In the bustling arena of China’s digital landscape, Xiaohongshu is carving out its niche as a significant player in e-commerce, mirroring the journey of global platforms like Instagram. For many brands, this platform has served primarily as a marketing tool, but recent transformations suggest it may finally be realizing its potential as a sales engine.
Take Tera Feng, a Shanghai lifestyle influencer, as an illustrative case. Over eight years, she amassed a following of over 500,000 users by sharing her chic experiences at galleries and fashion events. Recently, she transitioned to livestream sales on Xiaohongshu, successfully selling a range of products—from a luxurious Carven suit priced at 15,000 yuan (roughly $2,060) to a humble 60-yuan bag of rice. This example underscores how the platform is not only a place for aesthetic inspiration but also a viable shopping destination.
Xiaohongshu, which translates to “Little Red Book,” has been primarily recognized for its marketing capabilities rather than sales conversion. Despite multiple attempts to establish strong e-commerce functionalities, success remained elusive until the current landscape began shifting. It appears that, amid challenging retail conditions, brands are now beginning to see substantial sales figures.
Market analysts suggest that Xiaohongshu’s appeal lies in its focus on aspirational lifestyles, attracting a consumer base that is less affected by price cuts compared to shoppers on other e-commerce platforms like Alibaba’s Taobao. Suya Wang, general manager of Early Data, highlights the unique consumption power on Xiaohongshu, noting, “Brands really value a following on Xiaohongshu because the consumption power is totally different” from other platforms.
Luxury brands, including L’Oreal and Coach, have recognized this shift and are investing in creating dedicated stores and forming partnerships with influencers who can showcase their products. Live streaming has emerged as a crucial sales tool here, with these influencers adopting a more conversational tone, in stark contrast to the high-pressure sales tactics pervasive in traditional online retail.
The strategic incorporation of e-commerce with livestreaming on Xiaohongshu allows for seamless shopping experiences. Influencers create a relaxed atmosphere while showcasing products, which resonates with consumers seeking authentic recommendations rather than aggressive selling. Ian Hylton, president of Ms Min, an independent fashion brand, describes the unexpected sales surge they experienced after being featured in a livestream hosted by a popular actress. His realization that Xiaohongshu could be as much about storytelling as it is about selling marks a new phase for brands eager to engage with consumers on a deeper level.
Industry experts like Ivan Gu of Magic Advertising note that more luxury brands are now considering Xiaohongshu seriously as a sales driver. Plans are underway for opening official stores and organizing multiple livestream events to tap into the platform’s growing popularity. This ecosystem is evolving into what Chinese marketers call KOS or Key Opinion Sales, where brand ambassadors host livestreams to drive sales and brand awareness.
Despite the positivity surrounding Xiaohongshu’s sales potential, it is essential to remain grounded. The platform, with over 300 million users and a valuation of $17 billion, still holds a relatively small stake in the broader Chinese e-commerce market. Major players like Tmall, JD.com, and Pinduoduo dominate, collectively amassing more than 90% of the $2.78 trillion generated in gross merchandise value (GMV) in the country. While Xiaohongshu is witnessing user engagement and positive sales momentum, some analysts caution that its influence is still limited compared to these giant platforms.
Ultimately, the future of Xiaohongshu shines brightly with possibilities. Jacob Cooke, CEO of WPIC Marketing Technologies, points out that projections indicate triple-digit growth in the platform’s GMV in the upcoming year, with estimates suggesting it could surpass $100 billion in sales revenue by 2025. The combination of lifestyle inspiration and shopping capabilities makes Xiaohongshu a compelling option for niche and luxury brands aiming to connect with more engaged consumers.
As brands continue to navigate the ever-changing landscape of e-commerce, the emphasis on authenticity, community, and unique consumer experiences may pave the way for Xiaohongshu to become a formidable player in the industry.
