Little Red Book Cover Image

The Rise of Social Commerce

Several weeks ago, we dubbed 2020 as the year of Tmall Global. The platform is undoubtedly the cream of the crop as far as China’s cross-border platforms go. That said, it is important to understand the role of other major platforms in consumer journeys. This week, we look at Xiaohongshu, or Little Red Book (LRB).

Those who have been working in China for some time now will remember 2017 as marking the rise of the social commerce business model. In January of that year, WeChat launched mini programs enabling businesses to develop personalised shopfronts for the first time. Importantly, mini programs also provide merchants with greater visibility and control of their customers and sales data. Western social platforms are now finally following suit. We’re seeing eCommerce functionality growing on platforms such as Instagram, WhatsApp and most recently, Facebook.

JD's Mini Program on WeChat
JD's Mini Program on WeChat

The Rise of Little Red Book

Similarly to mini-programs, 2017 also saw a massive uptake in the popularity of Little Red Book. Though LRB had grown gradually as a travel-blog platform since its founding in 2013, the addition of Cross-Border functionality in 2015 led to a surge in uptake to 100M users by 2018.

The platform stood out for several reasons:

  • Its ‘Instagram-esque’ user interface. LRB provides a lazy-loading stream of hyper-targeted and engaging images, videos, reviews, tutorials and other content.
  • The seamless integration of eCommerce into a predominantly social platform. LRB supports the full spectrum of the customer journey from awareness to purchase and reviews.
  • Its focus on younger female target markets to the 20-30 year old market segment.

At the time, this approach to eCommerce was largely unprecedented. As a result, LRB enjoyed conversion rates of up to 4% – the likes of which we had never seen on JD, VIP and Tmall. Even more unprecedented was the encouragement we were receiving from our contacts at both JD and Tmall to ‘become active’ on LRB.

Little Red Book: By the Numbers

LRB statistics infographic

1. Operating a Little Red Book Official Account

✏️ Posting Content

Unlike other platforms, Little Red Book’s algorithms do not give content ranking priority to more popular brands or influencers per se. All content is effectively treated equally. When you post something on LRB, it is initially trialled on a small audience and tested for engagement. If it performs well, LRB organically boosts your post to a wider audience. Engaging posts can even reach audiences who are not subscribed to your account. For important campaigns, you can also pay to boost your post to an even larger audience.

RooLife's Content Posting Guidelines

  • Make it relatable
    Similarly to Douyin, content that is overtly branded and commercial in tone tends to struggle on LRB. The goal behind your content strategy should be to ensure relatability. Your audience wants primarily to engage with the human behind the screen.
  • Post frequently
    Post at least once per week, though the more the better. Reposting KOL and KOC content frequently is a relatively easy way to stay front-of-mind for audiences. That said, make sure you always credit the author.
  • Focus on the user benefits
    Beginner tutorials are extremely popular on LRB. Consider creating or incentivising UGC video tutorials on how to use your products, or how to enhance their daily lives. Give loyal audiences exclusive access to tailored promotions and sales.
  • Keep it relevant and on-trend
    Make sure to keep on top of trending keywords and try to leverage them in your posts. Try to draw connections between your products and trending celebrities. I.e. ‘Try this makeup tutorial if you would like to look like this celebrity on their recent talk show appearance’.
  • Be true to your own style and identity
    LRB is becoming increasingly competitive. Your campaigns need to have a consistent style, but also be innovative enough to excite audiences and stand out.

KOL小草der introduces the unique formulation of Nuria skin serum and it’s repairing propertities, as well as how use and apply it.

KOL 一颗奶糖鯨 demonstrates her face cleasing routine with Essano cleanser.

💇 Working with Influencers on Little Red Book

The Emergence of Key Opinion Consumers (KOCs)

In the past year, there has been a lot of hype surrounding the emergence of KOCs. The theoretical distinction to Key Opinion Leaders (KOLs) is straightforward:

  • KOLs are effectively micro-celebrities, drawing fame and influence from their skills, job, beauty, reputation, status etc.
  • KOCs explicitly stake their reputation on being professional shoppers. Therefore, the quality of the products they recommend has a direct impact on their reputation.

