Xiao Hong Shu Adjusts Structural Construction that Community and E-commerce will Merge

A news showed that Xiao Hong Shu has made organizational restructuring and the original community department and e-commerce department will be merged into a new community department. It is expected to obtain more traffic and method of commercialization of monetization to expand the profit model on the basic.

Recently, there is news that Xiao Hong Shu has made organizational restructuring and the original community department and e-commerce department will be merged into a new community department.

Xiao Hong Shu stated that the community vision of Xiao Hong Shu is to become a multi-lifestyle gathering place for more users and trading is an important part of community life. The transaction mind of users should be cultivated in the community and the transaction ecology of merchants should be grown in the community. The merger of the community and e-commerce business is a natural iteration of the organization in the process of achieving a common vision.

That may mean that Xiao Hong Shu's e-commerce business will be re-planned and strengthen the community to e-commerce link to increase the integration of e-commerce and community business. It is expected to obtain more traffic and a method of commercialization of monetization to expand the profit model on the basic.

From the organizational structure of Xiao Hong Shu, Xiaohongshu merged the "three-party e-commerce" business in the independent e-commerce department into the community brand (commercialization) system in February 2019 and self-owned e-commerce still exists as an independent business.

Public reports show that Xiao Hong Shu's two-year e-commerce GMV targets for 2018 and 2019 have not met the expectations of insiders. The revenue share of the advertising business of Xiao Hong Shu in 2020 is about 80% achieving triple growth while e-commerce only accounts for about 20% of the total revenue.

In addition, it can also be seen that Xiao Hong Shu tends to bind the community and e-commerce in some community projects. In 2021 November, Xiao Hong Shu held the first online pop art toy exhibition and launched more than 270 art toys to begin e-commerce in the community. In November last year, Xiao Hong Shu completed a new round of funding of $500 million valued at more than $20 billion after the investment. Xiao Hong Shu needs a diverse monetization model to sustain growth. This is the main reason for the merger of e-commerce and community businesses.

Xiao Hong Shu is a lifestyle platform for young people, where users can record their lives and share their lifestyles through short videos and graphics and form interactions based on their interests. As of October 2019, the number of monthly active users of Xiao Hong Shu has exceeded 100 million, of which 70% of users were born after 1990.