Good To SEO | Search engine optimization (SEO) Blog News

Social commerce: in the western world, no company has really managed to make it work.

The idea of fusing social media with ecommerce was all the rage between 2012 and 2016, when it reached peak hype with 52% of marketers predicting that it would be one of the biggest trends of the year.

This promise never materialised, and since then, the idea has mostly died out, with social networks like Pinterest and Instagram focusing on acting as platforms for inspiration rather than on driving direct sales. But maybe we’ve been going about it entirely the wrong way. In China, not only have multiple apps managed to fuse socialisation with shopping in a way that adds to the experience, they’ve also become some of its most popular and successful ecommerce platforms.

I’ve previously written about the success of Pinduoduo, a social commerce app that uses a group buying model to encourage customers to invite their friends in a bid to score deep discounts on products. Pinduoduo is all about buying cheap goods in bulk, and has managed to tap into a previously underserved market of rural consumers living in China’s third and fourth-tier cities.

Another newfound titan of Chinese ecommerce has built up a following for exactly the opposite reason. Xiaohongshu (小红书), whose name means “Little Red Book”, is an ecommerce platform for luxury goods from overseas – primarily fashion and beauty products.

Xiaohongshu’s logo

Instead of cheap wholesale goods, Xiaohongshu offers premium quality and exclusivity; it has built a highly-engaged community of savvy users who research and review their products extensively on the app. Xiaohongshu is an ecommerce platform, yes, but more than that, it’s a trusted source of advice and recommendations for its community of fashion and beauty lovers, and has even managed to build a following among some of China’s biggest influencers.

All of these factors have combined to make Xiaohongshu one of China’s most popular and successful ecommerce apps, with more than 100 million users as of May 2018, and a recent Series D funding round valuing the app at $3 billion. So, how does Xiaohongshu maintain its reputation as a trusted source of high-quality advice and products, and can non-Chinese ecommerce websites learn anything from its success?

From recommendation app to shopping platform

Founded in 2013, Xiaohongshu was originally conceived of as an app for Chinese shoppers travelling abroad to post recommendations about products they’d bought overseas.

Its co-founders, Miranda Qu and Charlwin Mao, soon noticed that the app was attracting a lot of repeat visits from its users, 17% of whom were opening it “six or seven times per day”, according to an interview that Mao gave to Wired magazine in 2016. They also realised that it was being used by Chinese consumers with no travel plans who wanted to order goods from overseas, often with the help of relatives who were living or studying abroad.

In July 2014, the app started to source its own products to cater to users who wanted to buy directly. Xiaohongshu is able to ensure the quality of its merchandise by acting as a first-party distributor, handling delivery and customer service. Qualified brands are also permitted to set up their own digital shops, for which Xiaohongshu charges a technical fee and a commission fee of up to 5% per deal.

However, even as the former recommendation app transformed into a shopping service, Xiaohongshu retained the characteristics that had attracted users to the app in the first place: an engaged community, and detailed, trustworthy reviews. Combined, they make Xiaohongshu the place to learn about the latest fashion and beauty trends. It’s no coincidence that hong (红), the Chinese word for red, also means “hot” or “popular”.

As a luxury shopping service, Xiaohongshu cultivates quality both in its products and in its community. Unlike other ecommerce platforms, it doesn’t allow practices like anonymous reviews, one-click ratings, or default high ratings if the customer doesn’t review a product after a certain period of time, giving the recommendations on its platform a level of authenticity and trustworthiness that helps to set them apart.

READ ALSO  eBay, Stripe, Mastercard, and Visa leave Facebook's Libra Association

Xiaohongshu’s users are discerning, and so they research products extensively, and publish in-depth feedback about their purchases (known as Notes, or biji 笔记). These are essentially long-form reviews, but can also include images and video.

The commerce side of Xiaohongshu flows seamlessly from the social side, with users able to insert product links into their Notes only if the seller has a shop on Xiaohongshu. No external links are permitted, which serves to keep users within the app, but also gives sellers an implicit seal of quality and approval.

There are also no sharing or forwarding functions on Xiaohongshu, though users can add Notes to their own personal collections. The app uses algorithms to recommend content to users that they might be interested in, and “Featured” and “Editor’s Pick” sections highlight popular Notes on the homepage.

Due to the app’s high engagement, as well as its direct link to ecommerce, influencers on Xiaohongshu have even more clout than they do on other social platforms. Some Chinese celebrities, like actress Fan Bingbing, have amassed huge followings, as users love learning about their style and beauty recommendations straight from the source.

A Note published by Fan BingBing endorsing beauty products once attracted so much traffic that it temporarily crashed a server, and the products that the actress recommends are regularly sold out on Xiaohongshu – leading Fan to joke that she should leave the platform, if only so that she might be able to buy her favourite products.

Fan Bingbing on Xiaohongshu (Screenshots via Walkthechat)

Trust and credibility: How Xiaohongshu succeeds by being truly user-centric

Xiaohongshu’s focus on quality, and the endorsements from high-profile influencers, have been instrumental in its success. But it’s clear that what truly sets Xiaohongshu apart, particularly from other would-be social commerce ventures, is its commitment to being truly user-centric.

Many companies proport to be “customer-centric” or “put the customer first”, but don’t always demonstrate that they know what this means in practice. Xiaohongshu is therefore a valuable case study of a business that has made a success out of catering to what its users want from the platform – and particularly one that has combined ecommerce and social features without sacrificing one or the other.

