Sou Hu Cai Jing·2025-12-29 06:11Core Viewpoint - Xiaohongshu has quietly suspended its local life membership product "Xiaohong Card" after only a few months of trial operation, highlighting the intense competition in the local life service market, which is projected to reach a scale of 35 trillion yuan by 2025 [1][3]. Market Size and Potential - The local life service market is expected to reach 35.3 trillion yuan by 2025, with an increasing proportion of online transactions, making it an attractive opportunity for internet platforms [3]. - The profitability of this sector is significant, as evidenced by Meituan, which has seen over 40% net profit margin from its local services [3]. Competitive Landscape - Major players like Douyin and Meituan are heavily invested in this market, with Douyin achieving nearly a trillion yuan in annual transaction volume in a short time [5]. - Xiaohongshu's daily search request volume is substantial, indicating a strong user base that seeks local recommendations [5]. Challenges in Execution - The primary motivation for users on group buying platforms is cost savings, which Douyin capitalized on by offering significant discounts [7]. - Successfully transitioning offline merchants to online platforms requires a robust ground promotion team, a challenge that Xiaohongshu may struggle with due to its content platform background [10][12]. Xiaohongshu's Strategy and Issues - Xiaohongshu introduced "Xiaohong Card" as a membership model to differentiate itself and avoid direct price competition, but faced challenges in supply and user experience [14][16]. - The platform has not yet established a comprehensive operational and service system necessary for complex transaction closures, limiting its ability to compete effectively in high-frequency consumer needs [16]. Future Outlook - The temporary setback for Xiaohongshu does not signify a loss of opportunity but serves as a pressure test, emphasizing the need for all participants to respect fundamental business principles and prepare for tough competition in the local life market [17].