Xiaohongshu intensifies crackdown on external traffic diversion, plugging the last hole in its commercial closed loop.

The seed planting track that Xiaohongshu has been deeply involved in has never lacked competitors.

Recently, NetEase launched a content community App called "NetEase Bee", which shares many similarities in style with Xiaohongshu. Prior to this, ByteDance, Tencent, Alibaba, and other major companies have already ventured into the seed planting track.

The obsession of major companies with seed planting communities is fundamentally due to the huge commercial value they see in the seed planting economy.

Although so far, none of the major companies' experiments with seed planting communities have been able to compete with Xiaohongshu, which has cultivated mature user perceptions, the covetousness of major companies with traffic and resources inevitably puts pressure on Xiaohongshu. Preventing user churn has become the only choice for its sustainable development.

As its commercialization expands, Xiaohongshu, which is gradually moving away from being "small but beautiful," is also increasingly confident in aiming for an in-app closed loop. Since November, Xiaohongshu has issued multiple governance announcements through its official account, targeting black and gray industries and off-platform transaction diversion.

Zhang Yi, Chief Analyst at iiMedia Research, believes that Xiaohongshu's strict governance of violations undoubtedly has a positive impact on the platform's development. On the one hand, it helps restore the authenticity of platform content; on the other hand, it can better maintain the balance between content and commerce, promoting the stable development of the content ecosystem.

For Xiaohongshu, the unrelenting layout of major companies in the seed planting business and the deepening of its own commercialization mean that protecting customer traffic is urgent, both from the perspective of protecting user rights and interests and from the perspective of the commercial closed loop.

Although it has firmly established itself as the leading domestic seed planting community, Xiaohongshu has never had an easy time. The constant pressure from competitors attacking its core areas forces it to use every means to retain users.

Recently, NetEase launched a content community App called "NetEase Bee," positioned as a content community for young people to share and exchange daily life.

According to the actual test conducted by "Xin Shang," this app adopts the same double-column waterfall display format as Xiaohongshu, allowing users to post images, texts, and videos to share their daily lives.

NetEase Bee is similar to Xiaohongshu in overall style but has made many differentiated treatments in details, such as identity verification and supporting rewards for image/video content. The app has a "Plaza" area where users can freely add rating topics. Popular rating lists in this area include "Which internship is the toughest?" "MBTI Personality Ratings," and "Mandarin Singer Rankings."

▲Photo/Screenshot from NetEase Bee

By innovating on details based on the foundation of Xiaohongshu's style, NetEase's underlying logic in deploying the content community track is also due to its optimism about the seed planting business. According to QuestMobile data, Xiaohongshu is currently the largest third-party content platform with the largest user base outside of Alibaba, ByteDance, and Tencent ecosystems.

The success of Xiaohongshu is undoubtedly a shot in the arm for major companies deploying seed planting communities. China Newsweek quoted the analysis of Cui Lili, Executive Director of the Institute of Electronic Commerce at Shanghai University of Finance and Economics, who believes that after seeding, it becomes easier to guide consumers, bringing them one step closer to monetization, which has become an important source of commercial value.

The Financial Times previously reported that Xiaohongshu achieved a historic breakthrough in 2023 by becoming profitable for the first time. Its revenue in 2023 reached $3.7 billion, an increase of 85%.

In fact, before NetEase saw the potential in the seed planting business, major companies had already launched multiple rounds of sniping at Xiaohongshu's model.

From 360's Qingxuan, ByteDance's Coles and Lemon8, WeChat's Xiaolvshu, Weibo's Oasis, Alibaba's Taibang, to Meituan's "Local Eating," and NetEase's Bee, whether it's adding seed planting communities within platforms or launching independent apps, the attempts by internet giants to "recreate a Xiaohongshu" have never stopped.

Although there is currently no similar product in China that can surpass Xiaohongshu in terms of popularity, Lemon8's explosive popularity overseas also proves that the Xiaohongshu model is not flawless. Facing multiple competitors, Xiaohongshu, with the sword of Damocles hanging over its head, indeed needs to use every means to ensure user retention.

As everyone knows, Xiaohongshu's dream began with a shopping guide composed of seven PDF files for domestic and international purchases. For a long time after its establishment, the community was in a state of wild growth, and ordinary people and UGC (User-Generated Content) served as the foundation of the platform, setting the tone for the seed planting community while also posing risks.

In 2019, Xiaohongshu was named in a Ministry of Industry and Information Technology notice. At the same time, frequent scandals such as fake posts and tobacco marketing also placed higher requirements on platform content compliance. Against this background, Xiaohongshu began to strengthen content supervision, explicitly banning off-platform links and jumps due to the potential risk of harming consumer rights.

Entering 2023, as the platform's commercialization accelerated, Xiaohongshu also adopted a more open stance towards off-platform traffic diversion.

At an annual education industry marketing summit in November, Xiaohongshu proposed the concept of "seeding on Xiaohongshu, harvesting everywhere" and reiterated this concept at a subsequent cultural tourism summit.

