It’s nothing new that TikTok’s parent company ByteDance eyes the success of Xiaohongshu, a mobile app featuring community social and lifestyle recommendations, as something to be desires. At home, Douyin, TikTok’s sister app for mainland China, has spared no effort to develop its business to compete with Xiaohongshu, going so far as to set up a special “L” team. Overseas, it mainly focuses on Lemon8, extending from Japan to Southeast Asian markets.
At the beginning of 2020 in Japan, ByteDance took the lead in launching Sharee, a product similar to Xiaohongshu. It focused on sharing and recommendation notes before changing its name to Lemon8 in September 2021. The inspiration of the new name is derived from “Lemonade”, that is, the idea of when life gives you lemons, make lemonade, while the “8” refers to “∞” (infinity).
By March 2022, after the cumulative download volume in Japan exceeded one million, the app began to expand into other Southeast Asian markets. According to Guangdada App Intelligence, Lemon8 ranked tenth in the download list of Chinese overseas mobile applications in July 2022. It can be seen that the app is accelerating its advertising promotions.
According to Chinese media outlet Zhixiang Chuhai, Lemon8 is contacting many overseas MCN (Multi-Channel Network) agencies. Many of them joined TikTok’s livestreaming e-commerce business in overseas markets and are now providing content for Lemon8 at the same time.
The founder of a Southeast Asian MCN agency said that Lemon8 buys content from it and then requires its online celebrities to upload content with pictures and texts on the platform, with an average of 20 posts per month.
One investor in the content creation industry suggested that the user scale can be made by burning money, and Lemon8 is at this stage. However, it is seemingly impossible to achieve a high penetration rate like Xiaohongshu in Chinese market since the likes of Instagram already exists overseas.
Talking about the company’s profit model, the above-mentioned investor pointed out that “e-commerce will not be a way out. In China, Xiaohongshu and Instagram have not realized profitability via their e-commerce businesses. Only advertisements can be profitable.” If Lemon8 wants higher traffic numbers, then the business mode will depend on the local online ad market. Developed countries such as Japan and Singapore have more opportunities than Indonesia. In Indonesia, companies can achieve a high DAU (daily active users) by pouring money into their products or services, but they can’t monetize with ads.
Previously, an Indonesian-Chinese Xiaohongshu-like model made a product called Storie. The number of monthly active users reached as high as 8 million, but it didn’t monetize and was then shut down. A company representative explained the numbers: “The root cause was monetization. Two years ago, it was too early to realize profitability through traffic and posts in Indonesia. No one bought ads, so it was not so meaningful to have many users. It would be much better in developed countries.”
The investor also speculated that if there is synergy between Lemon8 and TikTok’s e-commerce business, it is possible to achieve a closed monetization loop.
In addition, some commentators claimed that Instagram, the world’s largest online celebrity platform, is also the product that ByteDance’s Lemon8 wants to compete with. If ByteDance really has such ambition, it is not surprising from its current development plan. Threfore, the ultimate form of Lemon8 is likely to be an Instagram-sized lifestyle recommendations platform. However, Lemon8 is still at an early stage of development and it may be too early to be defined.