Little Red Book

Chinese consumers who were born after 1990s are getting more and more exposure to oversea education and travel opportunities. As a result, they actively seek for different kinds of foreign products / brands in their daily life in China. Therefore, the Chinese cross border e-commerce market is expected to grow significantly.

The Chinese ministry of commerce announced that the cross-border e-commerce reached 6.5 trillion yuan in 2016. It is also said that an annual growth of 30 percent in the next few years is expected with more than 58 million consumers buying via cross-border e-commerce. This market will more than double by 2020. 

XiaoHongShu (the “Little Red Book” in English), a review-sharing platform, was the one who definitely took advantages of the cross-border e-commerce growth opportunity. It is now a billion-dollar startup rapidly growing in China.

In the early days, as what the co-founder, Miranda Qu, mentioned in her Bloomberg interview, XiaoHongShu grew quietly as a review-sharing platform.  A positive reputation, comment, or DianZan (i.e., heart something), is valuable asset for any product, company, organization. Through understanding their customers and experience and collecting feedback from the public, the company can polish their product offerings and build a brand reputation. For Chinese young people to determine the reputation of oversea (especial European) products, they read the customer reviews on XiaoHongShu. When shopping, they compare various product features based on the comments or DianZan, and then narrow down the choices to the most favourable or cost-benefit one. A lot of young person expressed their satisfaction or disappointment regarding a particular product by writing a comment can result in a fashion trend among the young Chinese people community.

After feeling the strong demand from these young Chinese shoppers for buying certain foreign goods, XiaoHongShu launched its own cross-border e-commerce platform, the “RED store” in 2014. It connects Chinese consumers with global brands by enabling the users to buy oversea products directly through the application.  XiaoHongShu has formed strategic partnerships with many overseas brands including Lancôme, Swisse and Innisfree. It has seen tremendous growth in the last 2 years, reaching over 100 million users just this year, making it one of the most successful social e-commerce sites currently in operation.

Since lots of users generate shopping-related information, XiaoHongShu now becomes a hybrid of social medial and e-commerce. Although the company describes itself as a content-oriented social platfom, the commerce side flows seamlessly from the social side. According to XiaoHongShu, more than 70% of its users are those born in the post-90s. In addition, around 90% of its users are women with high purchasing power, especially those who believe quality is important. These post-90 young Chinese people are mobile-savvy in terms of shopping, socializing, and creating content. Therefore, most brands targeting Millennials or Generation Z try their best to create a positive remark in this world of XiaoHongShu, as it is an application with a concentrated age group, especially given that China represents one of the world's largest post-90s demographics in the world. As such, XiaoHongShu has become a popular and effective marketing place for the female fashion and beauty brands.

The tagging culture of XiaoHongShu is another feature that users inside the platform can take advantage of to facility searching. Here, users not only use hashtags but also tags of (store) location, brand, product, movie/ TV series, and other users' accounts. Therefore, when a user finds a product that he or she is interested in buying, one can easily find purchase information or even buy the product directly inside the online store in the application without having to ask for product information in a comment and search for an online store that sells it.

By emphasizing its social and sharing trait of the platform, the company keeps weakening its e-commerce label on purpose. As online shopping platform is no longer fancy in the Chinese young generation community, XiaosHongShu artfully keeps its focus on the social and sharing traits.