Xiaohongshu Drops Commission on Sales from 20% to 5% (and other news)

Thomas Graziani New WeChat features

This week, we report on a few significant news in the Chinese E-commerce space:

  • Xiaohongshu reduced the commission the platform charges to merchant sales from ~20% to 5%.
  • Weibo posts can now redirect users to WeChat Mini-programs
  • WeChat is testing a new #hashtag# feature

Xiaohongshu reduces platform costs

In an effort to attract merchants to promote their products on the platform, Xiaohongshu announced on the 3rd of July that it would reduce its platform commission from ~20% to 5%.

This new commission is now identical to the commission charged by Tmall in the fashion and cosmetics industries, making the platform competitive for merchants.

If traffic is coming from Xiaohongshu ads, the sales commission decreases even lower, all the way to 3%.

Xiaohongshu is an essential tool for (mostly female) users to read and write product reviews. Buyers use it to do research before purchasing fashion or cosmetics products.

However, the platform has struggled to convince its 85 million Monthly Active Users to buy products directly on the platform. Instead, users tend to learn about products on Xiaohongshu, but then head to Tmall or WeChat Mini-programs in order to purchase them.

With this adjustment to its commission rate, Xiaohongshu might convince merchants to invest more KOL and advertising resources to drive direct conversions. In the long run, this trend could lead end-users to gradually get used to buying directly from Xiaohongshu.

Weibo enables redirections to WeChat Mini-programs

A Weibo post can now direct users to a WeChat Mini-program.

This evolution might be game-changing for WeChat. Mini-programs have long been adopted by WeChat users, but users could only access them via within WeChat or offline QR codes.

By allowing traffic to WeChat Mini-programs, Weibo provides WeChat with a new traffic window to WeChat stores.

This move happens just when Weibo started restricting traffic to Taobao and Tmall, giving a new edge to WeChat for e-commerce conversions.

Note: the feature is not open to all accounts, and is subject to a case-by-case whitelisting process.

WeChat releases a new #hashtag# feature

WeChat launched a new #hashtag# beta feature. Accounts can specify hashtags listed at the end of the article. By clicking these hashtags, users can see a list of articles mentioning the same topic.

This feature follows other WeChat changes meant to make content on WeChat easier to discover. For instance, WeChat introduced last year its “Wow” feature (enabling to browse most popular content) and links to related articles.

These moves are reactions to the growing dominance of ByteDance and Douyin in the content space. They however sound like too little too late, as users are increasingly abandoning WeChat Moments to focus on short-video Apps.

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