The strategic cooperation between Xiaohongshu and Taotian opens up the whole link from grass planting to purchase through the “Red Cat Plan”, realizes data collaboration, and provides merchants with more accurate advertising and effect tracking. This cooperation aims to solve the problem of Xiaohongshu’s monetization and Taotian’s growth bottleneck, and at the same time trigger a chain reaction in the industry and promote the development of the “content + e-commerce” model.
The 618 promotion is imminent, and Xiaohongshu and Taotian have “officially announced”.
On May 7, the two platforms reached a strategic cooperation and announced that they would further open up and integrate with the “Red Cat Plan”, open up the whole link from grass planting to purchase, and jointly boost the business growth of merchants.
In the past, merchants needed to create content on Xiaohongshu to attract traffic to Taotian, and users needed to go through a multi-step conversion of “browsing-jumping-paying”, and the effect was difficult to track due to data fragmentation.
Now, the “Grass Planting Galaxy Platform” launched by Taotian has realized cross-platform full-link data for the first time. Merchants can observe the complete conversion chain of Xiaohongshu content interaction and Taotian transaction data in real time.
This means that merchants have moved from advertising on Xiaohongshu purely by luck to the current “traffic sharing + effect gambling” model. Taotian promises to provide algorithmic weighting for high-quality content. If the merchant’s ROI does not meet expectations, Xiaohongshu will refund part of the advertising costs.
The cooperation between the two looks like a cross-border CP between “sweet girl” and “big guy” at first glance, but behind it is the determination of the two major platforms to “break the situation and survive” in the e-commerce arena.
300 million monthly active users, 40% of the e-commerce market share, and 335% of joint investment merchants grew…… When these numbers collided together, Xiaohongshu and Taotian’s “Red Cat Plan” officially surfaced. On the one hand, there is the monetization anxiety of content platforms, and on the other hand, there is the growth bottleneck of traditional e-commerce, and the two sides use data to build a bridge of cooperation.
Can this cooperation, which involves the whole link of traffic, data, and transactions, rewrite the e-commerce landscape?
01 Can Xiaohongshu open the “traffic nugget era”?
“Do content in Xiaohongshu and make transactions on Taobao” is the general consensus of merchants in the past. A few years ago, Xiaohongshu was like a miserable baby who held a treasure but couldn’t find the key to realization. With 260 million monthly active users, the content of notes covers various fields such as beauty, dressing, and home furnishings, and the ability to plant grass is a must. However, many users have to “manually jump” to other e-commerce platforms to place orders after being planted. Therefore, for Xiaohongshu, taking the initiative to open the “foreign domain” is a realistic problem.
It is worth mentioning that this cooperation is not only for the “618” node.
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Since 2022, the two sides have jointly launched grass planting observation programs such as “Little Red Star”. According to the data provided by Taobao Tmall, in the past year, the scale of “Little Red Star” has grown rapidly, and the click-through rate of Taobao Tmall brand merchants in Xiaohongshu as a whole has increased by 20% and the interaction rate has increased by 109%.
Last year, Xiaohongshu e-commerce was a leap forward – the GMV of Xiaohongshu e-commerce exceeded 400 billion yuan, a year-on-year increase of 45%. However, Xiaohongshu’s stores account for less than 15%, and a large number of transactions still jump to third-party platforms such as Taobao and JD.com.
However, Xiaohongshu’s e-commerce road has made a good start. In the past year, in order to further promote commercialization, Xiaohongshu has been trying to emphasize the value of “planting grass” marketing on its platform, and has been working hard to measure the grass planting effect of merchants on Xiaohongshu.
In September last year, Xiaohongshu proposed the full-cycle business strategy of “direct and wide range of product number stores” and the “four sets of marketing formulas” to deal with the full-cycle marketing problems of small and medium-sized merchants, and also launched the quick delivery tool “Spotlight Lite” and the one-stop marketing platform “Ride the Wind”.
Moreover, Xiaohongshu’s future cooperation platforms are not only Taobao and Tmall. Cang Xiang, head of commercial technology at Xiaohongshu, previously revealed that he will explore cooperation opportunities with more platforms in the future.
