Xiaohongshu Highlights E-Marketplace on Home Screen Amid Retail Expansion

On August 29, the platform spotlighted its online marketplace on the app’s homepage and announced it will waive commission fees for the first CNY1 million (approximately USD 140,200) in sales from new vendors, as part of its increased focus on e-commerce.

This move marks a significant step in the company’s ongoing business transformation, two years after it revealed its comprehensive shift toward online retail. The platform, boasting around 350 million monthly active users and renowned for product suggestions and interest-based content, is intensifying its efforts in the e-commerce space.

The company aims to solidify its presence in online shopping and attract high-quality sellers, according to the head of merchant development during a recent media briefing.

Currently, the new marketplace interface is accessible only to frequent shoppers on the app, but access is expected to expand to all users within a month.

Since beginning to heavily promote its online retail segment in 2023, the Shanghai-based company has steadily expanded its e-commerce infrastructure. It has fostered a unique, content-driven shopping style where lifestyle experts such as buyers and store managers curate, select, and match products tailored to individual preferences.

The user base for online shopping is growing rapidly, especially among young consumers, said the head of the trading marketplace. “We hope this new marketplace will become another key reason for young users to stay engaged with our app,” he added.

According to data shared at the briefing, about half of the platform’s 350 million monthly active users are aged 30 or younger, and 70% of online buyers in this demographic. The platform describes its e-commerce clientele as young, financially capable individuals who have refined tastes and are willing to pay for quality.

The community of sellers is also relatively youthful. Half of the individual entrepreneurs operating stores on the platform were born after 1995, and more than half are opening a store for the first time, the company representative noted.

In terms of shopping preferences, the platform’s key differentiator isn’t traffic, scale, or pricing, but rather the quality of the shopping experience. Users trust that they will find “good stuff” on the platform, explained the head of the marketplace.

The number of new merchants increased by 8.1 times last year compared to the year before, and that growth continues to accelerate. Over the past three months, the team has been consistently traveling to identify and onboard quality vendors.

Prior to 2022, roughly 80% of revenue stemmed from advertising tied to interest-based content and product recommendations, with e-commerce contributing around 20%. However, as the platform ramps up its retail operations, this revenue split is likely shifting.

It remains a topic of keen market interest when the company might go public. Although rumors of an IPO have circulated almost annually since 2021, there has been no official announcement or confirmation of plans or valuation.