On paper, KOCs fill the rapidly growing void in consumer trust for KOLs; instilled by the increasingly commercialised nature of the industry. However, the reality is that to the everyday consumer, there is little distinction. Our experience here at RooLife is that KOLs still generally boast greater reach, engagement, and conversion rates. The major difference is purely financial. In fact, there is a recurring saying across Chinese social media:

“因为不够钱找KOL,所以人们发明了KOC”
“People invented KOCs because they could not afford KOLs”

Finding KOLs and KOCs

There are four ways to find and engage with influencers for your brand:

  • Third-Party KOL Aggregators
    Platforms like PARKLU function as the ‘yellow pages’ for celebrities, KOLs and KOCs. They provide a seamless interface whereby brands can filter their influencer pools down by followers, relevant platforms, categories, budget etc. Just ensure you do your diligence before signing on with any given influencer. Double check that their reach and engagement rates match what they are reporting. There have been numerous instances in recent years of influencers selling the rights of their social media accounts to private companies for handsome sums. The net result is inauthentic content with lower reach, engagement, and conversions.
  • On the platform:
    LRB have launched their own ‘matching’ service to connect brands with KOLs. The move is part of a broader strategy to ‘clean up’ the platform. LRB continues to remove low-quality and dishonest influencers from their platform. Similarly to third-party aggregators, LRB charges a commission (10%) for the service.
  • Direct Contact
    The other alternative is to reach out directly to KOLs yourself. This can be done via email and/or reaching out via WeChat. This method is cheap, though it can be comparatively more time consuming.
  • Through your China Partner
    RooLife group regularly leverage our own proprietary database including hundreds of KOLs and KOCs whom we have utilised over the years. Each KOL in our database been evaluated based on ROI.
Screenshot: Nuria Celebrity-Link Post
Associating your products with a trending celebrity provides a shortcut to engagement.

Organising KOL Campaigns

Once you have found an influencer who is right for your brand, it is a relatively straightforward process.

  1. Confirm the content format you would like (i.e. video, image etc)
  2. Confirm the price and terms of contract. (Note: Unlike smaller KOLs, big KOLs and celebrities often require an upfront payment. Occasionally, they may also charge a sales commission).
  3. Provide them with an ROI target.
  4. Send some free samples.
  5. Make payment once the campaign has ended.
  6. Evaluate the KOLs performance for ROI.

🎯 Other LRB Marketing & Exposure Tools for Official Accounts

  • Search optimization and PPC tools
  • Social marketing data analysis
  • Customer analytics
  • UGC management & display
  • Traffic and exposure tools
  • Targeted message pushes
A screenshot of LRB's customer analytics dashboard

2. The Shifting Role of Little Red Book in China's Digital Ecosystem

Screenshot: Nuria's LRB POP Store

🛍️ Pop Stores: Cheap, Though Not a 'Silver Bullet'

For brands launching in China for the first time, LRB provides a quick and affordable eCommerce proposition. You can open an LRB POP-Store once your official account has roughly 1000-2000 followers. The store sits within China’s cross-border eCommerce realm making registration cheap, quick, and ethical.

However, despite LRB’s successes in 2017-18, their eCommerce business is gradually dwindling. In our experience, LRB Pop stores tend to only hit sales volumes reaching 1-3% of an equivalent Tmall Global store. We believe this is largely due to the phenomenon of audiences using LRB for a price reference; before shifting off-platform to Tmall/Taobao for final purchase. Simultaneously, LRB’s direct-purchase activities have been gradually declining in recent years.

👧🏻 A Shifting but Vitally Important Role in the Consumer Journey

Despite this, LRB have managed to cement a fundamentally important role in the consumer journey, particularly in the earlier phases. It is one of the premier channels a brand can use for raising brand and product exposure to younger, female audiences.

  • It provides a great channel for boosting exposure reaching new and engaged audiences. The rich and dynamic user experience is perfect for sharing updates, exclusive promotions, campaigns, and content.
  • It is ideal for sharing informational and educational resources to support product evaluation.
  • It boasts a strong community of engaged users who can follow their friends, favourite KOLs and celebrities. As such, it is an important platform for many brands who seek to execute engaging campaigns.
  • The very nature of the platform encourages user-generated content (UGC). As such, it is a vital channel for sharing product evaluations, monitoring brand presence, and gauging consumer loyalty.

KOL Siran explains LipoSachet for skin anti-aging effects for 30-year-olds

🤝 LRB: Paramount for Securing B2B Business

Little Red Book is also a vital channel for gaining ‘buy-in’ from B2B distributors and direct-purchase eCommerce companies. These businesses are generally apprehensive to take on ‘unestablished brands’ for intuitive reasons. As such, they tend to scout Tmall and Taobao to get a read on an unfamiliar brand’s sales penetration. More often than not, they will then take to LRB to get a read on audience exposure and engagement. This is because, unlike WeChat, LRB publishes all relevant engagement rates: including account followers, post views, likes, comments, shares etc.

Summary

LRB is unlikely to become your primary China sales channel. It must be viewed as a long-term strategic marketing channel. It is the perfect marketing aid to support your customer’s journey, as well as to facilitate your B2B business. We hope you enjoyed this week’s article.

Article compiled by Alexander Kelso for RooLife Group, June 2020

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