Tera Feng, a Shanghai-based influencer with over 500,000 followers, has tapped into Xiaohongshu’s platform to sell a variety of products, ranging from high-end suits priced at 15,000 yuan ($2,060) to daily staples like a 60-yuan bag of rice. Her audience, predominantly financially independent urban Chinese women, has shown a strong willingness to spend, highlighting Xiaohongshu’s potential as a lucrative e-commerce platform.
Xiaohongshu, often likened to Instagram, has been a mainstay for marketing in China but struggled with its e-commerce ventures until recently. Amid China’s challenging retail environment, the platform is now gaining traction with niche and premium brands. Unlike other platforms such as Alibaba’s Taobao or Pinduoduo, which cater to price-sensitive shoppers, Xiaohongshu attracts consumers less focused on discounts and more drawn to aspirational lifestyles.
A Shift in Strategy and Audience Appeal
The platform has become a favored destination for brands targeting affluent and lifestyle-conscious consumers. Suya Wang, general manager at Shanghai-based consultancy Early Data, notes that Xiaohongshu’s user base offers significant purchasing power compared to other platforms. Companies like L’Oréal and Coach have established official stores on the platform, while many brands also leverage influencer partnerships to boost sales.
Influencers on Xiaohongshu adopt a conversational approach during livestreams, setting them apart from the fast-talking hosts on competing platforms. This strategy has proven effective for luxury and designer brands. For example, Ms Min, a Chinese independent designer label, experienced a surge in sales after being featured in a livestream by actress Dong Jie. The brand sold hundreds of items in a single session, marking an unexpected success on what was originally seen as a brand-awareness tool.
E-commerce Integration and Growing Ambitions
Xiaohongshu has doubled down on e-commerce by integrating shopping functions into its livestreams and hiring talent from competitors like Alibaba and ByteDance, signaling its intent to expand. Jacob Cooke, CEO of WPIC Marketing + Technologies, anticipates the platform achieving triple-digit growth in gross merchandise volume (GMV) next year, with sales projected to exceed $100 billion by 2025.
Despite its growth, analysts suggest that Xiaohongshu will remain a niche player in the e-commerce space. Major platforms like Tmall, JD.com, and Pinduoduo dominate the market, collectively accounting for over 90% of China’s $2.78 trillion GMV. Beijing-based e-commerce analyst Li Chengdong points out that Xiaohongshu’s influence is limited due to its relatively small GMV compared to larger competitors.
A Platform with Unique Appeal
Known as “little red book,” Xiaohongshu has evolved into a lifestyle search engine for young Chinese women, offering recommendations on everything from travel and beauty products to dining. With over 300 million users and a valuation of $17 billion, the platform continues to attract investment from firms like Hongshan, Hillhouse, and Citic Capital. However, its long-term position in the e-commerce landscape remains to be seen.
While Xiaohongshu may not rival China’s largest e-commerce giants, its focus on premium products, influencer partnerships, and a curated user experience is carving out a unique space in the market.
Xiaohongshu’s rise in the e-commerce landscape highlights an intriguing shift in consumer behavior and platform strategy. Unlike mainstream marketplaces driven by discounts and mass appeal, Xiaohongshu’s focus on curated, aspirational content taps into a growing demand for niche and premium experiences. This strategy not only positions the platform as a haven for high-end brands but also challenges the dominance of giants like Tmall and JD.com by offering a distinct value proposition. However, the platform’s niche focus could also limit its scalability in a market where GMV often defines influence. To truly cement its place as a major e-commerce player, Xiaohongshu must balance its unique appeal with the broader demands of China’s competitive digital economy.
Featured image courtesy of The Star
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Source: https://digitalmarketreports.com/news/31033/chinese-lifestyle-app-xiaohongshu-drives-high-end-sales/