Jacob Cooke
Nov 11, 2022

Single's Day 2022: Has Douyin become the next big thing in China retail?

Alibaba and JD.com aren’t the only ones competing for sales in China’s most exuberant consumer fiesta, rivalry from live streaming platforms like Douyin might be the highlight on this Double 11.

Single's Day 2022: Has Douyin become the next big thing in China retail?

One of the major storylines in this year’s Singles’ Day is the rapid ascendance of Douyin, the short video app owned by ByteDance, as an e-commerce player. Despite launching its commerce functionality only a few years ago, Douyin has already achieved more than US$150 billion in gross merchandise value (GMV) in 2021—and is set to eclipse that figure by a significant mark this year, in part due to its participation in a full range of Singles’ Day promotions.

For context, Alibaba moved just over US$1 trillion in goods last year—so Douyin has a big gap to cover. But Douyin is becoming a juggernaut in several key consumer sectors. According to a report from Chanmama that analysed sales on Douyin between January and June of 2022, GMV in the health and wellness sector was up at an astonishing 457% year-on-year. Athleisure, fashion, and beauty were up 191%, 160%, and 137%, respectively. On the entire platform, sales volume was up 150%, the number of livestreams were up 198%, and the number of stores were up 114%. That goes to show brands and consumers have been flocking to Douyin over the past 18 months. Importantly, that growth is not necessarily due to breaching Alibaba’s moat of loyal, high-spending customers.

E-commerce is growing overall. But, where Douyin is so revolutionary is that it is generating new demand from its social commerce model. In essence, it is ushering in a new era of digital commerce. Where traditional marketplaces like Tmall satisfy existing demand, Douyin generates new demand.

How?

Like TikTok (Douyin’s sister app for non-Chinese markets), Douyin is powered by cutting-edge algorithms, blasting users with viral content that matches their interests. Douyin has over 700 million daily active users, on average spending roughly two hours on the app per day. Douyin functions as a virtual shopping mall, offering users an experience that is fundamentally social and entertaining, but where users can also discover new brands and products-seamlessly. The strength of its interest-recognition algorithm has made Douyin a highly effective (and profitable) advertising platform.

In the past few years, Douyin has become even more important for brands by integrating commerce features directly into the app. This has allowed users to make instantaneous, friction-less purchases without changing apps. To lean into commerce, in March 2021 Douyin launched a feature to allow brands to set up flagship stores directly on the platform. This step was instrumental in Douyin becoming a powerful marketing platform for brands and advertisers where brands go beyond partnering with KOLs to build awareness, but they also get direct, attributable sales for their products. For instance, if someone is scrolling through their Douyin entertainment and then sees an appealing product being discussed or demonstrated, they can immediately and seamlessly purchase it and have it on its way for delivery (all within the app).

Traditional e-commerce platforms are transaction-based where brands are competing for consumers ‘existing attention and business. And the marketplaces recommend products they know you are likely to buy–because you’ve already bought them before. Douyin’s content creation model, on the other hand, gives every user (and brand) the opportunity to gain attention and exposure through engaging video creation. The core of Douyin’s commerce is to help users discover their potential needs, then accurately match those needs with relevant products. So, if a video goes viral and is promoting a particular product, that product can see sales growth inside of the platform, and that’s the beauty of the marriage between social and commerce -savvy brands.

A lot of the conversation around this year’s 11.11 Singles’ Day, the largest retail event in the world, has been focused on the effects of China’s zero-Covid policy on consumers. Media coverage has focused on the economic effects of persistent lockdowns and travel restrictions—so many casual observers might be surprised when this year’s Singles’ Day sets another sales record. Despite economic headwinds, there is still fast-growing demand for essential and discretionary goods in China. And the emergence of social commerce on Douyin is a major factor driving that demand.


Jacob Cooke is the CEO of WPIC Marketing+Technologies.

 

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