Although Xiaohongshu will begin to vigorously develop its e-commerce business in 2023, there are many giants in the e-commerce world, and Xiaohongshu can only develop on the relatively niche route of “lifestyle e-commerce”, and is also in a weak position in the competition for brand merchants. At present, on the one hand, the supply of Xiaohongshu e-commerce is limited, and on the other hand, it will take time for user habits to change.
Therefore, instead of watching the natural outflow of traffic, it is better to cooperate with Taotian to exchange “jump transactions” for advertisers’ budgets and continuous delivery, and capture part of the lost value.
Figure description: “Advertising chain” link diagram
But there are two problems now, one is that too many product recommendations can easily form a commercial alienation of the content ecosystem. The essence of grass planting culture is the authenticity of UGC, but commercial erosion is deteriorating this soil. But this is an inevitable problem in the commercialization of social platforms, and Xiaohongshu may have to balance e-commerce and content. The other is: Will jumping to Taotian like this make Xiaohongshu a traffic transfer station? According to the business data school, even with the Red Cat Plan, Xiaohongshu has not given up its e-commerce business, and now only a small number of brands can do external link jumping.
02 Can Taotian break through the stock market?
On the other hand, Taotian is facing pressure from the stock market.
China’s e-commerce industry is experiencing structural changes. According to QuestMobile data, the year-on-year growth rate of e-commerce users on the whole network has fallen below 5% in 2024.
Other rising stars of social e-commerce are running wildly. The “interest e-commerce” model is accelerating the user time of traditional shelf e-commerce through immersive consumption scenarios built through short videos + live broadcasts.
Douyin’s GMV will reach 3.43 trillion yuan in 2024; At the same time, Kuaishou e-commerce is also rising rapidly, with its GMV reaching a staggering 2.7 trillion yuan in 2024, further intensifying market competition.
In the face of the urgency of content transformation, although Taotian has launched sections such as “Shopping”, the content production mechanism and community atmosphere are still weak, and the penetration rate of content consumption users in 2023 is not high.
The combination of Taotian and Xiaohongshu can be said to have made up for the breakthrough of Taotian’s social shortcomings.
In fact, before this strategic cooperation, the two sides had a “Little Red Star” plan to test the waters. In 2024, the click-through rate of Taotian brand merchants on Xiaohongshu’s grass planting notes will increase by 20%, the interaction rate will increase by 109%, and the average number of merchants participating in the joint investment will increase by 335% year-on-year.
Seeing the potential of 1+1 greater than 2, especially the imminent 618 promotion, the “Red Cat Plan” may also be building momentum for Taotian’s 618 to solve the conversion problem of existing users.
The Xiaohongshu user group shows the characteristics of “high stickiness + high willingness to consume”: in 2024, the average annual consumption amount of platform users will reach 12,000 yuan, of which 70% of users complete consumption decisions through notes. Through the “Red Cat Plan”, Taotian can accurately reach Xiaohongshu’s high-net-worth users and achieve it through the data center.
“The most noteworthy thing about this cooperation is the depth of data collaboration.” Wang Lei, a partner at Boston Consulting, pointed out that through the “Planting Grass Galaxy” platform, Taotian realizes full-link tracking of cross-platform user behavior for the first time: Xiaohongshu’s user browsing, like, and comment data and Taotian’s add-on, payment, and repurchase data form a complete map.
According to a survey by the Boston Consulting Group, the correlation between the interaction volume of color test notes of a beauty brand’s lipstick products on Xiaohongshu and the number of orders on Taotian showed a correlation of 0.82, and the ROI increased by 67% after optimizing the delivery strategy. This model of “content behavior predicting consumption behavior” is subverting the traffic purchasing logic of traditional e-commerce.
Little Red Star’s data also confirms this view. According to Taotian data, in the past year, the scale of Xiaohongxing has grown rapidly, and the click-through rate of Taotian brand merchants in Xiaohongshu as a whole has increased by 20% and the interaction rate has increased by 109%. Among them, the average daily number of merchants participating in Taotian joint investment increased by 335% year-on-year, the store entry rate of brand merchants in the sports industry increased by 85% year-on-year, and the store entry rate of brand merchants in the beauty industry increased by 41.5% year-on-year.
