{"id":52217,"date":"2021-07-12T05:16:00","date_gmt":"2021-07-11T21:16:00","guid":{"rendered":"https:\/\/daxueconsulting.com\/?p=52217"},"modified":"2022-09-26T22:56:24","modified_gmt":"2022-09-26T14:56:24","slug":"douyin-e-commerce-functions","status":"publish","type":"post","link":"https:\/\/daxueconsulting.com\/douyin-e-commerce-functions\/","title":{"rendered":"Everything you didn\u2019t know Douyin could do"},"content":{"rendered":"\n

Douyin is one of the most popular social media platforms in China<\/a>. Owned by the Chinese tech company Bytedance, this APP allows users to upload and share videos under one minute long, but what makes it so special is its ability to tailor content recommendations on members\u2019 interests and tastes through its sophisticate algorithm. According to data<\/a>, young people between 19 and 40 years old, living in New-Tier-1, Tier-2, Tier-3 and Tier-4 cities account for about 80% of Douyin users. With this in mind, consumers belonging to such age range are those who made the largest amount of purchases online<\/a> during the pandemic and that last August the platform reached more than 600 million daily active users<\/a>, Douyin can be a great tool for brands eager to intercept potential customers and generate new leads.<\/p>\n\n\n\n

Moreover, the APP is currently building its own e-commerce ecosystem<\/a> and this year it joined 618, China\u2019s second most important shopping festival, officially entering into competition with big online retail giants, such as TMall<\/a>, Taobao<\/a> and JD. Douyin started its 618 strategy by launching a pre-sales campaign on May 25th, and then provided a wide range of discounts, vouchers and live streaming<\/a> promotional events for the entire festival period. The platform even created an interactive mini game to engage users and encourage them to don\u2019t miss the offers.<\/p>\n\n\n\n

Douyin is a golden goose for all kinds of brands<\/h2>\n\n\n\n

When talking about Bytedance\u2019s short-video platform, the word \u201clivestream\u201d immediately springs to mind. Last year live sessions on Douyin generated more than 500 billion RMB<\/a> in Gross Merchandise Volume (GMV), therefore it is not surprising that many brands actively recruit KOLs and KOCs<\/a> for their Douyin marketing strategy<\/a>. During their livestreams, KOLs usually introduce items that are likely to suit their audience\u2019s tastes, give their viewers the chance to see the products in action and immediately answer their fans\u2019 questions, thereby turning their videos into premium advertising tools.<\/p>\n\n\n\n

On the verge of creating its own e-commerce ecosystem<\/h3>\n\n\n\n

Nevertheless, all that glitters is not gold: about 60%<\/a> of the platform\u2019s GMV in 2020 came to third parties, while sales on Douyin stores just accounted for around 20% of the total. Indeed, until last year, sellers could add links redirecting to marketplaces, such as TMall and JD, to their videos and livestreams: when KOLs\u2019 fans wanted to buy a product, they actually went to visit another platform to purchase it. Thus, in August 2020<\/a>, Douyin banned embedding external links on livestreams, in an attempt to cut ties with third-party platforms and encourage both merchants and consumers to utilize its in-house stores. Similar to WeChat<\/a>, Douyin e-commerce relies on a constellation of mini-programs, which allow users to access several services without ever leaving the APP.<\/p>\n\n\n\n

\"GMV
Data source: Forward \u2013 The Economist, designed by Daxue Consulting, GMV of China’s main live streaming platforms in 2020 (in billion RMB)<\/em><\/figcaption><\/figure>\n\n\n\n

Moreover, aiming to expand its e-commerce capabilities, in March<\/a> 2021, the short-video platform launched official flagship stores for brand accounts. The new feature provides brands with a large set of powerful tools, including a campaign banner, brand recommendations, vouchers, product recommendations and offline store information. Unlike standard ones, this new category of stores on Douyin is specifically designed for brands selling their own items and requires presenting trademark documents. Compared to the previous framework, flagship stores are expected to increase the ratio of product views from 17% to 80% and improve brands\u2019 click-through rate performance<\/a>. Big names, such as Huawei<\/a>, Perfect Diary<\/a> and L\u2019Or\u00e9al<\/a> are already using this new feature.<\/p>\n\n\n\n

\"L'Or\u00e9al
Source: Douyin, L’Or\u00e9al official flagship store<\/em><\/figcaption><\/figure>\n\n\n\n

Douyin Pay grants independence from other large tech companies<\/h3>\n\n\n\n

Another significant challenge for Bytedance\u2019s subsidiary consists in cutting expenses resulting from processing fees to other payment service providers. Indeed, WeChat Pay and Alipay currently manage about 90%<\/a> of all mobile payments in China<\/a>.<\/p>\n\n\n\n

Thus, in an attempt to break the duopoly, in the middle of January 2021 Douyin launched its own payment tool: Douyin. Although during the first two months of 2021 the platform\u2019s in-app payment was listed in the \u201cOther payment methods\u201d submenu, starting from March it moved among recommended payment methods, below Alipay but above WeChat Payment. In addition, Douyin is granting a 2 RMB deduction to all shoppers using its brand new payment solution to make their purchases. Considering that during April 2021 users spent on average 27 RMB<\/a> on the short-video platform, this is therefore a considerable discount. However, competing with major payment service providers that enjoy a pervasive presence on Chinese consumers<\/a>\u2019 lives is going to be a very difficult task to achieve.<\/p>\n\n\n\n

Defying the titan of China\u2019s gaming industry: Bytedance vs Tencent<\/h3>\n\n\n\n

In 2020, China\u2019s mobile gaming<\/a> vaunted a market value<\/a> of around 210 billion RMB: compared to 2016, the industry turnover experienced an incredible 45% rise in just four years. As the number of gamers keeps growing<\/a>, more and more tech companies find such thriving market tempting and Bytedance is one of them.<\/p>\n\n\n\n

In line with its desire to expand in the videogames business, in 2019 Douyin\u2019s parent company founded Nuverse<\/a>, a fully controlled game development and publishing subsidiary. Then, in order to further enhance Bytedance growth in such profitable industry, Nuverse agreed to acquire Shanghai-based gaming studio Moonton Technology on March<\/a> and the one-man game creator C4games on April<\/a>. These moves put the Bytedance in direct competition with Tencent, which currently holds the lion share of the market (51.53% in 2019 Q1<\/a>).<\/p>\n\n\n\n

\"Number
Data source: GPC and China Game Industry Development Research Institute, designed by Daxue Consulting, Number of gamers in China and related growth rate (2014-2020)<\/em><\/figcaption><\/figure>\n\n\n\n

Bytedance\u2019s aspirations in the videogames business couldn\u2019t but involve Douyin as well. After all, gaming-related advertising generate about 50%<\/a> of the platform\u2019s revenues. Thus, in February 2019 Chinese TikTok<\/a> launched its first mini game. The game was called Music Jumping Ball<\/em> and consisted of a ball wearing headphones that had to jump from one building to another to the rhythm of music. When WeChat launched its own mini game Jump Jump<\/em>, it hit 200 million daily active users<\/a>, persuading leading international brands to advertise on the game<\/a>. Probably Douyin hopes for a similar outcome. However, the bid for a piece of the tempting gaming industry has just started, a lot more can still happen.<\/p>\n\n\n\n

Douyin\u2019s functionalities beyond short-videos<\/h2>\n\n\n\n