Xiaohongshu sharpens knives to employees

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Text/Editor by Li Tang/Hu Zhanjia

Source: Zero State LT (ID: LingTai_LT)

For Xiaohongshu, the news of layoffs at this stage will undoubtedly cast a shadow over the listing valuation.

“Xiaohongshu chooses to lay off employees on a large scale at this time when there is no financial difficulty, cut off the source of income for employees, and increase social unrest and privacy. It is really unkind, unwise and unjust.” “A Letter to the Leadership of Xiaohongshu”, spread on social platforms.

Recently, during the most difficult period of the epidemic in Shanghai, Xiaohongshu quietly started layoffs and optimization. According to 36 Krypton and other media reports, the optimization ratio of this layoff in mid-April ranged from 10% to 20%, involving all major business departments. The layoffs may be optimized in two installments, with the next one at the end of June.

Since 2022, although the large-scale expansion of Xiaohongshu has continued, there are still hundreds of positions on the recruitment website. However, according to a number of headhunters who disclosed to Zero State LT, many positions have been recruiting but few people have joined. Behind the layoffs, Xiaohongshu’s internal and external problems were also exposed—the commercialization was faltering, the false grass planting was named many times, and giants such as ByteDance competed for the grass planting business.

It is worth pondering that after this wave of layoffs, Xiaohongshu immediately announced the cancellation of the big and small weeks, which has to be said to have the effect of stabilizing the morale of the military. At the very least, the remaining employees can relieve some stress. At present, reducing costs and increasing efficiency seems to be the “unified operation” of various Internet companies, but for Xiaohongshu, which has not yet been listed, a series of negative news will undoubtedly affect the valuation and confidence of the secondary market.

01

linesman

No sign. It is the true voice of most laid-off employees.

Because before that, Xiaohongshu still had hundreds of jobs on its official website and major recruitment platforms. Many headhunting companies signed contracts with Xiaohongshu to recommend talents on a large scale, and the salaries of many positions were constantly pushed up. However, this is not the case.

Several headhunters told Zero State LT that their cooperation with Xiaohongshu has not been smooth since December last year. “We are responsible for the recruitment of many positions, but except for a few technical positions, many positions such as operations and marketing have not recommended candidates for more than 3 months.” A headhunter said.

Some headhunters believe that Xiaohongshu still has a situation where the offer is still hanging. “Xiaohongshu really does not have the spirit of the contract. After issuing the offer, a round is added, and then the candidate is hung up. The candidate had already resigned from the original unit at that time.” The above-mentioned headhunter said.

Some recruiting website practitioners also suspect that Xiaohongshu has released many positions, more like releasing smoke bombs, making the public think that it is expanding. Many Maimai users also said that Xiaohongshu’s so-called recruitment was just to understand the industry situation. “At that time, a department director was obviously trying to set a plan with me.”

“Xiaohongshu HR called me every day to ask about the business situation,” said a middle-level executive of a well-known live broadcast e-commerce agency. After such “uncomfortable” recruitment continued for several months, under the environment of cost reduction and efficiency increase in the whole industry, the wave of layoffs of Xiaohongshu also followed.

According to 36 Krypton and other media reports, many employees of Xiaohongshu said that they received layoff notices while working from home and had to go through the resignation procedures online. Some layoffs ranged from 10% to 20%.

Among them, among the optimized employees, most of them are probationary employees and freshmen recruited from school, and there are also some older employees, mainly post-80s. According to multiple interviewees, management wants to reduce Xiaohongshu’s average working age by laying off staff. At the same time, according to a number of Maimai netizens, some of the employees who held the option for two years and were about to get the ownership were told that the option would be voided immediately after the layoff.

