The commercial transformation and development of Xiaohongshu

Abstract

Web 2.0 has revolutionized social media, providing users with diverse platforms to engage with. Xiaohongshu stands out as a unique social media that offers a fusion of visual, textual, and video content, with a core focus on "growing grass" (i.e., promoting products or services). However, many researchers pointed out that the commercialization process of Xiaohongshu could have been more successful. Nevertheless, there is still a lack of a unified explanation for Xiaohongshu's difficulties and managerial decisions. To address this gap, this research collects data on the number of plants planted, the amount of interaction, the cost of brand placement, and so on in Xiaohongshu. It conducts regression analysis to determine whether the current strategy of Xiaohongshu can effectively and effectively increase the number of users and their intention to purchase. Results indicate found that merchant investment can significantly increase engagement. The amount of business investment can significantly increase the number of grass-planting notes, and the amount of interaction can also significantly increase the number of grass-planting notes. In contrast, the number of commercial advertisement notes significantly negatively impacts the number of grass-planting notes. Overall, the findings suggest that the amount of interaction and brand investment mutually reinforce in Xiaohongshu. In addition, the higher the interaction volume and the brand investment amount, the higher the willingness of users to share and buy. Moreover, there is a trade-off between the number of ads and the number of grass grown.