Xiaohongshu, a popular social media and e-commerce platform in China, is reportedly on track to significantly exceed its profit expectations for the year, thanks to a rapid expansion in its e-commerce operations. Insiders suggest the company is set to achieve a net profit of $500 million, far surpassing its initial forecast of less than $50 million at the start of the year.
Founded in June 2013, Xiaohongshu has successfully completed six rounds of funding, accumulating over $900 million. Its latest funding round in November 2021 raised $500 million, valuing the company at an impressive $20 billion.
Xiaohongshu's e-commerce success is particularly noteworthy when compared to Western counterparts like Meta's Instagram and Pinterest, which have struggled to convert their substantial traffic into significant online commercial revenue. This year, Instagram even shut down its live shopping feature to focus more on its advertising business.
As a content-driven community, Xiaohongshu has experienced rapid growth. In 2022, its daily active users (DAU) exceeded 100 million, with monthly active users (MAU) surpassing 260 million. The average daily usage time per user rose from 26.49 minutes in 2018 to 55.31 minutes in 2022.
With a vast user base, Xiaohongshu has developed a unique e-commerce model centered around "buyers." At its August buyer's conference, Xiaohongshu's COO, Conan, highlighted the vitality of individual sellers on the platform. Over the past year and a half, the platform has seen a 27-fold increase in the number of buyers and sellers, a tenfold increase in active merchants, and a twelvefold increase in purchasing users.
This remarkable growth in its e-commerce sector may position Xiaohongshu favorably for new funding rounds or an eventual initial public offering (IPO), marking a significant milestone in the company's journey.