At the WILL Business Conference in December 2023, Xiaohongshu opened its ecosystem, not only allowing off-platform traffic diversion but also integrating cross-platform data. Although this openness is limited to the search function, it is undoubtedly good news for individual merchants within the Xiaohongshu ecosystem.

It is worth noting that the off-platform traffic diversion allowed by the platform is compliant traffic diversion under the premise of using official traffic diversion tools.

In fact, Xiaohongshu has official traffic diversion tools such as the Juguang Platform, which can meet diverse marketing needs, including product seeding, increasing product sales, collecting potential customer information, and live streaming promotion.

Xiaohongshu's measures against illegal traffic diversion are strict.

On November 6 of this year, Xiaohongshu's official account "Business Advertising Potato" issued an announcement on business order governance rules for transaction diversion for merchants and creators.

The announcement stated that providing WeChat IDs/phone numbers or guiding to WeChat/phone and other contact methods for off-platform transactions, sending links to other platforms for off-platform transactions, etc., would be deemed as violations. The platform is unsparing in punishing violations of traffic diversion: depending on the severity of the violation, measures such as restricting account traffic, restricting content publication, paying liquidated damages, closing shops or banning accounts will be taken.

▲Photo/Screenshot from Xiaohongshu

On the 18th, the official account "Security Potato" issued the "strictest crackdown on black and gray industries in Xiaohongshu's history," stating that comprehensive governance of black and gray industry accounts would be carried out over the next two months. This also mentioned mutual traffic diversion between black and gray industry organizations and attempts to divert traffic off-platform while trying to avoid platform management and punishment for improper profits.

Xiaohongshu's goal in strictly governing commercial traffic diversion is clear – to protect user rights and interests. Additionally, the consideration of defending in-app traffic cannot be ignored. Some media have commented that "in the era of omnichannel marketing, private traffic is a hot commodity. Just as you want to divert it to your private domain, Xiaohongshu also wants to retain its own private domain."

Since 2023, Xiaohongshu has continuously accelerated its commercialization pace.

In March 2023, Xiaohongshu announced the upgrade of its live streaming business to an independent department, Unified management of live streaming content and live streaming e-commerce services ; in April, it conducted a beta test of group-buying functions in Guangzhou and Shanghai, entering the local lifestyle sector; in May, it opened the note-based e-commerce function, allowing merchants to complete e-commerce transactions through notes collaborated with influencers; in late August, it proposed the concept of buyer's e-commerce at the E-commerce Partner Conference.

These actions reflect Xiaohongshu's eagerness on the commercialization path and its desire to form an in-app closed loop for transactions on the basis of gradually cutting off external traffic diversion links.

With its diversified layout, Xiaohongshu's commercialization achievements are also obvious to all.

During this year's Double 11 shopping festival, the number of merchants with transactions exceeding ten million was 5.4 times that of the same period last year, and the number of buyers with single-session transactions exceeding ten million was 3.6 times that of the same period last year. As the first "Double 11" after focusing on live streaming in stores, the number of Xiaohongshu live streaming rooms with single-session transactions exceeding one million was 8.5 times that of the same period last year.

Previously, for the purpose of lower business costs, many individual merchants chose to show their transaction links in private messages while seeding, while the smooth progress of commercialization provided Xiaohongshu with the confidence to block traffic diversion vulnerabilities.

Admittedly, any platform rules are bound to encounter disharmony during implementation. In the process of cracking down on black and gray industries and illegal traffic diversion, many Xiaohongshu users have also reported being "collaterally damaged."

A Xiaohongshu user named Xianxian said that she was only sharing her daily life on the platform and was not involved in any transactions, but her account was judged to have issues and permanently restricted in terms of traffic. Xianxian said, "I still don't know where I violated the rules to this day."

Another user, Xiaolin, found that some of the messages she sent in private messages on Xiaohongshu were sometimes blocked. "Without any notification, I only found out that my message had not been successfully sent when the other party inquired again." Xiaolin believes that even if certain messages involve violations and cannot be sent, the platform should at least provide a notification.

Shishi, a merchant in the building materials category, speculated that the reason why many individual merchants choose off-platform traffic diversion may be due to Xiaohongshu's relatively high commission rate.

In this regard, Zhang Yi analyzed for "Xin Shang" that although in the short term, strong supervision may affect the interests of some individual merchants, some minor pain is inevitable for the high-quality and sustainable development of the platform.

Obviously, at this stage when commercialization is progressing smoothly, Xiaohongshu intends to plug the last hole in its commercial closed loop by intensifying crackdowns on external traffic diversion.

Xiaohongshu's drastic measures reflect its consideration of retaining users under the pursuit of major companies and the confidence given by the advancement of commercialization. In the context of major platforms competing for strength through daily and monthly active user numbers, Xiaohongshu's traffic defense war may be a protracted battle that needs to be continuously pursued.