Consumers in China spend a great deal of time watching Xiaohongshu and other shopping guide communities that allow them to enter shopping apps directly, thus shortening the time lag between marketing and sales. As a platform, Xiaohongshu has become a home for millions of content creators and end users who are looking for daily advice on shopping, lifestyle, discovery of new brands, tutorials and more! But what are the latest happenings on the platform today? What type of content is booming and who exactly are the ones consuming Xiaohongshu content? Today we will dive into the data and statistics to find out.
China has recently entered the early stages of the so called “third consumption era” where supply-oriented consumption has switched to demand-oriented consumption. For companies and brands looking to grab attention and convert their social media followers to customers, this change means that brand marketing approaches need to be re-evaluated in two ways: ① paying more attention to content marketing and not traditional e-commerce advertising; ②switching to demand-oriented product design, research and development.
In 2022, marketing and sales in e-commerce and social media spaces occur almost simultaneously. The segmentation and diversification of demand allows more brands to gain opportunities, provided they meet the needs of consumers. However, at the same time, competition in the Chinese digital market has become more intense. Brands must make consumers recognize them and recognize the incremental value brought by their products in order to gain a higher market share. Therefore, the intensity, method and efficiency of marketing investment have all become priorities for FMCG and other consumer goods brands in terms of where they need to focus their energy in the next few years.
So, what consumer trends is the “third consumption era” bringing to Xiaohongshu? How is it changing the way people use the platform and the way the platform influences its users? Here are the top 5 trends we have observed on the platform in 2021-2022.
1. Demand-oriented decision making on Xiaohongshu
In the past, marketing in China relied on heavy advertising. However, the sector has more recently developed hot consumption demand and fierce competition. Consumption has been an important ingredient of people’s daily dose of entertainment, so as to meet both the physical and spiritual demands of consumers.
Consumers spend many hours watching Xiaohongshu and other shopping-guide and entertainment content communities such as Douyin (Tiktok in China), where they can directly enter the shopping app to place orders when they find a product they like. It is critical to understand the business model as well as operation model of social shopping platforms such as Xiaohongshu, and their correlation with your targeted GMV.
Content Seeding – UGC (User Generated Content) and KOL content mix (posts, videos and live-streaming) are the most important marketing tactics this year, which have reconstructed users’ consumption decision-making process on Xiaohongshu. Content seeding provides platform entrance for new brands (searchable keywords of the brand, traffic to brand page), directs users to shopping channels such as RED store, and maximizes the likelihood of instant sales.
2. Xiaohongshu – a place for high-net-worth consumers and a high-quality content
Xiaohongshu is the largest lifestyle content platform in China with more than 100 million active users in June 2020 and 200 million in January 2022. In terms of overall traffic, Taobao, a traditional e-commerce platform, and iQiyi, a top-ranked video platform in China, had 800 million and 600 million monthly active users respectively in July 2021 according to QM data.
Quickfire video platforms Douyin and Kuaishou stood out thanks to the advantages in attractiven content, and had 700 million and 400 million monthly active users respectively. There are only three APPs that have withstood the impact of short-video platforms and have more than 100 million monthly active users, and they are Weibo, BiliBili and Xiaohongshu. According to the data of Qianfan Analysys, the RED monthly number of active users reached 150 million in July 2021. The growth rate of the MAU of Xiaohongshu was the highest among all top APPs in China. During the e-commerce promotion period in June 2021 (618 festival), Xiaohongshu had a growth rate of monthly active users of 69%!
Xiaohongshu has been an online hub for high-value, high-influence and high-activity people in China. Most users of this platform are big consumers and will continue to be in the future, showing tremendous market space potential. By analysing users’ portraits on the platform, we established that Xiaohongshu mainly attracts young female users in first-tier cities. Therefore, it is an important platform for brands with this target audience.
a. Female orientation: Xiaohongshu is used by females, who are currently the dominant consumers in China. However, its content covers F&B, fitness, fashion, parenting, China, sports and other fields. Since male celebrities and KOLs entered Xiaohongshu in 2020, the proportion of male users has increased.
b. Youth orientation: Xiaohongshu covers a wide range of user ages, however, 18-30 is the dominant age group, accounting for 69% of all users.
c. Front-tier cities: in terms of regional distribution, most Xiaohongshu users are in first/second-tier cities and young high-consumption users continue to power the platform. As of March 2021, the total proportion of Xiaohongshu users in first/second-tier cities was up to 90%.
