Xiaohongshu’s self-operated online beauty retailer, Welfare Agency, set out to connect Chinese consumers with global brands. Now, after almost ten years of operation, the platform will be cannibalised as part of sweeping changes to Xiaohongshu’s e-commerce business.
On September 15, the Shanghai-based firm announced that Welfare Agency, which was established not long after the flagship Xiaohongshu app, will stop selling merchandise on October 16 and shut down completely on November 16.
This comes after the announcement that its sports and outdoors goods e-commerce platform, Little Oasis, will also close for business at the end of next month.
“Over the past year, as e-commerce has become an integrated part of the Xiaohongshu community, more diverse purchasing scenarios have emerged on the platform and users’ needs have become diverse as a result,” the company explained in a letter posted online.
Miranda Qu and Charlwin Mao launched Xiaohongshu in 2013 as a dedicated purchasing decision-making platform, creating a breeding ground for the now well-recognised social commerce behaviour “seeding”. Noticing users’ constant requests for links to products recommended on the platform, Qu and Mao then set up Welfare Agency and achieved 200 million RMB (27.4 million USD) in sales within five months.
Going forward, Xiaohongshu will concentrate its resources on brand owners and procurement specialists, whose presence on the app has surged by 2800% in the past 18 months. The company’s e-commerce business will be upgraded to a department on the same tier as the community services division and will focus on helping brand owners and procurement specialists leverage the value chain of the Xiaohongshu platform.
Industry insiders told Beijing-based Jiemian News, “At the end of the day, Xiaohongshu is a community, and its core advantage is content. The team at Xiaohongshu believes that encouraging purchases through high-quality posts and livestream content is the best possible growth model for their e-commerce business.”