The development of social commerce is 618: Douyin and Xiaohongshu

Douyin and Xiaohongshu gave remarkable performances at this year’s 618 shopping festival, highlighting their growing influence on China’s e-commerce ecosystem.

Douyin, which launched its e-commerce arm two years ago, has quickly developed into a robust platform that shifts beauty brands’ focus from Tmall-centric marketing to a closed-loop, social media-centric model.

“Douyin has leveraged its massive user base and live streaming capabilities to drive sales across all segments, especially beauty and fashion,” Subbu Bhatt, CEO and founder of market research firm China Trading Desk, tells Jing Daily. “Douyin 618’s revenue is expected to grow 20% to 30% in 2024, with cosmetic products potentially growing by 40%.”

According to the official data of the Douyin app, Douyin 618 Good Things Festivals (抖音618好物节) recorded a total live broadcast duration of 40.5 million hours, and short videos containing cart links attracted 115.1 billion views. In total, each of the 183 livestream sessions achieved sales of more than $1.37 million (RMB 10 million), and 758 brands recorded sales above this threshold.

Significantly, many beauty brands reported sales on Douyin that were similar to or greater than sales on Tmall. Douyin’s top 30 beauty brands list has seen significant growth compared to last year.

Sales for brands such as Whoo, Estée Lauder and Ya-Man exceeded $13.7 million (RMB 100 million), a significant jump from last year, when only Whoo achieved this milestone. Fourteen brands achieved sales of over $6.8 million (RMB 50 million), double the previous year.

According to Feigui data, Chinese beauty brands KanS and Proya overtook Douyin at this year’s 618 Shopping Festival, securing the top two positions in terms of gross merchandise value (GMV). Last year, Proya and KanS finished ninth and tenth, respectively. This year, KanS climbed to first place and Proya to second place. This significant leap underscores the increasing competitiveness of domestic brands relative to their international counterparts in China.

“Influencer marketing and engaging live streaming sessions have played a key role in driving sales,” says Bhatt. “In the beauty sector, targeted promotions, live events and collaborations with key influencers have boosted sales, reflecting the trend towards guochaoor national pride. “National beauty brands have gained favor and there has been strong demand for skincare products driven by increased awareness of self-care.”

Xiaohongshu also posted impressive results. Sessions streamed live on the platform during the 618 period saw orders increase 5.4 times compared to the previous yearwhile GMV from in-store broadcasts was five times higher.

The sharp growth can be attributed to a strategic reorganization that combined e-commerce buying and selling operations, increasing operational efficiency and optimizing merchant services.

Xiaohongshu’s ability to push posts containing popular product keywords to relevant user groups has made it a popular choice for new product launches. For example, beauty brand Flower Knows (花知晓) launched its new Midsummer’s Eve Illuminating Concealer range via livestream to buyers in Xiaohongshu, generating over 15,000 orders and sales worth US$468,500 (RMB3.4 million) within just four hours.

Xiaohongshu’s monthly active users (MAU) reached 312 million in 2023, up 20% year-on-year, highlighting its rapid growth. Adapting the platform to the brand’s aesthetics and focusing on user trust has made it increasingly popular among sellers.

Jacob Cooke, co-founder and CEO of WPIC Marketing + Technologies, says: “Xiaohongshu’s sales growth demonstrates the broader trend of content-driven commerce and consumers’ willingness to shop on traditionally social channels.”

Despite these successes, Xiaohongshu faces the challenge of scaling its new model against other platforms where top players such as Apple, Xiaomi and Maotai can quickly exceed billions of dollars in GMV during shopping sprees.

Comparing the performance of both platforms, Douyin’s wide reach and high engagement rates highlight its rapid growth in the e-commerce domain. Its ability to increase sales and brand visibility through live broadcasts and short videos highlights its growing importance. Xiaohongshu’s strength lies in precise targeting and effective promotion of new products, supported by a significant increase in its user base.

While Douyin’s overall sales and engagement numbers pose a formidable challenge to traditional e-commerce platforms like Tmall, Xiaohongshu’s strategic shifts and strong order growth signal its potential to become a key player. Both platforms exemplify the shift towards interest-based e-commerce, leveraging the dynamics of social media to support consumer engagement and drive sales.