What is Douyin E-Commerce?
Douyin (TikTok China) e-commerce is the use of a popular video app to buy or sell products or services. Millions of Douyin creators provide users with a more personalized, vivid and efficient consumer experience through rich content forms such as short videos and live streaming.
Douyin e-commerce has been growing extremely fast. According to the president of Douyin E-Commerce Wei Wenwen, Douyin's 2022 GMV (Gross merchandise value) nearly reached 1.5 trillion. In 2023, the platform's GMV increased by over 80% compared to last year. Among them, the mall function GMV grew 277% year-on-year, e-commerce search GMV grew 159% year-on-year, and shelf scene GMV accounted for over 30% of the platform GMV.
Moreover, there are over 3 million merchants on Douyin, and over 860 merchants exceeded 100 million cumulative GMV.
According to Kang Zeyu, manager of Douyin's e-commerce business, Douyin is not a "live streaming e-commerce" or a "content e-commerce", but an "interest-based e-commerce".
"Interest-based e-commerce" is a kind of e-commerce based on people's desire for a better life, satisfying users' potential shopping interests, and improving consumers' quality of life.
The core of “interest-based e-commerce” is to proactively help users discover their potential needs. In“interest-based e-commerce”, consumer needs are unclear, Tik Tok identifies these potential needs and stimulates consumers to buy products or services to satisfy these potential needs that didn’t exist before they open Douyin.
Unlike traditional e-commerce where the consumer's decision path is “need - active search - competitive price comparison - purchase”, the consumer decision path for Douyin is “content/host stimulation - interest - demand - purchase”. In other words, traditional e-commerce focuses on converting existing demand while Douyin emphasizes generating potential demand.
The “interest-based e-commerce” relied on Douyin’s mature interest recommendation technology. This personalized recommendation model helps merchants tap into more consumer potential, and it allows merchants to find their target audience more accurately.
“interest-based e-commerce” has great potential. According to third-party estimates, the GMV of “interest-based e-commerce” will probably exceed $9.5 trillion by 2023. The entire e-commerce industry will see more and more players turning to “interest-based e-commerce”.
In addition to huge GMV, Douyin attaches great importance to the platform's basic service capabilities for merchants, providing users with the ultimate purchase guarantee and perfect customer service experience. According to Kang Zeyu, Quality GMV is the core metric of Douyin e-commerce.
The conversion Path
Douyin has managed to gain over 150 million DAUs (daily active users) with short videos and live streaming. How did Douyin take this huge traffic and turn it into a realizable GMV (gross merchandise value)?
Different from traditional e-commerce platforms in China like Tmall and Pinduoduo,
where the intention to buy exists when users open the app, Douyin as a short video platform has a naturally lower conversion rate as users usually open the app for entertainment and relaxation.
To solve the problem and successfully turn “traffic” into “money”, Douyin has used several conversion paths to help merchants make money.
External links to recommended products
Before 2019, creators could put product information and purchase links in the videos, allowing users to click on the links directly to other e-commerce platforms to purchase products once they have been attracted. However, in 2020, Douyin announced the closure of the external link function to launch its own e-commerce business.
Live shopping is a marketing tool that has grown rapidly and become popular in China in recent years.
Live streaming is divided into influencer live shopping and brand live shopping. Influencer live shopping means influencers collaborate with merchants to recommend products to viewers and fans in their live shopping sessions, and viewers can directly click on the links attached in the live room to place orders directly. Usually, an influencer's live streaming could have several different brands and different products. The GMV of an influencer's live streaming is mainly related to the influencer's sales ability, traffic acquisition ability, content output ability, and merchandising power. Merchants can also increase brand awareness through influencer live streaming and drive traffic to their shops.
Shop live shopping is a direct live streaming hosted by merchants, usually with content recommending their products and answering consumers' questions. Consumers watching a live shopping session may receive some purchase discounts.
The Douyin Store segment was launched in 2020, meaning that Douyin allowed merchants to set up online shops on the Douyin app. By 2022, over 1.8 million merchants have registered shops in Douyin. Users can find the shops directly on Douyin in the “mall section”, browse all the products in the shop and then place orders directly.
Attracting customers offline
Users can also tag their address in the video to attract more customers to offline shops.
Traffic is at the heart of conversion
Compared to other e-commerce platforms, traffic is the advantage of Douyin e-commerce. Douyin has over 809 million users, the daily active users exceeded 150 million and monthly active users broke 300 million in January 2023. Moreover, the average daily usage time of Douyin reaches a staggering 140 minutes per capita.
The huge traffic pool is the base of Douyin's e-commerce. Traffic is directly related to purchases, all the above conversion paths rely on traffic. The reason is simple: more viewers, more purchases. Therefore, brands and merchants should not only improve the conversion rate, but also gain more traffic.
If you wish to know more about the live-streaming e-commerce analysis and tactics in China, please contact RougeLink for more information.
RougeLink offers e-commerce solutions, with integrated capabilities encompassing all aspects of the e-commerce value chain covering e-store operations, digital marketing, customer services, and logistics.