Produced by Tiger Sniff Commercial Consumer Group
Author|Huang Qingchun
Visual China
Sinking market, bytes also want a piece of the pie.
Recently, Douyin quietly launched an App called "Douyin Mall Edition" (Android channel only), directly competing with traditional e-commerce (Taojing Spelling Home) for transaction increments, which shows its determination to increase the shelf model.
A person familiar with the matter told Tiger Sniff that this move cannot be ruled out as a potential energy to continue to rise in the GMV of Douyin e-commerce. The person cited a tripartite survey data showing that the market estimates that the scale of Douyin e-commerce in 2023 will be 2.2 trillion, and the actual estimated scale may reach 2.56 trillion, which will push Douyin to set the GMV target at 3.5 trillion in 2024.
Douyin is so "aggressive", mainly considering that the shelf scene (Douyin mall, store window, etc.) is continuing to release its potential - Wei Wenwen, president of Douyin e-commerce, disclosed in May last year that the GMV of the platform has increased by more than 80% in the past year (May 2022-May 2023), of which the GMV of the mall has increased by 277% year-on-year, the GMV of e-commerce search has increased by 159% year-on-year, the overall GMV of the shelf scene has increased to more than 30%, and the platform has sold more than 30 billion items throughout the year.
There are even voices that since the first independent app of Douyin e-commerce, Douyin Box, is "dumb fire" (note: Douyin Box was officially launched on major application markets on December 16, 2021, and is a trendy e-commerce platform that benchmarks against the "Dewu App", taking the fashion shopping route, covering street culture, high-end fashion, makeup and skin care, etc.), "Douyin Mall Edition" may become another test for e-commerce to independently of the Douyin ecosystem.
According to Qimai data, the last update of the "Douyin Mall Edition" App stayed on April 3, and its cumulative total downloads on the Android channel have exceeded 418.8 million times, and the number of downloads in the past 30 days has been 3.36 million times (Tiger Sniff Note: According to the launch cycle of a new App, it is difficult to precipitate such a large download base in a short period of time, which is more like an online App upgraded and iterated into the "Douyin Mall Edition", which is essentially inherited the download data of the previous product).
As there are more and more reports on the "Douyin Mall Edition" and the spotlight is getting denser and denser, the relevant person in charge of Douyin e-commerce responded, "We have observed that some users have a strong demand for active shopping, and the launch of the Douyin Mall Edition is to better serve these users, help users find good prices and products, and conveniently manage orders." ”
Although there is no mention of the adjustment of Douyin's e-commerce strategy, anyone with a discerning eye can see that the "Douyin Mall Edition" is more like a product of the "low-price strategy" to test the waters.
People close to Douyin said that Douyin e-commerce has set "price power" as the highest priority task in 2024 after the year, becoming the fourth e-commerce platform after Pinduoduo, Alibaba, and JD.com to clearly promote "low price" as its core strategy - at least on the dark line, Douyin e-commerce is changing its strategy, and low price has become a key part of the business.
In this regard, an Internet celebrity brand executive bluntly told Tiger Sniff, "The general environment is like this, reducing the high price rate and increasing the supply of cheap products are becoming the competitive consensus of various e-commerce platforms in 2024, and Tmall and Douyin have made efforts to be backward compatible last year." ”
When Tik Tok is in a hurry to sink
There is no doubt that ByteDance is still full of Attacker optimism in 2023 - on December 20, 2023, foreign media reported that ByteDance's revenue in 2023 is expected to increase by 30% to US$110 billion (about 785 billion yuan), surpassing Tencent to become the most profitable Internet company in one fell swoop.
Among them, the rapidly expanding e-commerce business in the past two years is becoming a "new engine" for ByteDance to boost revenue - on November 14, 2023, foreign media quoted people familiar with the matter as reporting: ByteDance benefited from the strong growth of advertising and e-commerce business, and its revenue in 2023Q2 increased by about 40% year-on-year to $29 billion, far exceeding Meta (FaceBook's parent company) - this is exactly what ByteDance CEO Liang Rubo said at the company's 11th anniversary annual meeting (March 16, 2023): " In the coming year, the company will focus on investing in the two main businesses of 'information platform' and 'e-commerce'."
Looking back, Douyin live e-commerce has passed the climbing period - initially it mainly attracted high-quality merchants on Tmall, and aligned the delivery of the content field through high-ROI live broadcast rooms to improve the delivery effect of the entire Douyin platform;
It is worth mentioning that the ferocious offensive of Douyin e-commerce in 2023 is largely due to the growth of various sub-categories driven by traffic recommendations and industrial belt layout, which in turn holds the budget of a considerable number of white-label merchants and small and medium-sized brand merchants.
"Douyin will continue to support white-label products this year, but the support strategy may be different - in addition to advertising fees, it will also charge technical commissions, software service fees, annual fees and basic service fees to merchants, and this year there will be more reductions or preferential policies for this part of the fee. A Douyin service provider said to Tiger Sniff.