From beauty and makeup to lifestyle, Xiaohongshu is committed to boosting users’ enthusiasm to make content. Users can search and discover great things in Xiaohongshu, create and share experiences, as UGC accounts for more than 70% of all posts on the platform. It is always difficult to keep up high activity together with high quality content, so the key for Xiaohongshu to keep this up is its excellent operational capability. RED’s top prioritiy is its content and its commercialization ratio (no more than 20%). The platform gives ordinary people more exposure opportunities in order to maintain a good community atmosphere.
3. Xiaohongshu is improving Tmall sales. Content marketing ROI.
Xiaohongshu has the ability to transform sales through increasing the search volume of branded keywords on Tmall. When comparing the data from direct searches, product sales and search-based additional purchase transformation, it can be observed that investing content in Xiaohongshu is very effective. According to the service data of Fish Design, it can generate a positive initial ROI and continuous improvement.
Case study: Tineko, a local electrical cleaning appliance brand became a leading brand by GMV in its category on Tmall
Tikeno went from 0 to 1 using the Xiaohongshu “product seeding and recommendation” tactic. Through Xiaohongshu’s “seeding” campaign promotions, brand awareness increased, which further increased the transformation of Tmall brand awareness and sales, turning the brand into a champion in its category.
Tikeno’s marketing and promotion plan: The brand’s marketing campaign launch started in January 2021, with a total of 800 KOCs (ranging from 4k-10k followers per account). The entire marketing promotion process included talent selection, brand positioning, content production, picture/video shooting, placement tracking, selling point analysis, etc. Marketing and promotion results exceeded expectations: total KOC engagement reached 100K+, and brand GMV became the champion of its category for the 618 festival in 2021, and sales increased by 1663% over the same period.
4. Xiaohongshu: the era where “the user is the author”
Any brand can establish word of mouth advertising in the community with the help of KOCs (Key Opinion Consumers) to influence the consumer behavior of platform users. They share the consumption experience, and then influence the brand and other users, forming a positive experience cycle. But in 2022 we have observed a new trend, where a brand’s word-of-mouth marketing has gradually moved from co-creation with KOC to mass-creation with KOC and consumers, meaning that we are now moving into an era of “users as authors”.
5. Analysis of Consumption Trends in 2022: A look at Advertising Investment between the accounts in 2022.
a. Overall trend: market distribution – food and beauty accounts are accounted for 17% of total account on Red.
In terms of total volume, Xiaohongshu has generated about 360 million notes (posts) in the past year, with the most notes coming from the food, beauty, and entertainment categories (33.686 million, 26.956 million, and 20.342 million respectively), accounting for 23% of the total. As female users dominate the platform, these numbers are quite “normal”, and they reflect Red’s “product seeding/recommendation” genes of the platform and a strong community spirit. Food notes (posts) accounted for 9% of the market and ranked first, and the notes were mainly about food tutorials, shop exploration, food matching, and sharing. Beauty notes are still an important part of the Xiaohongshu community. In the past year (2021), the number of notes accounted for 7%, second only to food. The main contents of notes are beauty tutorials, recommendations, and makeup sharing.
The share of games, education, and pets in the broader market has increased in the past six months, and the proportion of notes in the first half of the year increased by 0.4%, 0.3%, and 0.2% respectively. Among the first-level categories where the number of notes accounted for more than 2%, games, pets, education, mothers and children, and home furnishing with higher month-on-month growth rates in the past six months were the growth rates of 28%, 22%, 21%, 9%, 9% respectively.
