Xiaohongshu Bets on Livestreaming E-commerce to Promote Higher Profit

Xiaohongshu, a Chinese lifestyle-sharing platform, will upgrade its livestreaming business to an independent department, LatePost reported. The site features many reviews and users can post videos and pictures to show off their purchases.

Xiaohongshu’s commercial team is currently being managed by the COO this year, while the advertising business is still under the responsibility of the CMO.

Xiaohongshu, China’s Instagram-like platform, has attached great importance to community governance for a long time. In the past, the community department has always controlled how much traffic the platform opened to e-commerce and advertising, which led to long-term competition among several businesses. Users mainly view posts or buy stuff on the platform. This personnel adjustment means that Xiaohongshu finally decided to solve the dispute between making a profit and maintaining the atmosphere as a community for many years.

Compared to other popular platforms like Douyin, Kuaishou, and Taobao, Xiaohongshu entered the livestreaming business relatively late, in 2020. Initially, users had to click on a blogger’s flashing avatar and homepage to watch their livestream, ensuring that the platform’s community atmosphere remained largely undisturbed. By making the entry into livestreaming a matter of active selection rather than a forced experience, Xiaohongshu has been able to minimize the potential impact of livestreaming on its user community.

Xiaohongshu’s community atmosphere, which values quality and style, naturally filters out a lot of noisy livestreaming channels. However, some influencers have managed to thrive on the platform by adopting a more subtle approach. Chinese actress Dong Jie, for instance, recently attracted a large audience by gently introducing products to her followers. According to official data, over 2.2 million people tuned in to Dong’s second broadcast on Xiaohongshu, and the gross merchandise volume (GMV) generated in a single broadcast exceeded 30 million yuan ($4.3 million).

However, this method does present a bit of a barrier. Now, Xiaohongshu has added a number of livestreaming portals to increase exposure.

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Despite its widespread popularity, Xiaohongshu’s commercialization efforts have not yet extended to a significant portion of its business. For instance, certain industries like education, gaming, and finance have been excluded from advertising on the platform. This year, Xiaohongshu is planning to address this issue by increasing the proportion of effective advertisements, which includes attracting more brands to conduct livestreaming on the platform and ensuring that all advertisements yield the desired results.

As the economy recovers in 2023, it is expected that the advertising industry will see a resurgence at the start of the year. This year will also be a crucial one for Xiaohongshu, as it seeks to demonstrate its commercialization potential.