SEE­ING RED

小红书为什么这样红?

The World of Chinese - - Contents - BY HATTY LIU

Like, com­ment, and buy: In­no­va­tive app Xiao­hong­shu com­bines so­cial me­dia with e-com­merce, gain­ing celebrity users and a rep­u­ta­tion for mak­ing things vi­ral. But is trend-set­ting re­ally a prof­itable busi­ness model?

The chi­nese spend an av­er­age of 102 min­utes each day brows­ing e-com­merce sites, the long­est in the world. On so­cial me­dia, they lag, but still clock in at a re­spectable 25th place world­wide— ex­actly two hours per day, and one minute be­hind the US.

It was only a mat­ter of time be­fore some­one tried to com­bine the two trends.

Founded in 2013, Shang­hai-based “so­cial com­merce” app Xiao­hong­shu (“Lit­tle Red Book”) has had a very good year. It had al­ways been a rel­a­tively pop­u­lar plat­form for buy­ing for­eign brands, a hip­per al­ter­na­tive to us­ing over­seas “pur­chas­ing agents” ( daigou) via Taobao or Wechat. In 2018, how­ever, Xiao­hong­shu raised a to­tal of 300 mil­lion USD in fund­ing from back­ers such as Alibaba and Ten­cent, and grew its users by 40 per­cent to a to­tal of 100

mil­lion, which in­clude celebri­ties such as Jing Tian, Fan Bing­bing, and the cast of re­al­ity show Idol Pro­ducer.

Dig­i­tal mar­ket­ing ex­pert Mi­randa Tan has at­trib­uted Xiao­hong­shu’s me­te­oric suc­cess to its “uniquely Chi­nese” char­ac­ter­is­tics. “Its ap­peal might be dif­fi­cult for peo­ple un­fa­mil­iar with Chi­nese so­ci­ety and cul­ture to un­der­stand,” she wrote for Jing Daily in 2017. As in the case of an­other Chi­nese start-up with no clear over­seas equiv­a­lent, the Imdb-mys­pace-goodreads hy­brid Douban, tech writ­ers from out­side China have re­sorted to un­wieldy com­par­isons to try to en­cap­su­late all of Xiao­hong­shu’s func­tions—the app has been called a com­bi­na­tion of Pin­ter­est, In­sta­gram, and, of course, Taobao.

The app works like an on­line di­ary or scrap­book, on which users can share pho­tos and write re­views about dif­fer­ent prod­ucts they’ve dis­cov­ered, foods they’ve sam­pled, their trav­els, or leisure ac­tiv­i­ties. Where it dif­fers from a run-of-the-mill Pin­ter­est board is the abil­ity not only to browse, “like,” or “pin” items from other users’ feeds, but buy them di­rectly through the app. “In China, [so­cial me­dia plat­forms] get to mon­e­ti­za­tion much faster than the West,” Xiao­hong­shu’s co-founder, Charl­win Mao, told Wired in 2016.

In Mao’s case, that process took just a lit­tle over six months. In De­cem­ber 2013, Mao, an “over­seas re­turnee” from Stan­ford, no­ticed that Chi­nese tourists were fond of shop­ping abroad, and launched a sim­ple so­cial app to help trav­el­ers share their finds. Soon, though, he no­ticed that many users who signed up had no plans to travel, but merely wanted to use the plat­form to find daigou.

By July, Mao’s team had de­cided to cut out the mid­dle­man and source the prod­ucts di­rectly, even­tu­ally es­tab­lish­ing part­ner­ships with over­seas brands like Vivi­enne West­wood and Ja­panese sk­in­care com­pany SK-II. The com­pany has given con­flict­ing ex­pla­na­tions for its name (it prefers to be known as RED in English): Mao claims that “red” is slang for a pop­u­lar or vi­ral prod­uct in Chi­nese, and de­nies any con­nec­tion with The Quo­ta­tions of Chair­man Mao, known as the “Lit­tle Red Book” in the West, but “Red Trea­sure Book” (红宝书) in Chi­nese. (More­over, a spokesper­son told the Wall Street Jour­nal in 2015, “Our users are mostly young peo­ple born in the post-80s and post-90s gen­er­a­tion who will not make that kind of con­nec­tion.”)

To­day, the ma­jor­ity of Xiao­hong­shu users are un­der 30, and around 80 per­cent are fe­male, though the app has been try­ing to at­tract male users with ath­letic prod­ucts. Di­rect pur­chases from abroad still form one of the core func­tions of Xiao­hong­shu, with cos­met­ics be­ing the most pop­u­lar prod­uct cat­e­gory, fol­lowed by nu­tri­tional sup­ple­ments and lux­ury goods.

In­creas­ingly, though, do­mes­tic prod­ucts are try­ing to es­tab­lish them­selves on the app, as Xiao­hong­shu ab­sorbs the func­tions of travel or din­ing apps like Mafengwo or Dian­ping; small busi­nesses, from wed­ding plan­ners to indie bak­eries, are try­ing to lever­age its rep­u­ta­tion for cre­at­ing vi­ral trends ( wanghong). “I’ve never shopped on there, but I use Xiao­hong­shu to dis­cover ex­hibits, travel desti­na­tions, and food rec­om­men­da­tions,” says Meng Ran, a user in her early 20s.