In addition, through the dual-platform rights and interests system of “Taobao member rights + Xiaohongshu exclusive coupons”, Taotian’s repurchase rate can also be greatly improved. Previously, this model has run through, and according to Xiaohongshu’s transformation, Taotian’s repurchase rate has increased by 35%.
According to the cooperation information, Taotian and Xiaohongshu’s “Red Cat Plan” has been fully upgraded, and merchants can observe the full-link effect through Taobao’s “Grass Planting Galaxy Platform”, and Taotian will also increase investment in note heating and streaming, improve the accuracy of advertising and conversion efficiency, and bring more deterministic growth to merchants.
But this ushers in another problem: when Xiaohongshu’s grass planting efficiency is visible to the naked eye, why do merchants stay in Taotian?
Leave professional things to professional people. On the one hand, Taotian solves the problem of slow traffic growth by cooperating with social platforms to drain traffic; On the other hand, Taotian is working the interests of merchants.
Since last year, Taobao and Tmall have become more and more open, and cooperation with external platforms such as WeChat, Xiaohongshu, and Douyin has been strengthened, guiding users to return to the station and enter the store for conversion through various channels. Taotian’s off-site traffic incentives essentially abandon the view of portals, take the interests of merchants as the primary consideration, and help merchants make the “traffic cake” bigger, so as to realize that platform merchants jointly invest funds to help merchants achieve more efficient off-site drainage.
In addition, Taotian will continue to expand its investment this year, and the intensity is unprecedented – for some merchants who meet the threshold, the foreign investment incentive can even achieve “as much as the merchant invests, the platform invests”.
03 When the “grass planter” meets the “harvester”, the ecological revolution in the second half of e-commerce
Behind this seemingly simple platform marriage, there is the most profound underlying logical change in China’s e-commerce industry – when the genes of content planting and transaction transformation are reorganized, a new “content-consumption” ecological closed loop breaks the zero-sum game and is reshaping the competitive landscape of the industry.
Li Chen, an analyst at iResearch, bluntly said that Xiaohongshu’s content ecology is a “traffic gold mine” in the e-commerce industry, but it lacks a “digger” for closed-loop transactions; Taotian has the world’s most mature e-commerce infrastructure, but it urgently needs the “living water” of content traffic.
Xiaohongshu’s monthly active users exceeded 230 million, but the embarrassment of GMV of less than 100 billion yuan in 2023, and the conversion anxiety of Taotian’s 1.2 billion commodity library constituted the most original driving force of this cooperation.
From “people looking for goods” to “goods looking for people”, the e-commerce industry is undergoing unprecedented changes. From “mutual defense” to “joint operation”, this hand-in-hand between Xiaohongshu and Taobao Tmall may only be the beginning of a new cycle of platform cooperation, and it is also a bold exploration of the new model of “content + e-commerce”.
Therefore, this cross-border cooperation has also triggered a chain reaction. Jingdong Retail CEO Xin Lijun publicly stated that it will increase the construction of content ecology, and Pinduoduo secretly tests the grass planting function of “Duoduo Video”.
iiMedia Consulting predicts that in the next three years, more than 60% of the leading e-commerce platforms will build global operation capabilities through similar cooperation, and the industry may form a matrix competition pattern of “content platform + trading platform”.
The marriage between Xiaohongshu and Taotian is not only an in-depth verification of the “content + e-commerce” model, but also provides a replicable model for the entire industry – in the stock market, open collaboration between platforms may be more competitive than going it alone.
When Xiaohongshu’s “content grass planter” and Taotian’s “transaction converter” complete genetic restructuring, this cooperation will not only open up a new dimension of growth for both parties, but also may reconstruct the value distribution system of the entire e-commerce industry.
As the Harvard Business Review points out: “In the future, business competition will no longer be a contest of a single platform, but a game of ecological alliances.” “In the era of stock where traffic dividends disappear, ecological collaboration between platforms may become the key to breaking through the growth bottleneck, and how to balance user experience and business interests will be a long-term proposition that all participants must face.
This marriage, which began with complementary resources, will eventually evolve into an experiment in the reconstruction of the industry ecology.