Since then, Xiaohongshu has publicly responded through “Shanghai Internet Rumors”, saying that this reduction of personnel is a normal annual performance inventory and personnel replacement, and the overall proportion is within 10%. In addition, the compensation measure given by Xiaohongshu is that if you leave immediately, you can get one and a half months’ salary as compensation, or you can continue to work for one month without compensation. At the same time, all the members who are now laid off will not receive the year-end bonus (15 salary) in 2021, which should have been paid at the end of April, only a little more than a week before and after.

According to Zero State LT, the “hardest hit areas” involved in this layoff are important departments such as commercialization, community operations, internationalization, and live broadcasting. At present, there are nearly 500 people in the rights protection group for this layoff. In addition to layoffs, many departments have also locked down the recruitment of HCs. Many candidates who have undergone multiple rounds of interviews and are waiting for an offer, including candidates who have already received an offer and are waiting for a job, say it is difficult to get a reply in a short time. .

During the most serious period of the epidemic in Shanghai, layoffs, Xiaohongshu’s practice was criticized by all walks of life, and it was regarded as “cruel”. In contrast, although Meituan has also made significant layoffs for “cost reduction and efficiency enhancement”, it also took into account the Shanghai epidemic and did not “hands on” the Shanghai team.

02

commercialization dilemma

Before the layoff, Xiaohongshu was accelerating its expansion, especially in key business sectors such as community and commercialization.

2021 is a year of outstanding performance for Xiaohongshu, and its value has skyrocketed. From the $5 billion in Series E financing in March 2020, Xiaohongshu’s valuation has now reached $10 billion. This mainly depends on the achievements of Xiaohongshu – the rapid growth of users, the number of monthly active users has doubled to 160 million. This is not easy at a time when the growth rate of various platforms is slowing down.

Because of this, Xiaohongshu has expanded its recruitment in many fields, such as vertical field operations, commercial advertising, etc., which can not only better serve new users, but also better monetize traffic. However, Xiaohongshu is not generally favored by the industry, and many people still believe that the valuation is too high because it has not yet proved its profitability. A number of insiders have said that Xiaohongshu has set a goal to triple its revenue in 2022 compared to 2021.

According to the prospectus previously released by Xiaohongshu, the main sources of revenue of Xiaohongshu are information flow advertising and brand cooperation, both of which face huge challenges.

On the one hand, it is not uncommon for brand advertisements to “do not take the platform”.

On December 16 last year, some users found that the content of 29 brands such as Dove, Neutrogena, and Banmu Huatian were blocked and could not be searched in the content of Xiaohongshu. . Since then, Xiaohongshu responded that this is a new round of “false marketing” special rectification on the platform. Behind the rectification, Xiaohongshu wants to hold the transaction chain within the community in its own hands, and requires brands to take the platform approach and pay for promotion.

As early as 2020, Xiaohongshu issued regulations requiring that all brand-cooperation content needs to be traded through the Dandelion platform. According to multiple media reports, Xiaohongshu, as a platform, will charge the brand side a 10% platform service fee, and another 10% will be charged when it settles with KOLs, with a two-way commission. The commission ratio of Xiaohongshu is higher than that of platforms such as Douyin, and the industry is generally around 5%.

Because of this, many brands still choose to bypass the platform when launching on Xiaohongshu, cooperate with guilds and celebrities, and publish promotional content directly on Xiaohongshu; and many mid-waist bloggers will bypass the platform. Single system, to pick up private work.

At the same time, users often complain about false notes, and false grass planting is serious, which affects the tonality of the platform. In 2021, Xiaohongshu officially launched the “Woodpecker” program to conduct a double-check of “multi-dimensional algorithm model + manual review” for falsely promoted content. Just last month, the Woodpecker Program just launched the “New Model for Notebook Brand Recognition”. The model identifies and combats false promotions in the community by monitoring the relationship between brands and promotion notes.

However, the difficulties faced by Xiaohongshu not only come from the inside, but also from the external environment.