Fa­mously, in 2017, Xiao­hong­shu’s third an­nual June 6 An­niver­sary Sale saw sales of over 100 mil­lion RMB in two hours. Com­pany vice-pres­i­dent Lou Yilin claimed that a Pana­sonic hair dryer sold more in one day than in one month on an­other “ma­jor e-com­merce plat­form” (im­plied to be Alibaba’s Tmall). The app has been cred­ited with start­ing re­cent ma­nias for fish maw (a nu­tri­tional

sup­ple­ment), brown-su­gar milk tea, Idol Pro­ducer, and va­ca­tion­ing in Turkey. Com­pany his­tory records boast that, in the first half of 2015, Xiao­hong­shu’s sales vol­ume ex­ceeded 200 mil­lion RMB “un­der con­di­tions of zero ad­ver­tis­ing.”

In­stead, the com­pany’s sales model re­lies on its celebrity in­flu­encers and other top users—called “key opin­ion lead­ers,” or Kols—to pro­mote prod­ucts by word-of-mouth to their mil­lions of fol­low­ers, who, in turn, add more value to the prod­uct ev­ery time they com­ment, cu­rate, and share. The lat­ter may ac­tu­ally be be­com­ing more in­flu­en­tial, due to cycli­cal con­cerns over Chi­nese prod­uct qual­ity and crooked en­dorse­ments. “Xiao­hong­shu is very com­mer­cial­ized, and all the en­dorse­ments by KOLS are paid, so the prod­uct’s trust­wor­thi­ness is not high,” claims Liu Xiaoy­ing, a pho­tog­ra­pher in her 30s who oc­ca­sion­ally pro­motes her stu­dio on the app.

By com­par­i­son, 19-year-old Zhao Tiange finds or­di­nary user re­views more be­liev­able on Xiao­hong­shu than on other sites. “There are both good and bad re­views, and they in­clude pho­tos and a de­tailed write-up, so you can tell they’ve put some thought into it, in­stead of post­ing fake re­views or re­view­ing in bulk, [as] on Taobao,” she says.

Re­views also con­trib­ute to an­other as­pect of Xiao­hong­shu’s suc­cess— peer pres­sure. In a 2017 sur­vey by Green­peace, 82 per­cent of re­spon­dents from first and se­cond-tier cities stated they based their fash­ion de­ci­sions on what they see oth­ers wear; 72 per­cent ad­mit­ted that so­cial me­dia in­flu­enced their shop­ping de­ci­sions, and 49 per­cent paid at­ten­tion to celebrity en­dorse­ments.

For these rea­sons, some ex­perts be­lieve Xiao­hong­shu should still be clas­si­fied as pri­mar­ily a so­cial me­dia app, rather than e-com­merce. “With­out the so­cial app, the e-com­merce is noth­ing,” claimed brand­ing ex­pert Miro Li at a Techn­ode event ded­i­cated to Xiao­hong­shu in Bei­jing in Septem­ber. In con­trast to net­work­ing fea­tures on e-com­merce sites—such as Taobao’s un­der­used “Spa­ces,” where users could share pho­tos and an­swer ques­tions about their pur­chases— Xiao­hong­shu’s brand iden­tity fos­ters a much tighter com­mu­nity, one that even goes by the nick­name “Lit­tle Sweet Pota­toes” (小红薯,a homonym of Xiao­hong­shu).

“Xiao­hong­shu sim­ply gives me a bet­ter feel­ing com­pared to Taobao,” de­clares Zhao. “Ev­ery­one on there is a reg­u­lar per­son, and in the com­ment sec­tions, it’s not like talk­ing to a cus­tomer ser­vice rep­re­sen­ta­tive, but more in­ti­mate. It makes you want to be­lieve that the prod­uct is good.”

Yet an over-em­pha­sis on so­cial net­work­ing has its down­sides. Li ob­served that Xiao­hong­shu still strug­gles to mon­e­tize its vi­ral mar­ket­ing prow­ess, as many sim­ply use the app to browse, be­fore buy­ing the prod­uct else­where. Zhao, in spite of her pro­fessed trust in fel­low “Pota­toes,” is still sus­pi­cious of the com­pany’s sourc­ing prac­tices, com­pared to more main­stream sites. “I heard there are knock­offs on Xiao­hong­shu, so I’ve never bought any­thing there,” she ad­mits. “I get their rec­om­men­da­tions, then go to the flag­ship store on Taobao.”

Per­haps in an ef­fort to level the play­ing field, Xiao­hong­shu has jumped head­long into the off­line “new re­tail” arena. In June, it opened Red­home, a cash­less bou­tique that com­petes with Taobao and Jd.com’s new brick-and-mor­tar stores. With its stu­dio light­ing and slick red-and-white color scheme, the Shang­hai store has quickly be­come a fa­vorite photo back­drop among the Sweet Pota­toes.

“It’s Shang­hai’s pho­tog­ra­phy mecca,” reads the top re­view for Red­home on Xiao­hong­shu. “Even self­ies look like movies here.” There’s no men­tion of any­thing that the re­viewer bought.

Xiao­hong­shu is a so­cial e-com­merce app worth bil­lions— but can it mon­e­tize its trend-set­ting rep­u­ta­tion? 密集种草,疯狂带货,小红书为什么这样红?

A Red­home out­let in Zhengzhou has im­ported prod­ucts on of­fer— and no cashiers

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