching its set goals.

However, it is evident that the platform's determination is stronger than ever. "Iterating on commercialization requires a gradual development process for both institutions and platforms. Xiaohongshu has undergone many crucial changes in integrating e-commerce and live broadcasting businesses. Not only have product updates been made, but the industries capable of building conversion links are also expanding. Compared to the previous two years, the platform's determination and actions this year are more coordinated," expressed several service provider agencies with long-standing contact with Xiaohongshu's commercialization department, sharing a consistent view.