In the new consumption boom in the past two years, Xiaohongshu has been an important “incubator platform” and beneficiary. Through planting grass, domestic brands such as Perfect Diary and Ju Duo quickly became popular on major platforms. In the follow-up, it will continue to invest in purchasing and publicity, which has also brought a steady stream of benefits to Xiaohongshu.

In 2022, the new consumption trend has slowed down, and many start-up brands have been forced to withdraw from the market after burning through financing; while the top brands have reduced their marketing investment, and for Xiaohongshu, they have also lost a lot of income. At the same time, compared with the byte system, Xiaohongshu also lacks a powerful advertising tool like a huge engine, which means that the efficiency of information flow advertising is relatively low and cannot bring ideal conversions.

Now, on the contrary, information flow advertisements invested by platforms such as intermediaries and education and training can be seen everywhere on Xiaohongshu, and more users have complained about them, which has lowered the tonality of the platform.

03

Giants start to grab the “grass planting” business

Behind the layoffs, Xiaohongshu has not been listed for a long time, causing many investors and brokerages in the primary and secondary markets to worry. At the same time, with the popularity of planting grass and bringing goods all over the Internet, more mainstream platforms have also carved up the market of Xiaohongshu.

One sign is that many celebrities who are popular with Xiaohongshu have turned to Douyin live broadcast to bring goods. Take the fashion blogger LUMENG of Xiaohongshu as an example. She has 700,000 fans in Xiaohongshu. She mainly focuses on French-style womenswear. The recommended brands are also concentrated in overseas niche brands. Most are more than a thousand dollars.

She has started broadcasting on Xiaohongshu since 2020, and has also started broadcasting several times in 2021, most of which are direct collaborations with brands. Therefore, she can get good discounts and sources of goods from the brand side. She once said in the live broadcast, “b.fleur (brand name) national goods should be on the shelves in my live broadcast room.”

However, just when her fans thought that her style was only suitable for Xiaohongshu, she had opened an account on Douyin and started live streaming at the beginning of the year. Compared with Xiaohongshu’s live broadcast with only two or three thousand followers, the number of people who LUMENG first launched on Douyin exceeded one million, but the specific high conversion rate has not been announced by the platform.

Recently, Douyin has also strengthened the promotion of graphic content on the platform, emphasizing the unity of graphic and video content. As a graphic blogger, LUMENG has become a key publicity target together with food blogger Xiaosang, fashion photographer Li Hang, pilot “Burning Top” and other celebrities.

As we all know, in addition to brand cooperation, live streaming is the most important step for the realization of Xiaohongshu talents. In Douyin, there is not only a larger user group, but also a more complete store and payment system. For Xiaohongshu, it is not possible to invest too much in e-commerce business at this stage. After all, building a supply chain and closing the transaction loop are huge consumption. At present, it is only testing the water in beauty, mother and baby brands, and the transaction volume is difficult. Compete with e-commerce platforms. The live broadcast platform is even more embarrassing, and the online number and conversion rate are difficult to meet expectations.

In addition to digging out Xiaohongshu celebrities, Douyin has also recently focused on the “grass planting” business, mainly focusing on the local life business side. For example, when some Beijing users log in to the Douyin APP, they find that the first-level entrance of “Same City” in the upper left corner of the homepage has become “Growing Grass”. Users can also choose to switch “grass planting” to “same city”, “live broadcast”, “hot spots” and other channels.

The “grass planting” channel mainly focuses on local attractions, online celebrity shops, food, etc., not limited to video content, but more pictures and texts, which are similar to Xiaohongshu’s local grass planting stickers to a certain extent. Different from the common video presentation method of Douyin, “Growing Grass” adopts the display method of double waterfall flow, which is also similar to Xiaohongshu.

Under the enemy, whether Xiaohongshu can maintain rapid growth, steadily go public, and hand over a good commercial answer before going public, it may be revealed in 2022.

This article is reproduced from: http://finance.sina.com.cn/tech/csj/2022-04-25/doc-imcwiwst3867545.shtml
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