While e-commerce giants Alibaba Group Holding Ltd., and JD.com Inc., have pushed hard on imported goods, Red plans to set itself apart with a special focus on the community through user sharing.
Red, or Xiaohongshu in China, is an e-commerce site founded by Qu Fang in 2013. It serves an online community of foreign brand fans by letting its users post pictures of their beloved products online. The website then connects the users with overseas sellers that sell various products from ant-aging masks to FollieFollie watches.
65 percent of Red's users are young and well-educated women. Qu said: "Sharing is an inherent trait in women. Those who buy things here are vocal opinion leaders, and many promote our platform on a voluntary basis."
Although Red doesn't give financial incentives for those who share, it became an incubator of word-of-mouth-marketing.
Red has gained traction in China, as it has 32 million registered users by the end of 2016. According to Bloomberg data, Red has become the latest darling for venture capital firms, attracting investment from GGV Capital, Zhen Fund, and potentially Tencent Holdings Ltd.
Red is currently betting on a huge market where a growing disposable income, as well as the freer-spending mindset among the millennials, are pushing for high-quality, personalized products from abroad.
Qi Xiaozhai, head of the Shanghai Society of Commercial Economy, said: "The likes of Red are riding on the surging waves of demand for imported goods as well as the prevalent social media usage in China, and the potential is huge."
The combination of social networking and business is an area that e-commerce players covet. This model worked well on Red, as it has grown from a small startup to the largest distribution Channel for many brands in China.
Making friends and reaching out to users has become a motto by Red employees, as its business benefits from the vast number of bloggers who post their findings. Employees organize monthly afternoon tea parties with selected users to ask for feedback and suggestions
Qu noted: "The goal of Red is to resonate with the ongoing consumption upgrade across China, where people have turned from show-off consumption to quality consumption."