Tiger Sniff learned that Douyin e-commerce will be divided into brands according to the P sequence for a long time in the past, that is, the brand is divided into different levels of P1-P6, and the products below P4 are classified as white labels by Douyin e-commerce, even if they may be domestic second-tier brands or some core brands, but the brand influence and tonality are limited, and in the peak season of brands such as November, December and January, the proportion of white label sales may be relatively low (brand sales are higher), but if the time is extended to the whole year, the proportion of white label sales is relatively stable.
In terms of operation strategy, brands will also be divided into two groups: A and B, Group A is the brand, including P5 and P6 brand stores and official flagship stores, and Group B covers all dealers and specialty stores - in 2023, Douyin e-commerce will hand over the distributors of P5 and P6 to Group A to operate to provide more low-price supply, and Group A will still cover dealers in 2024.
Moreover, in order to achieve the goal of reducing the high price rate and increasing the supply of low-priced products, Douyin has taken a variety of measures: on the one hand, Douyin has introduced a large number of white labels by introducing new merchants and cultivating industrial belts, and on the other hand, Douyin has increased the popularity of white labels through influencers and industry traceability activities.
Specifically, Douyin divides products into non-standard products, FMCG products, and consumer durable products, and formulates corresponding growth strategies for each category: non-standard categories (such as clothing and jewelry), Douyin focuses on supporting superior brands and enriching SKUs, FMCG categories (such as beauty and food), Douyin vigorously develops dealer channels to enhance price competitiveness, and consumer goods (such as home furnishings and major appliances), Douyin focuses on the promotion of new products and the introduction of low-price products.
This seems to be a deviation from the outside world's perception of Douyin - most people's perception of Douyin e-commerce is still in the control of big names, but Douyin has been building a sinking market two years ago - first in the second half of 2022 to focus on small and medium-sized merchants and white labels, and then in 2023 through customized cooperation to further lower the threshold for opening stores, and during the change of Douyin's e-commerce strategy, clothing has become one of the categories with a large increase in 2022-2023, especially women's clothing.
The reason why Douyin chose to focus on clothing stems from two points:
- First, the market scale is large, the number of businesses is large, and the industrial belt is rich. As early as 2021, when Douyin established the first-level e-commerce department, it chose clothing as a key business category, and in the past two years, it has invested a lot of resources to build supply chains and special activities, such as Guochaofeng, Ace Factory, etc.;
- Second, the monetization rate of clothing and beauty on the live broadcast platform is generally high, clothing is Taobao's advantageous category, and it is also a category that Kuaishou has focused on building in recent years, and Douyin e-commerce needs to further seize the share.
Taking 2023 as an example, Douyin e-commerce will compete for Taobao users by introducing Taobao TOP merchants and docking with high-quality service providers, especially in the clothing vertical category - Tiger Sniff got a tripartite data showing that as of 2023, Douyin e-commerce will have more than 350 million monthly purchasing users and more than 3.7 million merchants, of which clothing merchants account for about 30%.
The growth rate of Douyin e-commerce in service categories exceeds that of Taobao, which can be simply attributed from two aspects: first, there is no shortage of Taobao stock merchants to move towards a multi-platform layout due to testing the waters of live broadcast e-commerce;
In fact, the unit price of Douyin e-commerce and Taobao overlap a large range, but there is still a big gap between the number of SKUs, the number of monthly dynamic sales products, and the repurchase rate with Taobao - for this reason, Douyin tries to make up for the shortcomings from two aspects: on the one hand, it is through the introduction of industrial belts, cooperation with associations \ local governments, and investment promotion in industrial belts;
Not only is Taobao's advantageous clothing category, but Douyin can be described as an all-out attack in 2023 - Pinduoduo's advantageous food and fresh food and agricultural products, and the sales of casual snacks and drinks on Douyin will rise strongly in 2023, and the sales scale of mobile phones, major appliances and 3C digital on Douyin in 2023 will also reach tens of billions, head-on to grab JD's advantageous business (3C digital, major appliances in the field).
However, a home appliance brand market believes that Douyin's special live broadcast and official live broadcast for home appliance brands have driven the home appliance industry to a certain extent, and it is by activating the stock to increase the increment. "Douyin Live has accelerated the cycle of consumer replacement, especially young people."
Make an e-commerce festival every month?
Even Douyin is difficult to make great strides to quickly complete the compatibility of the brand's sinking, and the first thorny problem that comes out of the way is: the Douyin shelf promotion has a low volume of goods, and merchants are more inclined to participate in big promotion activities on Taobao and other platforms - it is worth mentioning that Douyin Mall is not zero commission, but through mall activities to release part of the commission-free opportunity, this way of collecting commissions can ensure the sustainable development of the Douyin platform and provide stable sales channels for merchants.
