It’s Instagram and Pinterest sprinkled with a dose of Taobao. China’s cross-border social shopping platform Xiaohongshu (XHS) has been rising fast since its founding five years ago, attracting investors such as Tencent and securing its latest $300 million Series D round of funding from investors including Alibaba.
XHS, however, is different than another famous Chinese social e-commerce site Pinduoduo that targets bargain hunters and penny pinchers. This style-obsessed platform has carved up a special niche in the heart of 100 million of China’s young, middle-class, and mostly female consumers. And, according to experts, it’s not an e-commerce platform at all.
“XHS is not a cross-border e-commerce platform, it’s a product search engine,” according to Lauren Hallanan, Chinese social media expert, VP of Live Streaming at The Meet Group and an XHS influencer.
Hallanan talked about the secrets of cracking this platform together with Miro Li, co-founder of e-commerce marketing and branding agency Double V. specializing in XHS, at TechNode’s event in Beijing this week dedicated to the platform.
“The unique part of this platform is the community and the user experience,” said Li noting that the catch at XHS is connecting user posts with products—opening a shop and waiting for traffic to magically appear won’t do much for a brand. “Without the social app, the e-commerce is nothing.”
Founded by Miranda Qu and Charlwin Mao, XHS (meaning Little Red Book – yes, Mao’s one) was used to exchange opinions on merchandise bought overseas, discover luxury, fashion, and cosmetics brands and swap shopping and style tips.
It was different than the two most popular social media sites in China, WeChat and Weibo, in part because it allowed its female users to flaunt their purchases without spamming their friends and family or being judged for overindulging in frivolous activities.
Soon, the company started to sell these items. Today, XHS counts many Chinese celebrities as a part of its user community. Content is generated by users themselves as well as KOLs (key opinion leaders) and presented according to favorite topics and interests expanding from beauty and luxury to travel, food and beverage, and fitness. XHS’s latest attempt is capturing male users into their web with articles and videos on exercise and grooming.
“We’re an incubator of word-of-mouth marketing,” Mao told Wired in 2016.
Turning online babble into RMB, however, is not something that can be achieved overnight, according to Li.
“There are a lot of people browsing on XHS but they do not buy there, they buy on Taobao and other apps,” Li noted. “XHS is trying to convert these users into customers and this is what we’re doing too.”
The platform has been trying to upgrade its user base from window shoppers to actual shoppers. A new set of rules issued this week bans brands from inviting users to shop on other platforms or providing links to alternative stores. It has launched its own design brand called REDesign.
On top of that, XHS has also been experimenting with the “new retail” concept bringing online experiences offline. In June, the company opened a flagship store in Shanghai becoming one of the first smaller e-commerce platforms to go into bricks and mortar after Alibaba and JD.