Last Updated on January 15, 2025 
Jeffrey Hau
Quick Answer: How Does XiaoHongShu Make Money?
XiaoHongShu primarily generates revenue through 4 main channels: native advertising on its platform, the XiaoHongShu shop, fees from marketing tools, and charges to brands and marketers.
In fact, these revenue streams have helped XiaoHongShu achieve a new peak in its revenue and profits, with over a billion USD of revenue and a net profit of over 200 million.
According to reports, XiaoHongShu mainly relies on advertising fees as its main source of revenue, with this source making up 80% of the platform’s total revenue as of 2022!
However, e-commerce on the platform has been skyrocketing recently under XiaoHongShu’s constant effort to reposition itself as a ‘social commerce’ platform. With this shift, the XiaoHongShu shop is quickly becoming a major revenue generator as well!
Let us go through in detail on exactly how XiaoHongShu make their money:
Native Advertising on the Platform
As mentioned above, advertising fees are the main revenue source of XiaoHongShu.
XiaoHongShu provides several advertising options for brands, such as:
Feed Ads
Brands can pay XiaoHongShu to feature posts (or ‘notes’) about their products on more users’ homepages while they’re browsing the platform. However, these promoted posts will be clearly labeled with a ‘Sponsored’ tag, informing users that the content is a paid advertisement.
Search Ads
To align with XiaoHongShu’s user behavior, which focuses more on searching than browsing, brands can pay XiaoHongShu to boost the ranking of their notes in search results for specific keywords. For instance, a skincare brand can pay to have a note about its product appear higher in the search results when users search for keywords like ‘sensitive skin’. This concept is similar to Google Ads!
Banner Ads
This is the most straightforward form of advertising on XiaoHongShu. Brands can pay to have their advertisement appear as a pop-up page when users log into the app, ensuring maximum visibility right from the start.
Advertising fees on XiaoHongShu are primarily based on two models: the CPC (cost-per-click) model and the CPM (cost-per-mille) model.
- CPC Model: Fees are determined by the number of users who click on the promoted note. This model is commonly used for feed ads and search ads. The cost per click can range from a few cents to even several tens of yuan, depending on the account’s follower count. Accounts with larger followings charge higher rates due to their greater reach and influence.
- CPM Model: Fees are based on the number of impressions, with charges applied for every 1,000 views of the promoted note. The CPM for feed ads and banner ads usually ranges from tens to hundreds of yuan, depending on factors such as the time the ad is being promoted, the specific location the ad is being promoted in, and also the specific audience segment the ad is targeting.
Do take note that the advertising cost on XiaoHongShu is also affected by the competitiveness of the industry you are in! For instance, popular industries on XiaoHongShu such as fashion and beauty will have higher advertising rates.
XiaoHongShu Shop (Commissions & Shipping)
The XiaoHongShu Shop is the only official channel for brands to sell on the platform. Users can only buy and sell products through the XiaoHongShu Shop, as the platform strictly prohibits redirecting users to third-party e-commerce sites. Trying to bypass this rule could even result in your account being banned!
XiaoHongShu generates revenue from its shop feature by collecting deposits and commissions from businesses selling products on the platform. However, commissions are only charged if your store’s monthly revenue exceeds 10,000 RMB.
For stores earning less than 10,000 RMB per month, you’ll only need to pay 0.7% of your revenue as a “payment channel’ fee, which covers costs for payment services like Alipay and WeChat Pay.
For stores with revenues exceeding 10,000 RMB, you will need to pay a commission starting from 5% on top of the 0.7% payment service fees. The final commission rate collected varies depending on the categories of products sold, and also the status of the merchant.
For example, XiaoHongShu charges an additional 5% commission on beauty products, such as cosmetics, and even higher rates for products in the healthcare category.
Essentially, the platform collects higher commission rates for products with higher price points and greater profit margins.
The more expensive your product, the higher the commission fee. Additionally, larger businesses may face higher commission rates compared to individual sellers or smaller businesses.
For XiaoHongShu Shop, XiaoHongShu also provides sellers with its own shipping service known as RED Express. Sellers using RED Express just need to send their products to XiaoHongShu’s warehouses located in Hong Kong, Japan, and South Korea and XiaoHongShu will handle order management and delivery. The fees for RED Express range from 25 to 28 RMB per 500 grams of the parcel.