Therefore, the solution to the problem of Douyin e-commerce is: focusing on the live broadcast room of talents, by greatly increasing the frequency of platform promotions and full reduction (low), improve the mentality of live broadcast users on Douyin shelves, and the specific indicators include: the number of new entrance payment users of the mall, the number of search payment users, the negative feedback rate of users, and the high price rate.
A person close to Douyin e-commerce told Tiger Sniff that Douyin's business had proposed to hold a big promotion event every month to normalize promotion.
In order to implement this proposal, Douyin e-commerce has internally explored the use of hierarchical and differentiated resource investment to ensure the effectiveness of each promotion, and the logic is to increase exposure and reduce high price rates through increasing the frequency of promotions - on the one hand, increasing the frequency of promotions can increase user stickiness and attract new users, and on the other hand, it can also improve user retention and repurchase rates.
The premise of the above strategy is that Douyin e-commerce user portraits can be basically consistent in different fields, that is, whether it comes from search or live broadcast rooms, Douyin can draw user preferences through age, gender, region, user search history, and purchase history, and then accurately complete the matching of people and goods according to tags.
In addition, Douyin launched Xingtui Souzhi in September 2023, which aims to solve the problems and needs of purchasing Xingtu advertising inventory and conducting ad pushing, search, and live streaming — it is not a product, but a set of solutions based on the problems of historical co-creator projects — and compared to Xiaohongshu's KFS, "Xingtui Souzhi" is more powerful in terms of advertising.
A person familiar with the matter told Tiger Sniff that the "Star Push Search Direct" plan in 2023Q4 will consume more than 1 billion yuan of star map resources, and the beauty category will contribute the most.
Taking the 2024 March 8 Good Things Festival as an example (February 28 to March 8), Douyin's overall GMV exceeded 100 billion yuan, and the sales of beauty products at the Good Things Festival exceeded 20 billion yuan, nearly doubling compared with last year (about 11.37 billion yuan) - the above results can be attributed to the excellent performance of domestic brands in the 3.8 promotion on the one hand, and on the other hand, the recovery of market sentiment has also promoted the valuation of the beauty sector.
In view of this, a person close to Douyin told Tiger Sniff that Byte's GMV target for the beauty category in 2024 is set at 300 billion, while the GMV actually completed last year exceeded 200 billion.
A data that can be referred to is: the report "2023 China Cosmetics Market Industry Development and Consumption Insights" shows that the market size of China's cosmetics industry in 2023 will be about 516.9 billion yuan, and it is expected to climb to 579.1 billion yuan in 2025 - even considering that GMV includes transaction volume, unpaid order amount, return/rejected order amount, etc., especially the high return rate of live broadcast e-commerce will make GMV inflated, but Douyin has already become the main battlefield (one) of the fierce battle of the entire beauty category (brand).
Data source: "2023 China Cosmetics Market Industry Development and Consumption Insights" report
In fact, Tiger Sniff communicated with practitioners and found that more than 80% of the beauty industry's sales on e-commerce platforms come from live broadcasts, 10% are converted through search and grass planting, and only about 5% will be traded through short videos (the unit price of beauty customers is high, and the conversion of short video purchases is low), slices and other content.
Previously, there were three parties that showed that women accounted for 89% of beauty buyers, and the main group was between 25-30 years old, while in recent years, the proportion of male buyers has risen to 19%, and the age group of users is scattered, but the growth rate of users aged 30-35 is obvious.
Of course, there is also a common problem for e-commerce platforms, the return rate.
According to the data of the "2020 China Live E-commerce Industry Research Report", the average return rate of live broadcast e-commerce is 30%-50%, which is higher than the return rate of traditional e-commerce of 10%-15%, which is not much different from a three-party data obtained by Tiger Sniff - the overall return rate of Douyin products will remain at about 30% in 2023, of which the return rate of beauty products is about 20%, and the return rate of clothing products is the highest, approaching twice that of beauty.
A person close to Douyin told Tiger Sniff that since 2021, Douyin has vigorously promoted improvements to reduce the return rate. For example, through the rating system, the return rate and logistics service quality are used as factors that affect the total score of the store - if the store score is lower than 4.5 points, its live broadcast privilege will be restricted, in addition, Douyin has strict requirements for stores, if the customer complaint rate is too high, stores cannot participate in big promotion activities, and Douyin also requires that the return rate of stores in specific activities must be less than 20%-25%.
Even if the platform has a strong will to intervene, due to the characteristics of impulsive consumption and shopping in the live broadcast scene, the return rate is still high - because the live broadcast puts forward higher requirements for Douyin's logistics, supply chain, after-sales and other links, and it tests the platform's comprehensive operation and research capabilities, which is difficult to achieve overnight.
However, this is precisely the charm of entrepreneurship - in 2017, Tong Shihao, the managing partner of GGV, asked Zhang Yiming: "How did you turn to social networking when you used to make headlines", Zhang Yiming said frankly: "A lot of changes are for the business, and they are pushed to change by the business" - when the company is pushed by the business, Zhang Yiming's attitude is always "to keep thinking, keep trying, and find ways to break through." ”
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