AsianFin — In a landmark move reshaping the consumer journey from discovery to purchase, e-commerce giants Taobao Tmall and lifestyle platform Xiaohongshu have launched a strategic partnership, marking a new era of integrated content-commerce in China.

The "Red Cat Initiative," unveiled on May 7, opens a new chapter in cross-platform collaboration, with performance advertising channels now interconnected for the first time. The rollout of a new "Ad Link" feature beneath Xiaohongshu content allows brands in a pilot program to directly channel users to Taobao Tmall, significantly shortening the path to purchase.

This synergy is widely viewed as a vote of confidence in Xiaohongshu's fast-rising influence in product discovery and commercial viability. And the numbers are backing it up.

According to foreign media reports, Xiaohongshu's Q1 2024 revenue surged to $1 billion, a 67% year-on-year increase from $600 million in the same period last year. Net profit quadrupled to $200 million, with commercial advertising being the primary revenue driver. While its e-commerce unit remains in the early stages, growth has outpaced peers in a maturing market.

"Xiaohongshu's overall commercial scale reached 100 billion yuan in 2024, up from 40 billion in 2023—a 2.5x leap in just one year," said Van Gogh, General Manager of Mogujie's MCN division, which has rapidly grown to become one of Xiaohongshu's top e-commerce partners. "In today's market, such exponential growth is increasingly rare."

Van Gogh's bet on Xiaohongshu is already paying off. Mogujie jumped from first place in Xiaohongshu's "Outstanding Product Selection Service Providers" ranking last October to second in its March "Buyer MCN Rankings," trailing only e-commerce powerhouse Ruhnn.

But the real story is the evolving model of live-streaming e-commerce—one where Xiaohongshu is carving out a differentiated, slower-paced, and narrative-driven approach compared to its rivals.

Unlike the high-pressure, flash-sale model of Douyin and Kuaishou, Xiaohongshu's livestreams rely on storytelling, authenticity, and user trust. Hosts are expected not just to sell but to articulate a lifestyle and brand story.

This has led to lower return rates—clothing returns hover around 60%, far below the 80–90% seen on other platforms. High-ticket items such as gold and jewelry perform even better, with minimal returns.

"Users on Xiaohongshu appreciate honesty. There's no need for a '3-2-1 drop the link' countdown. People buy when they understand the product and feel a connection," Van Gogh said.

That's why personalized, design-driven brands thrive, while standardized big-brand products often struggle to find traction. A typical early user comment—"Can I buy this on Taobao?"—captures the still-limited habit of shopping directly on Xiaohongshu.

Mogujie has been leading the charge in developing a "Xiaohongshu Playbook" for brands and influencers, working closely with the platform to refine backend functionality and operational strategies.

One standout case is @Aaaki-, a previously low-profile fashion blogger who skyrocketed from obscurity to 6 million yuan in monthly sales in just a few months. Her success validated Mogujie's "low-follower, high-frequency" livestream model, proving that regular streaming—up to 10 hours every few days—can outperform one-off viral hits.

"We understand traffic, human behavior, and platform dynamics," said Van Gogh. "It's not just about content anymore. It's about predictable, scalable growth."

That methodology aligns with Xiaohongshu's 2024 evaluation standards, which prioritize how many streamers can consistently generate 500,000 yuan in net monthly GMV, rather than just absolute sales volume. Mogujie currently supports over 30 top-tier buyers and nearly 70 streamers, all focused on mid-tier market cultivation.

Despite encouraging results, challenges remain—especially in expanding Xiaohongshu's product pool and shifting brand perceptions. Major brands still largely treat the platform as a marketing tool rather than a sales channel, limiting product variety for streamers.

To change that, Xiaohongshu is targeting Gen Z and millennial users through trend-forward content and influencer partnerships, including events like its March product selection fair at Mogujie's Hangzhou HQ.

However, shifting the perception of Xiaohongshu as a "premium-only" space remains a hurdle. With 80% of livestreaming users born post-1990, affordability and perceived value are crucial to sustained growth.

The Taobao-Xiaohongshu integration via the Red Cat Initiative signals a pivotal step toward answering that question. If Xiaohongshu can successfully convert its strong discovery power into a robust transactional engine, it could redefine how lifestyle content and commerce converge in China.

For now, Van Gogh and Mogujie are betting big—and building the infrastructure—to make that vision a reality.

"We're not just chasing GMV," he said. "We're building a repeatable system that gives creators and brands the tools to thrive in a new kind of e-commerce."