There is also a pure delivery service where overseas sellers just need to pack their orders and hand them over to XiaoHongShu for delivery to Chinese customers, known as RED Box. The fares for RED Box varies according to the origin country, as below:
Hong Kong
- Under 100 Parcels: 16 RMB (first 500g per parcel), 5 RMB (additional 500g)
- Over 100 Parcels: 15 RMB (first 500g per parcel), 5 RMB (additional 500g)
Japan
- Under 100 parcels: 27 RMB (first 500g per parcel), 15 RMB (additional 500g)
- Over 100 parcels: 22 RMB (first 500g per parcel), 15 RMB (additional 500g)
South Korea & Taiwan
- Under 100 parcels: 25 RMB (first 500g per parcel), 16 RMB (additional 500g)
- Over 100 parcels: 20 RMB (first 500g per parcel), 16 RMB (additional 500g)
USA
- Under 100 parcels: 34 RMB (first 500g per parcel), 18 RMB (additional 500g)
- Over 100 parcels: 29 RMB (first 500g per parcel), 18 RMB (additional 500g)
Europe
- Under 100 parcels: 28 RMB (first 500g per parcel), 12 RMB (additional 500g)
- Over 100 parcels: 26 RMB (first 500g per parcel), 12 RMB (additional 500g)
Australia/New Zealand & Singapore
- Under 100 parcels: 32 RMB (first 500g per parcel), 18 RMB (additional 500g)
- Over 100 parcels: 28 RMB (first 500g per parcel), 18 RMB (additional 500g)
‘Pro’ Accounts Fees
As we talked about XiaoHongShu Shop, a point worth highlighting is that only verified ‘pro’ accounts are eligible for selling on the platform. There are mainly two types of pro accounts offered by XiaoHongShu, which is a personal pro account（专业号） and a business pro account（企业号).
To upgrade your account to a pro account, you will need to submit an application along with a verification fee to XiaoHongShu. Personal Pro Accounts are free to verify, making them a great option for individuals and small businesses.
However, for brands, we strongly recommend going for the Business Pro Account to unlock the full suite of features and make the most out of XiaoHongShu Shop!
The verification fee charged for a business pro account is 600 RMB per application. Do take note that this fee is non-refundable even if the application is not approved.
Besides, once your account is verified, XiaoHongShu will collect an annual auditing fee of 600 RMB to review your account every year.
Tools
As an extra source of revenue, XiaoHongShu also offers its own official tools to assist users in improving the performance of their content on the platform.
For example, one of XiaoHongShu’s well-known tools is its official content promotion tool, ‘ShuTiao’. ShuTiao is a self-service tool where creators can pay to promote their content to a wider audience, such as by featuring their posts on more users’ feeds.
As for Shutiao’s fees, the pricing is flexible and depends on your desired audience size and the purpose of your promotion. For instance:
- If you want your post to reach 5,000 new users, it will cost you 75 RMB.
- For reaching larger audiences or specific goals—like gaining new followers—the cost for ShuTiao increases accordingly.
Another tool of XiaoHongShu worth mentioning is its official influencer management service, ‘Dandelion’. Dandelion connects brands with the most suitable influencers, including Key Opinion Leaders (KOLs) and Key Opinion Consumers (KOCs), to promote their products and services.
It’s a streamlined platform designed to ensure successful collaborations between brands and influencers on XiaoHongShu.
Besides, XiaoHongShu requires all influencer-brand collaborations to go through Dandelion. Skipping the platform to work directly is against the rules and could lead to account bans.
For every partnership facilitated through Dandelion, XiaoHongShu collects a 10% service fee from both the brand and the influencer.
For example, if a beauty blogger earns 1,000 RMB from a brand partnership, Dandelion deducts 100 RMB as a service fee, leaving the influencer with 900 RMB.
Similarly, the brand pays the influencer 1,000 RMB for the partnership, but XiaoHongShu adds a 100 RMB service fee, bringing the total payment to 1,100 RMB.
For eligibility to use these tools, ShuTiao is open to any type of account, and Dandelion’s services are only available for business pro accounts!
What is XiaoHongShu’s Business Model?
As a social commerce platform combining the best of both worlds of social media and e-commerce, XiaoHongShu’s business model is quite unique.
