A report titled E-commerce in China: Trends and Outlook for The Largest eCommerce Market in The World revealed that China’s e-commerce industry is predicted to reach $1.8 trillion by 2022. Domestic giants such as Alibaba and JD.com are leading the way, but unicorns like Xiaohongshu (小红书), otherwise known as Little Red Book or RED, are gaining traction and getting a larger slice of the pie than ever. Social commerce — or merging social media with an e-commerce platform — looks to be the future of retail. And according to Econsultancy, “in China, not only have multiple apps managed to fuse socialization with shopping in a way that adds to the experience, they’ve also become some of its most popular and successful ecommerce platforms.”
Little Red Book is a luxury retail app that gained popularity because of its peer-to-peer approach. According to the social media agency WalktheChat, Little Red Book is “the number 1 ranking cross-border e-commerce app in China.” Little Red Book gained momentum by building and growing a community of kindred users who share the same passion for retail and enjoy interacting with other members through product reviews. Until recently, foreign luxury brands found a trusted partner in Little Red Book — one that helped them increase brand awareness while also reaching a perceptive, well-informed consumer base. In fact, RED’s content-driven nature transformed the app into a highly successful e-commerce platform, where China’s biggest influencers offer advice and trustworthy reviews on beauty and fashion products. Moreover, luxury brands may soon install digital shops in which they release new products, advertise, and sell their collections.
Until recently, the marriage worked perfectly. But then the app got unceremoniously removed from Android stores in China, thanks to the government’s efforts to crackdown on illegal and harmful internet content. Soon after, RED initiated “a self-examination” process by rectifying their user-centric content. As China Briefs reports, Nanfang Metropolis Daily discovered that the RED is turning into a distribution hub for clandestine beauty professionals. According to China Briefs, “those small businesses posted public displays of sales of drugs illegal in China such as various face lifting drugs and human placentas.”
RED responded without delay, and under their self-examination process, closed the businesses of over 13,000 KOLs. Under the new guidelines “only influencers with over 5,000 followers, and whose average post view of the past one month exceeds 10,000, are allowed to establish a business relationship with brands.”
Mirko Wormuth, co-founder of China Briefs told Jing Daily that illegal content and fake followers are not a problem exclusive to RED, as various short video and live streaming apps suffer because of fraudulent user behavior. “Urged by regulators they had to increase their HR spending to literally recruit armies of people simply monitoring content as well as relying on ever more complex search algorithms to detect unlawful content early,” says Wormuth.
As stated by Zhai Fang, CEO and co-founder of RED, in the near future, the app will roll out further guidelines and rules. These policies ensure that every interaction on RED remains a captivating, genuine, and an honest experience for all users. As billions of posts are created daily, the app fears that information overload will fatigue users; thus, reducing paid content and influencer marketing should restore relevance and authenticity to the platform. But Wormuth told Jing Daily that “Xiaohongshu's move to set new criteria to qualify as a KOL has been seen by many in China’s fast-moving social media scene as anti-creator.” Wormuth mentions that “many brands in executing their campaigns these days follow an intentional mix of micro-influencers and more well-known and expensive KOLs to spread the message,” but RED was purged of these micro-influencers; thus, this might represent a significant drawback for luxury brands.
Others argue that the new guidelines won’t scrap the inclusive nature of RED. In fact, even today, RED’s top influencers range from television personalities and actresses to high-school students and stay-at-home moms. And while Western luxury brands leverage RED’s power by partnering with powerful KOLs such as Fan Bingbing and Rita Wang (RED’s biggest fashion influencer with 3.5 million followers and 2 million likes), new voices with smaller engagement appear (occasionally) more authentic. In fact, Wormuth is right and luxury brands need partnerships with big KOLs and emerging influencers. Actually, research from MuseFind, an influencer marketing platform for small businesses, suggests that 92 percent of consumers trust influencers more than ads and celebrity endorsements; thus partnering with influencers seems as a safe choice.
On various occasions, the influence of RED’s key opinion leaders was in full display. Econsultancy says that “a Note published by Fan Bingbing endorsing beauty products once attracted so much traffic that it temporarily crashed a server.” Moreover, the products endorsed by Fan Bingbing are often sold out on RED. However, not all influencers command the same level of engagement as Fan Bingbing. But that doesn’t mean that luxury brands shouldn’t focus on other popular KOLs or micro-influencers. In fact WWD mentions that girls like Enru Lin and Coco Zhan are successful because they have “the girl-next-door vibe that RED’s users can gravitate toward.” And the appeal of the girl next door is significant when marketing to women.
For decades, Western marketing campaigns focused on fresh-faced women and celebrities (think Cameron Diaz in the 1992 Coca Cola ad or baby-faced Drew Barrymore in the 1990s marketing campaign for Guess) who enchanted audiences with their approachable beauty. Another case is the lingerie brand Victoria’s Secret, whose marketing strategy has at its core the concept of the girl next door or the wannabe sex bomb. These ads, especially their earlier ads, featured naturally beautiful women who were friendly, accessible, and relatable. And women love the concept because its less aspirational and more approachable and real.
Chinese influencers have caught up with the trend and the new generation of KOLs appear to be kind and open. They engage with their audience naturally, similar to how they talk to friends, and they recommend and review products convincingly and in a way that is less receptive to commercial interests. This authentic dialogue is central to RED’s success being unique to the platform. In fact, other social media platforms (think Instagram) support unattainable beauty standards and fake beauty trends. But despite RED’s tranquilizing vibe, influencers still feel challenged by the competitiveness of the platform. In fact, in an interview with Parklu, influencer Kiki said that her aim is to create excellent content because “there are more and more excellent influencers” using RED; consequently, the competition is fierce.
True, the fact that in several occasions the high engagement rate on RED hasn’t led to conversions will discourage certain luxury brands, but growth takes time. RED is rather new and in a market saturated with social media platforms and apps improving the conversion rate requires attentiveness to detail, a strong understanding of target audiences, and an effective lead nurturing strategy.