On March 30, Han Shangyou, president of TikTok’s parent Douyin, announced the launch of the “Douyin Safety and Trust Center” website. The site publicly disclosed the principles behind Douyin’s recommendation algorithm and explained how it predicts user behavior.

Why it matters: Since gaining attention in 2016, Douyin’s unique content recommendation algorithm has been seen as a key factor in its success. However, it has also raised concerns about creating filter bubbles and biases. Over the past nine years, China’s online environment has undergone significant changes, and as one of the country’s most popular social media platforms, Douyin has played a central role in shaping this digital landscape. With the public disclosure of its algorithm, Douyin aims to address the issues it has helped create.

Details: Douyin introduced two models: the Wide&Deep model and the Two-Tower Retrieval Model.

• The Wide&Deep model, as its name suggests, combines a single-layer Wide component with a multi-layer Deep component. The Wide component focuses on strengthening the model’s “memorization” ability, which refers to its capacity to learn directly from the co-occurrence frequencies of items or features in historical data. In contrast, the Deep component enhances the model’s “generalization” ability, allowing it to identify correlations between features and uncover links between rare or even unseen features and the final label.
• Two-Tower Retrieval Model is used to recommend content to users by converting both user and content features into numbers, like “0” for a cat video and “1” for a dog video. These numbers are fed into two separate deep learning models – one for users and one for content – creating unique “digital fingerprints” for both. The model then compares the user’s fingerprint with those of all available videos, measuring how close they are. The closer the fingerprints, the more likely the video is to be recommended. This approach helps the system match users with videos they might like without needing to understand the actual content, just the numbers.

The website also outlined the review process for governance on the Douyin platform, detailing how it handles challenges related to rumors, online harassment, and other violations.

Context: The actions follow a three-month government campaign, launched in late November, aimed at addressing common algorithmic issues on online platforms, such as filter bubbles, where users are exposed only to content that aligns with their views, and discriminatory pricing practices targeting different demographics. The campaign was led by the Communist Party’s cyberspace affairs commission, the Ministry of Industry and Information Technology, and other relevant government agencies.In January, Douyin Group announced plans to introduce ten measures aimed at increasing transparency on the platform, including efforts to make its algorithms and governance processes more open. On Jan. 8, Li Liang, vice president of Douyin, rejected the idea that the company’s content recommendation algorithms contribute to the creation of filter bubbles. He noted that ByteDance’s algorithms have come under global scrutiny, with specific concerns about filter bubbles and restricted content exposure.

The huge growth of Douyin (TikTok’s China sibling) has led to an increasing number of advertisers using the platform to launch their marketing campaigns.

However, although Douyin has more than 809 million users, advertisers have to take the profile of these users into account to successfully reach their target audience and launch effective campaigns.

Age distribution

According to official data released by Douyin, the age distribution of the ByteDance-developed app’s users is relatively wide, mainly focusing on the 18-35 age group. Within this group, the proportion of users aged 18-24 is the highest, accounting for 35%; the proportion of users aged 25-30 is 27%, and the proportion of users aged 31-35 is about 16%.

The data shows that TikTok’s China sibling is most popular among those born in the 1990s and the first decade of this century, often referred to in China as the ‘post-90s’ and ‘post-00s’ generations. The Post-00s and Post-90s have a longer average daily usage time and high user stickiness. Compared to the Post-90s, the Post-00s are more prominent as “digital natives”, with 173 hours of monthly per capita use of the internet, much more than the 159 hours of the overall population in China, and with a higher activity rate throughout the day than the overall user base, with 30.9% of the user base still active after midnight. Furthermore, some younger individuals only use Douyin when it comes to entertainment, rejecting rivals such as Xiaohongshu.

If your target audience is a young consumer group such as Generation Z or Millennials, Douyin could be a highly useful vehicle for your marketing.

Gender

The male-to-female ratio of Douyin users is about 4:6, which is a significant increase in the proportion of male users compared to the previous 3:7. But there are still more female active users. Beauty and other industries mainly targeting female users tend to put a lot of resources into marketing Douyin for this reason.

Geographical distribution

Douyin users are mainly concentrated in first and second-tier cities in China, such as Beijing, Shanghai, Guangzhou, and Shenzhen. Among them, Beijing, Shanghai, and Guangzhou have the highest proportion of users compared to other first and second-tier cities in China, with 7.9%, 6.7%, and 6.3% respectively.

Crowd classification

Douyin categorizes its users into eight strategic groups according to their city level, age, consumption power, life stage, and other indicators: Gen-Z, refined mothers, new white-collar workers, urban blue-collar workers, small-town youths, senior middle-class, urban silver-haired people, and middle-aged/old people in small towns.

Generation Z: Generation Z refers to the new generation of young people born into a world of online technology, mainly in third-tier cities and above. China’s Generation Z has been brought up in a world vastly different from that of their parents and grandparents and has a more confident culture, which allows them to pursue higher spiritual needs such as socialization, respect, and self fulfillment. China’s Gen-Z internet population is around 342 million.

