Now a go-to lifestyle app in China, RED (or Xiaohongshu, 小红书) has fully blended the worlds of social media and commerce in ways that Instagram and Pinterest are only starting to explore.

Originally conceived as an app for advice on purchasing foreign products abroad, RED has evolved to include lifestyle-focused content similar to Instagram and Pinterest. A wave of celebrities and influencers launching RED accounts over the past year has attracted 30 million MAUs posting lifestyle content covering topics like product reviews, beauty tutorials, workout regimes, and diets. RED’s consumption-oriented content focus allowed it to develop an e-commerce business much more quickly than US platforms like Instagram, which instead rely mainly on ads for monetization, including product listings that link to external sites to purchase.

Brands can open official shops or rely on on RED’s first-party distribution. Gartner L2’s report on China’s mobile disruptors finds that beauty has become the most likely segment to open official brand stores on the platform, boasting a 41% e-commerce adoption rate. While the app’s user base is predominantly from China’s more affluent Tier 1 cities, only 5% of luxury brands have decided to open RED stores. This is possibly due in part to the prevalence of third-party sellers on the app, as 66% of all luxury brands can be found on it.

While Xiaohongshu’s fomat has been focused on organic product reviews and in-app sales, its recent $300 million investment round led by e-commerce giant Alibaba may mean that changes to its business model could be in the future. The app introduced sponsored posts for the first time in October, after previously focusing on keeping product reviews organic to maintain a sense of authenticity. Even more importantly, RED influencers’ product reviews now show up under product listings on Alibaba’s e-commerce app Taobao. With the closer ties to Alibaba and introduction of sponsored posts, it’s possible that RED’s future could hold a shift toward social platform-style advertising with paid posts linking out to external e-tailers.

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