First of all, the app is relentlessly non-commercial, with no official brand accounts, advertisements or commercial posts permitted on the platform. This allows Xiaohongshu’s users to trust that all of the recommendations and endorsements from other users are genuine: everyone in the community is there to discover the latest trends, recommend good products and share their honest opinion, rather than just to make a quick profit.

As The Next Web wrote in a profile of Xiaohongshu published earlier this year,

“Users are not primarily looking to make a purchase, but they want to know the latest beauty trends and hot items recommended by other users. Price and sales volume are not their top concerns when browsing the app. They care whether the product is right for them. With trust and credibility at its core, Xiaohongshu wants to keep its niche, thus hard selling or even soft ads with a commercial aim are not allowed on the community platform. There are no official accounts for brands either.”

This clearly hasn’t hurt Xiaohongshu’s ecommerce business. Notes on Xiaohongshu have a much higher conversion rate than reviews on other ecommerce platforms: 8% of Xiaohongshu users make an order on the app after reading Notes, compared with 2.6% who do the same on Tmall, China’s largest marketplace for brand goods, owned by ecommerce giant Alibaba. (Small wonder, then, that Alibaba was a lead investor in Xiaohongshu’s latest round of funding).

READ ALSO  Facebook Trying To Habituate Consumers Around Driving Transactions, Says Button CEO

It is currently one of China’s fastest-growing ecommerce platforms, and last year, when the company held a shopping festival in honour of its 4th anniversary, Xiaohongshu exceeded 100 million RMB in sales revenue in the space of just two hours.

Secondly, Xiaohongshu didn’t hesitate to reinvent its business model as soon as it was clear that its users wanted something else from the app. Xiaohongshu’s origins as a social and content platform designed for sharing product recommendations have a fair amount in common with Pinterest, which started out as a content curation community for users to save and share images they liked, and evolved into a visual search and discovery platform.

However, Pinterest has been much more hesitant about integrating ecommerce functionality into its platform, despite a fairly clear business case for doing so. Ecommerce features have been introduced gradually, from the launch of buyable Pins in 2015 to Shopping with Pinterest in 2016, to the most recent introduction of Product Pins and shopping recommendations just last week – and have been met with a lukewarm response from users overall.

You might say this proves that Pinterest was right in being cautious – but maybe its failure to fully commit to becoming an ecommerce platform prevented it from making a success of social commerce.

Xiaohongshu co-founder Charlwin Mao certainly thinks that this attitude is holding western companies back. He told Wired,

“In China, they get to monetisation much faster than the west. You need to get your hands dirty, as retail is always one click away.”

We don’t ask ourselves if we’re a social or a commerce company. We ask, ‘What does the customer want?’”

– Charlwin Mao, Xiaohongshu co-founder

“If the customer wants it, you do it,” he went on. “If the best way to deliver experience is to have direct sourcing, do that. If you have to work with government, do that – we built a government relations team with 20 employees. These are things western companies tend to stay away from. In China, to build a successful business you don’t have a choice.”

Should non-Chinese companies learn from Xiaohongshu?

There’s always going to be a limit to how much we can remove companies like Pinduoduo and Xiaohongshu from the context of China when talking about how to learn from their success.

Pinduoduo has made a success of social commerce partly thanks to the omnipresence of Chinese social app WeChat, as well as tapping into a newly-connected market of consumers in China’s third- and fourth-tier cities who are underserved by ecommerce platforms that focus on high-end and luxury goods.

Similarly, Xiaohongshu owes much of its success to the demand for luxury and overseas goods among Chinese consumers – particularly the young, female consumers who make up the majority of its user base. It may also be that Chinese consumers are more accepting of businesses transforming themselves wholesale into commerce companies – in the west, we might see that as a betrayal of their core values. Being “user-centric” doesn’t always mean the same thing depending on where you are in the world.

Yet I do think there is a lot to be taken away from Xiaohongshu’s success, particularly when it comes to building an engaged community that exists purely for the benefit of its users, and not to serve a commercial interest. Xiaohongshu demonstrates that there is real business value in this.

I also think that Xiaohongshu shows that if a business wants to reinvent itself, as long as it has something truly unique and valuable to offer, its customers will follow it. Perhaps if Pinterest, Instagram or Facebook had been more willing to blaze a trail, social commerce in the west might be a different story.

Sharpen your skills in social with Econsultancy’s social media training courses.

Source link

  • Facebook
  • Twitter
  • Linkedin
  • Pinterest
  • Buffer
  • stumbleupon
  • Reddit

Join To Our Newsletter

You are welcome

This div height required for enabling the sticky sidebar
WP Twitter Auto Publish Powered By :
Ad Clicks :Ad Views : Ad Clicks :Ad Views : Ad Clicks :Ad Views : Ad Clicks :Ad Views : Ad Clicks :Ad Views : Ad Clicks :Ad Views : Ad Clicks :Ad Views : Ad Clicks :Ad Views : Ad Clicks :Ad Views : Ad Clicks :Ad Views : Ad Clicks :Ad Views : Ad Clicks :Ad Views : Ad Clicks :Ad Views : Ad Clicks :Ad Views : Ad Clicks :Ad Views : Ad Clicks :Ad Views : Ad Clicks :Ad Views : Ad Clicks :Ad Views :