Delicate Moms: Compared with the previous generation of mothers, new generations of mothers have unique values and self-consciousness. In addition to meeting their children’s developmental needs, they also pay attention to their children’s education at an early age. Living fast-paced urban lives, they are more enthusiastic about online shopping, attaching particular importance to the health and safety of products, and are also very inclined to buy high-quality milk powder and complementary food products originating from overseas. Their online consumption power is very strong, and in addition to buying just-demanding products on big FMCG platforms more frequently, they are also very concerned about new products with high value and convenience.

New white-collar: Mainly refers to the high-income group aged 25-35, living in first- and second-tier cities, with a young mindset, financial independence, and strong consumption ability. Different from the previous generation, new white collars are more willing to try new things, pay attention to product quality, have higher acceptance of new brands, and love to pay for self-improvement. They are the main force in the consumption of fitness and knowledge products.

Urban blue-collar: More than 50% of urban blue-collar workers are aged 31-40, and more than 70% of them have children. The consumption concept of this generation of blue-collar workers has changed drastically compared to their forebears. They pursue high-frequency and high-quality shopping experiences, pay attention to the quality of goods, and are willing to pay for a high-quality state of life, having a greater demand for non-rigid material goods such as sculpture ornaments, fine dining, and medical beauty and skincare.

Small-town youths: This group mainly resides in fourth-tier cities and is aged 24-40 years old. Small-town youths do not have a high consumption level, but are good at online shopping, keen on promotions, and focus on quality. Small-town youths prefer health care and pets, and they are incredibly fond of cost-effective goods.

Small-town middle-aged and elderly people: This mainly refers to middle-aged and elderly users living in fourth-tier cities; their consumption habits are more arbitrary, and often focus on cost-effectiveness. They attach importance to socializing with acquaintances and have high social needs.

Senior middle class: This group is focused on 35-50 year olds living in third-tier cities and above. The senior middle class has a high consumption level, focuses on quality experience, and pursues luxury.

Silver-haired people: The silver-haired people in urban areas have sufficient income such as a pension. They represent the “second spring of Internet consumption”. According to CNNIC data, those over 50 accounted for 26.3% of the total number of Internet users in Dec. 2020. These users are more inclined to new ways of spending their retirement, taking after the lifestyle of silver-haired influencers on China’s answer to TikTok, and are willing to boldly try new things. They are enthusiastic about novelty products and trying trendy tools, such as using live streaming to talk with young people.

Conclusion

The users of Douyin are mainly young women in first- and second-tier cities. The male user segment is growing fast, however, and the ratio of male and female users on the app is likely to become more balanced in the coming years. In addition, although the proportion of people under 35 years old accounts for nearly 75% of users, the middle-aged and older-aged group is still an indispensable part of the platform that can not be ignored. With a high consumption level, strong consumption ability, and increasing use of the Internet, these groups have great potential.

The wide array of categories and content found on China’s TikTok sibling means that it is important to have precise positioning and targeted content for any marketing strategy. But for those who get it right and who understand the platform’s vast user base, the pay-off could be enormous.

This article was provided to TechNode by Xiaoyan Chen, founder of RougeLink, an agency offering high-performance e-commerce tactics based on data-driven technologies and livestreaming.

Douyin, TikTok’s Chinese counterpart, has established a new department dedicated to entertainment ventures, according to a Monday report by 36Kr citing multiple sources. The move aims to centralize the management of activities ranging from live-streaming programs and variety shows to dramas and music.

Why it matters: Douyin’s emphasis on cultural and entertainment content not only enriches its product ecosystem but, more importantly, helps the platform to further diversify its revenue streams.

Details: Chen Duye, head of the recently established division and previously in charge of Ocean Engine, ByteDance’s marketing platform for business promotions across its various apps, will directly report to Han Shangyou, who now holds a prominent position within Douyin.

• Live broadcasts, particularly sports events and concerts, will take priority within the newly-established department, according to 36Kr, due to Douyin getting a taste for broadcasting major events over the past year.
• Official data reveals that 10.6 billion cumulative viewers tuned in to watch the 2022 Qatar World Cup on Douyin. The leading short video platform reportedly spent over RMB 1 billion to secure broadcasting rights.
• Amid COVID-19 restrictions impacting offline entertainment, Chinese-operated short video platforms recognized online events as a source of growth. Douyin, along with competitors Kuaishou and WeChat Channel, organized various concerts and live events featuring renowned musical artists, which has proven effective in drawing user engagement.
• Variety shows, traditionally confined to television or long-form video platforms, have often been constrained by funding limitations during their pre-project phases in China. Nonetheless, the report highlights Douyin’s current efforts to create more original reality TV and variety shows, subsequently monetizing on an uptick in popularity. This involves various approaches, including live commerce activities on the platform and the introduction of content-charging within the platform.
• Short-form dramas have also become a growing focal point for Douyin and its rival Kuaishou, as they strategically monetize their extensive user base. According to data revealed by Kuaishou, by the end of 2022, short dramas on the app attracted up to 260 million active viewers a day, with paid users for short dramas increasing by over 480% in the first quarter compared to a year earlier. While both companies did not provide specific figures, Douyin reported a 72% year-on-year revenue growth in the same sector in 2022.