The number of notes/posts in the gaming category increased by 31.9% month-on-month in the past six months, and the growth rate was the highest in all categories. The game content is mainly female-oriented, couple-oriented, and multiplayer online games. In addition, although the number of notes in areas that male users are more interested in, such as automobiles and digital technology, is small, the growth rate was the highest, with a month-on-month increase of 28.4% and 7.2% respectively. The rapid growth of male content is attributable to the increase in male influence on the Xiaohongshu platform.
According to the new list, the proportion of the interaction volume of notes posted by male experts in the first half of 2021 rose on the whole, approaching 19% in June.
The number of pet category notes has increased by 22.4% month-on-month in the past six months, and the content consists mainly of sharing cute moments with pets, and pet raising strategies. The substantial growth of pet notes reflects the steady improvement of young people’s spending power and the growth of spiritual needs such as companionship and affection. The pet economy may become a new focus in the future consumption field, and it will also serve as a guide for the future development of home cleaning and other tracks.
The total number of likes + comments + favorites is proportionate to the amount of engagement. From the perspective of interactive ROI, the categories of fun, film and television entertainment, makeup, games, and music have the highest engagement rate (number of interactions/number of notes).
b. Home improvement and renovation content: the post-90s generation are becoming the main force in home related.
The total number of notes/posts in 2021 is 11.278 million (for comparison, in the cosmetics category there were only 6 million similar notes/posts), the number of promoted notes (that were boosted by ads) was 2.361 million, and promoted notes accounted for 21% of all notes (generally, promoted notes in the whole Xiaohongshu market account for 25% of the advertising revenue). The proportion of UGC notes (posted by RED’s day-to-day users, and that were not boosted by ads) was much higher than that of the general market, concluding that the user demand is large, and there is a lot of spontaneous traffic. All notes in the home improvement category show an upward trend as a whole.
All notes in the home improvement category were on the rise in 2021, and reached a peak in April 2021. The number of new notes/posts in a single month of April was twice as large compared with the previous six months. The synchronous growth of new notes indicates that users’ attention in this category is increasing. In contrast, the growth trend of these notes is relatively stable, indicating that the brand competition in the home related industry is not very fierce.
In May 2021 alone, Xiaohongshu recorded 960,000 notes in the home reparation category (for comparison, in cosmetics category there were only 400,000 similar notes/posts). The explosion of home improvement notes in Xiaohongshu expresses the consumption needs of contemporary young people and their yearning for a refined and better life.
The three decoration styles with the highest interaction volume are Nordic, French and American, followed by semi-luxury, Japanese and minimalist. The interaction rate (the average number of interactions per note) represents consumer preferences. The highest interaction rate is natural style and French style, followed by Nordic style. The worst performer is the Chinese style, which not only has a low preference value, but also has a low rate of interaction.
c. Pet Supplies
In 2021 there was a large increase in the number of notes in the pet supplies category, with the total number of Pet related notes amounting 7.982 million, and the number of promoted notes coming in at 1.057 million. The proportion of promoted notes was 25%, and the proportion of UGC and amateur creator notes was much higher than that of the general market, indicating that the user demand is large, and there is a great deal of spontaneous traffic. All notes in the pet supplies category are on the rise as a whole, and reached their peak in May 2021. In the past year (2021), the number of notes in this category has more than tripled, and the industry has grown rapidly.
d. Medical and Health
In the past year, the total number of notes in this category went up to 5.957 million (for comparison, there were 6 million notes in the makeup category), and the number of promoted notes is 938,000. Promoted notes accounted for 25%, the proportion of UGC and amateur notes/posts is much higher than that of the general market, indicating that user demand is large, and there is a lot of spontaneous traffic.
In the past year, the total number of notes in this category went up to 4.233 million, and the number of promoted notes was 488,000. The proportion of promoted notes overall was 12%. The proportion of amateur notes was much higher than that of the general market, indicating that user demand is high, and there is a lot of spontaneous traffic.
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