Xiaohongshu takes on low conversion rates by blocking rivals

Social media and e-commerce platform Xiaohongshu will stop hosting links to items on other shopping platforms in an attempt to bolster its own marketplace.

The news, based on sources that spoke to Caixin, means the app would block written links – but not live-stream commerce links – to rival services, including Taobao from Alibaba, which also backs Xiaohongshu. The platform says the move is in service of a batter UX.

Why it matters

Known as “Little Red Book”, the platform brings in a large sums in advertising revenue but is failing to convert that into value to its own e-commerce service as consumers opt for trusted platforms.

Background

• The idea behind Xiaohongshu is to bring together social networking capability with a cross-border e-commerce offer that could give global brands a direct route to the Chinese market.
• Since its latest funding round, the company has struggled to live up to its reported $6 billion valuation.
• Xiaohongshu is very popular with Gen-Z women, and attracts more than 100 million monthly active users.
• The move is particularly interesting in light of the country’s tech regulator’s intention to clamp down on apps that block competitor links. There is a possibility that instead of opening up the market, it could instead entrench market power among incumbents.

Sourced from Caixin, WARC. Image: Xiaohongshu