Firstly, the platform is well-known for its focus on user-generated content (UGC). Unlike other social media platforms where users are fed with polished ads from brands, XiaoHongShu users can enjoy authentic, trustworthy reviews on products and services from their peers.
XiaoHongShu users are also actively searching for product information and reviews with the platform’s ‘search’ function, meaning that they are genuinely interested, ready to spend, and become paying customers.
In fact, many Chinese consumers rely on others’ experiences and opinions when shopping, with over 60% of Chinese shoppers referring to online reviews before making their purchases!
XiaoHongShu also caters to every user in different phases of the user journey. For instance, there are users in the awareness phase who discover new products through XiaoHongShu notes, users in the consideration phase who are searching for product reviews, and users in the decision phase who are directly placing their orders on XiaoHongShu Shop.
Why is XiaoHongShu So Profitable?
Known as China’s own Instagram, XiaoHongShu welcomes an amount of 300 million active users every month, making it the 8th most used social media platform in China.
Although its ranking might not sound impressive compared to other giants like Weibo or WeChat, XiaoHongShu wins with its attractive user demographics, which are mainly white-collar female workers.
Besides, with its female-dominated and high-income user base, brands in various industries such as beauty, fashion, travel, and lifestyle are paying XiaoHongShu to reach this high-quality customer base.
Although XiaoHongShu’s commission rates are relatively higher compared to other e-commerce giants such as Taobao, XiaoHongShu’s irresistible user base still lets brands willing to pay higher rates to engage with these users.
In fact, some of the biggest names in luxury and fashion such as Louis Vuitton, Dior, and Gucci also jumped on board, showing XiaoHongShu’s power to help brands reach its high-quality user base!
Can Users on XiaoHongShu Make Money?
Absolutely! XiaoHongShu isn’t just a platform for brands to shine—it’s also a golden opportunity for everyday users to earn some extra cash. So, no need to feel left out!
If you’re already working for a brand, consider putting your deep product knowledge to good use by becoming a Key Opinion Sales (KOS) on XiaoHongShu to promote your company. If you’re just a normal product user, you can also become a Key Opinion Consumer (KOC) to share your favorite brands to other users! Both KOS and KOC roles let you turn your knowledge and personal experiences into profit, as brands pay you commissions and salaries for your content.
Although becoming a Key Opinion Leader (KOL) on XiaoHongShu can be highly lucrative, it’s a more challenging path. To succeed as a KOL, you need deep expertise in specific topics and strong content-creation skills to build and maintain a large follower base. So, we recommend users start with becoming KOSs or KOCs first.
Besides, if you’re a XiaoHongShu content creator, affiliate marketing is also a great income source apart from commissions from brands. You can work with vendors on the XiaoHongShu Shop to become an affiliate of the vendor.
For example, if you’re sharing a post about your favorite skincare product, you can include a link directing to the vendor’s XiaoHongShu Shop where that product is sold. When viewers click on your unique link and make a purchase, you earn a share of the profits.
Interested in running your own business instead of promoting others? You can do that on XiaoHongShu as well. For instance, you can promote your own services, like design or accounting, to your audience. Just remember to follow XiaoHongShu’s rules regarding traffic redirection and sharing personal information to avoid violations.
Additionally, if you’re interested in selling products, opening your own store on XiaoHongShu is a great option. Since individual stores don’t have to pay commissions, it’s a cost-effective way to start your business. Just make sure to review the platform’s requirements and regulations before you begin!
The key to earning on XiaoHongShu is creating high-quality, engaging content that resonates with your audience. If your content doesn’t meet the platform’s standards, you risk being shadowbanned, meaning your posts will be hidden from viewers and your potential profit will be cut off.
Looking to Start Your XiaoHongShu Business Journey?
XiaoHongShu’s success has proved that it’s packed with potential for brands or even individuals to turn it into a profit-making business. However, it can be confusing or overwhelming for beginners to take their first steps.
That’s where PRIZM comes in. Our expert team, based in Guangzhou, specializes in XiaoHongShu’s platform and has a proven track record of helping brands establish and grow their presence.
We’ll guide you through the process step-by-step, helping you avoid common pitfalls and reach your goals faster.
Ready to kickstart your XiaoHongShu business? Click the button below for a free consultation!
