Little Red Book, aka XiaoHongShu (小红书), is a Chinese social shopping app that is quickly gaining traction with Western brands. The app assists 200 million users to discover and purchase luxury fashion and beauty products from overseas.
Social shopping, a hybrid of social media and ecommerce, is expected to account for 15% of all online sales in China by 2022.
Western brands looking to grow their presence in the Chinese market should consider social shopping channels such as Little Red Book to complement their presence on marketplaces such as Tmall.
Little Red Book boasted RMB 1.49 billion in revenues in 2018, with 6% market share of cross-border ecommerce into China. The app hosts 8000 verified brands and 4800 key opinion leaders. The primary product categories sold are cosmetics, clothing, mom/baby products, nutrition, fitness gear and vitamins.
To date, 87% of urban Chinese consumers have participated in social shopping, with young consumers particularly favouring social commerce over traditional ecommerce platforms. As may be expected, the core user demographic of Little Red Book is young (18-35 year old) affluent women living in urban areas, specifically tier 1 and 2 Chinese cities. On average, each user makes 3 purchases a month via the app.
There are two interconnected ways in which brands can leverage Little Red Book:
As a social platform to enhance brand visibility and build relationships with potential consumers. Chinese consumers will often search for reviews and recommendations before making purchasing decisions making the app an important touch point in the pre-purchase customer journey.
As an ecommerce sales channel to sell products. The app also offers a seamless shopping experience with its ecommerce integration by linking product posts to the relevant brands sales pages.
The platform offers particularly high conversion rates - 8% of Little Red Book's users will place an order after reading reviews and recommendations, compared with 2.6% of shoppers on Tmall.
In May this year, one of LVMH’s leading labels, Louis Vuitton listed on Little Red Book. The brand launched with a series of posts including video content narrated by Chinese opinion leaders discussing functional and design features of its handbag and clutch collection.
Other high-profile brands listed on the app include Dior, Vivienne Westwood, MaxMara, Hugo Boss and GNC supplements.
The app is founded on user-generated content consisting of authentic product reviews with a highly personal tone of voice which make users feel as if they are chatting among friends. Posts typically have four styles of content:
Discussion of how products can improve aspects of consumers daily life (e.g. mix product reviews with lifestyle storytelling).
Product insights (e.g. before/after reviews, performance tracking, how-to guides).
Products as a solution to customer pain points.
Content related to popular culture trends (e.g. entertainment industry references).
All product posts must contain a 10-15 word title, along with 5-9 images or a video content (preference is given to videos). Posts are also expected to contain insightful captions and hashtags to optimise product discovery for users.
In China, 67% of consumers are influenced by KOLs during their customer journey; whereas only 23% of consumers are influenced by a brand spokesperson.
Little Red Book is committed to providing a platform for the content of high-profile KOLs. The app prevents influencers with under 5000 followers and less than 10000 views per post from forming brand partnerships.
However working with KOLs can be costly. For example a top KOL with one million followers can cost between RMB 30,000 - 300,000 (US$4,250 - $42,500). So it is important to find the right KOL for your brand values and target audience.
To launch on the platform brands need to submit various documents (e.g. business license, product related documents etc) and pay a deposit to set up the brand account. The fee varies by product, but averages RMB 20,000 (US$2850). This is accompanied by a 15-20% operating fee; and 10-15% commission on sales.
Little Red Book's focus on user generated content and community building bolsters users' trust in the offerings, which enhances consumers' willingness to purchase lesser known foreign products sold on the app. This can be particularly useful for market entry for smaller brands.
It also allows brands to detect user interests and purchasing trends - insights that are useful in building a Chinese marketing strategy.
Finally, Little Red Book help brands manage cross-border inventory logistics and payments lowering the barriers to entry for Western brands. For instance, Little Red Book offers 60 days of free warehousing in Hong Kong, Europe, USA and Australia.
Cross-border payments are also supported. International brands can open a Little Red Book account using their local bank as all RMB payments taken via Alipay and WeChat pay will be converted by Little Red Book into the brands' local currency.
All of this is designed to make it as easy as possible for Western brands to be discovered by and sell to discerning Chinese urban consumers.
Find the latest benchmarks for Chinese ecommerce in our Tmall Trading Guide.
For more information on how Pattern can help boost your online sales, develop your marketplace strategy or enter emerging markets such as China please contact us here.
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Entering the ecommerce landscape is a huge undertaking for any brand—it usually requires a large investment in resources and expertise to really be successful. Any brand can quickly get in over their heads trying to navigate the nuances of SEO, fulfillment and logistics, distribution control, listing optimization, and meeting the numerous other requirements and administrative tasks to show up well on marketplaces.
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An ecommerce consultant is a specialist in the ecommerce space who can give you personalized guidance on how to market your products and grow their presence on digital marketplaces.
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Not sure how to evaluate a consultant? Here are 4 key attributes to look for as you make your choice.
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It’s best to pick a consultant who knows how to guide a brand onto and through multiple marketplaces worldwide. You’ll want to take a look at your long-term strategy and think about the regions and platforms you’re currently on and where you might want to take your brand in the future. If your consultant is truly great at what they do, they’ll be able to help you perform well enough with your current product roadmap that it’ll be a no-brainer to expand your presence at the right time.
The most effective partnership with an ecommerce consultant will be able to give you both recommendations and point you to solutions for making those changes in your planning, processes, and execution. Your time and money is valuable, so you want to make sure that you’re spending it as efficiently as possible as you follow your consultant’s advice. So, before you commit to an ecommerce consultant, ask about the resources and concrete solutions they typically recommend to the brands they work with.
Finding an ecommerce consultant that checks the boxes can be a difficult task. At Pattern, our entire focus and drive centers around giving brands the tools and resources they need to succeed on domestic and international ecommerce marketplaces.
With over 100 global ecommerce consultants across 10 global offices, we have the right tools to partner with brands across the world to achieve better ecommerce success. We give specialized advice, then make sure our partners have all the adequate SEO, social media, CRM, Amazon multi-channel fulfillment services, and ecommerce outsourcing services they need.
Interested in ecommerce consulting services? Set up a call here to learn what Pattern can do for your brand on global marketplaces.