UGC is the crucial product model of Xiaohongshu, and the foundation of its survival. Stepping away from the community gene, it will lose its advantage over other e-commerce giants.
User sharing other than product marketing is more crucial to RED. Photo: Credit to Unsplash
April 16, 2019, Beijing Center for Diseases Prevention and Control (北京市疾病预防控制中心) released the monitoring results on tobacco’s online marketing data. It shows that the Internet platforms with many young users are relatively lack of supervision have become the hardest hit area for tobacco marketing. On the app of Xiaohongshu (小红书 is also known as RED) alone, there are more than 95,000 marketing posts related to "smoke". This information is mostly carried out in the form of “reviews” and “Zhongcao(种草, refers to the act of promoting a product with great quality)”, attracting millions of readers' attention.
According to a journalist from YNET.com (北青网), the monitoring of Internet tobacco marketing data was carried out by Beijing Center for Diseases Prevention and Control in collaboration with Center for Social Media Research School of New Media Peking University (北京大学新媒体研究院社会化媒体研究中心). The monitoring team uses web crawler technology to automatically identify the keywords related to tobacco. Based on those data collected to conduct preliminary investigation and research on the advertising and promotion status of tobacco companies online. The monitoring period is from Jan 1, 2018 to Jun 30, 2018.
It mainly analyzes the quantity of tobacco advertising and promotion information, the characteristics and new trends of tobacco advertising and promotion information on various network platforms, the typical network tobacco advertising and service case analysis, and the characteristics of tobacco information publishers. Then after three rounds of discussions by industry experts, legal experts, market supervisors and network management experts, the monitoring team has sorted out on information classification, data analysis and prevention and control measures, in order to assist in tobacco marketing information supervision on China's Internet platform.
On the Xiaohongshu app, if one enters the word "smoke" to search, the page prompts 95,000 posts. The recommended search entry on this page is “e-cigarette”. After entering, there are 2,656 posts on the “e-cigarette” topic, with a total of 4.9 million views. If enters “Lady’s cigarette”, the result show 6848 notes. These posts disseminate tobacco information in a way that greatly beautifies the behavior of smoking, and enhance public recognition of tobacco brands by rendering the consumption of tobacco is based on love, friendship, and family relationships. Though does not look like advertising, the marketing strategy has attracted many users' attention.
Besides Xiaohongshu, there are 14 other online platforms are in the portfolio of this monitoring research. Weibo (微博) for example, accounts for 82.54% of entire data collected. On March 15, 2019, Sina Weibo Data Center (新浪微博数据中心) released the latest "2018 Weibo User Development Report", showing that young users aged 18-30 accounted for 75% of Weibo platform users.
Female and youth groups are becoming the main marketing target of the tobacco industry.
In the newly revised The Advertisement Law of PRC (中华人民共和国广告法) in 2015, clause 22 clearly stipulates the prohibition of advertising in the mass media or public places, public transport, and outdoor. It is prohibited to send any form of tobacco advertising to Juveniles.
However, with the rapid development of the Internet industry and the changes in the way the Internet is transmitted, tobacco online marketing still arises great clamor. The fact is that compared with traditional forms of advertising, tobacco marketing information on the Internet platform is more flexible and more concealed.
Soon after YNET.com's report, Xiaohongshu withdrew all the tobacco-related posts from its app on April 16, 2019 afternoon. Now if one enters “tobacco” or “cigarette”, no results can be found.
As of January 2019, the number of app users of Xiaohongshu has exceeded 200 million, with a valuation of more than USD 3 billion. It has been selected as the "World's Most Innovative Company" list together with Meituan Dianping (美团点评 )and Alibaba (阿里巴巴) by the most influential business magazine Fast Company.
The main competitors Xiaohongshu facing are oversea E-commerce platforms like NetEase HK, Tmall and Haitun Global (海囤全球) under JD.com. According to iiMedia Research, the reasons for consumers to purchase online and overseas are shown below, the reason to purchase for quality increases from 22.9% to 30.7%, which has the highest increasing rate among others reasons. Clearly, the consumers' consumption upgrading (also mentioned in the New Style Tea Drink article) lead people to quality-driven purchasing.
Xiaohongshu is currently the most famous zhongcao (explained above) platform similar with Meituan Dianping (美图点评) in China that users would promote the superior quality of a certain commodity on the app and attract others to view or even to purchase. This user-based operation mode is called User Generated Content (UGC). UGC is the most important product model of Xiaohongshu, and the foundation of its survival.
It might choose a less GMV oriented expansion plan for the above reason. If separated from the community relation, it will lose its advantage compared with other e-commerce giants such as Tmall and JD.com. Xiaohongshu needs to protect its community gene with real users’ value adding in, and focus more on its sharing content quality and branding.