Context: As of last December, the China Internet Network Information Center reported that over 70% of the Chinese population had accessed short videos, highlighting the significant reach of these platforms as mainstream entertainment channels across the country. The report also noted that individuals spent an average of 2.5 plus hours on the platforms every day.

China’s 618 shopping festival, the country’s mid-year online deals event, is coming to a close after a month-long campaign. This year’s 618 is the first major shopping event since China reopened in December, offering some insight into China’s current consumer sentiment. 

It’s also an interesting test for Chinese e-commerce giants Alibaba, JD, and Pinduoduo, all of whom have recently undergone management adjustments. Each company continues to face significant growth pressure in the face of fierce competition.

Alibaba, JD competing on lower prices with Pinduoduo

This year’s 618 festival encapsulates the escalating price war in China’s e-commerce industry. With the slowdown in economic growth, consumers are actively seeking cost-effective products. In response, multiple Chinese e-commerce platforms have followed Pinduoduo’s marketing strategy by offering higher discounts to attract buyers.

During the month-long mega promotion, Alibaba customers have received a discount of RMB 50 (about $7) for every RMB 300 spent across Tmall stores. In addition, Taobao has introduced an “RMB 10 billion subsidy” project, adopting a similar approach and bearing the same name as Pinduoduo’s signature campaign. Through this channel, products were directly sold at lower prices without the usually complicated coupon application.

JD, with former CFO Sandy Xu recently taking over as CEO, offered the most generous discounts compared to other platforms. Buyers have been able to get RMB 50 back for every RMB 299 spent. Prior to the festival, Trudy Dai, CEO of Alibaba’s newly independent Taobao Tmall Commerce Group, expressed the platforms’ commitment to making a “historical investment” in this year’s event, while JD announced its intention to undertake “industry-wide investment efforts” during the festival.

Pinduoduo, known for selling ultra-low prices goods, prominently displayed a slogan on its 618 promotion interface that roughly translates to “no need to compare with other platforms because we offer the lowest prices.” Pinduoduo has also been offering RMB 30 off for every RMB 200 spent.

“Encouraging consumption became the priority for the government, the market, and the e-commerce platforms in all aspects,” said Fabian Sinn, a managing partner at e-commerce marketing firm Genuine. “As a result, there were more subsidies and more affordable prices to attract consumers and stimulate the market’s economic recovery.”

Retail sales, as a key figure indicates consumer confidence, rose 12.7% in May, falling short of market expectations and down from 18.4% in April. The recovery in China’s consumption sector is not as strong as it appears.

The rise of Pinduoduo, which has steadily gained market share in an e-commerce industry once dominated by Taobao and JD, has combined with the emergence of live commerce platforms like Douyin and Kuaishou in recent years to have a significant impact on price-sensitive consumers. These consumers now consider the price differentials and after-sales services offered by various shopping outlets when making their purchasing decisions.

Copying from each other’s playbooks

In a heated competition, Chinese e-commerce platforms are copying strategies from each other. Rising content commerce platforms like Douyin and Kuaishou are copying from the majors, trying to offer more serious online shopping experiences like Taobao and JD on their apps, adding new dedicated shopping sections rather than directing people to shop while they are watching content like they used to. While majors like Alibaba and JD are trying to offer more video entertainment and content, making the shopping experience more casual in their apps. 

Douyin and Kuaishou, known for stimulating consumption via livestreaming and short videos, have focused on leveraging various promotional activities to drive sales through dedicated shopping channels called “marketplace,” where product listings can be displayed in columns. 

Wei Wenwen, president of Douyin’s e-commerce unit, recently highlighted at the TikTok sibling’s ecosystem conference that the GMV generated from the “marketplace” accounted for over 30% of its total sales in 2022.

Douyin and Kuaishou “have been steadily capturing more market share, despite offering similar products to other major platforms,” Jacob Cooke, CEO of WPIC, an e-commerce tech and marketing firm that helps foreign brands sell in China, told TechNode.

“People use these short-video apps for entertainment and knowledge acquisition,” added Cooke, “and the platforms have cleverly integrated e-commerce so that users are exposed to brands and products that relate to their interests, which has been a catalyst for impulse buying and consumer engagement.”

Mainstream shopping sites are adopting a content-driven approach as a defensive strategy to promote sales. The content-based browsing was repeatedly emphasized by Trudy Dai at the 618 Merchant Conference held on May 10. Dai promised that Taobao would provide a wide range of products, short videos, and livestreaming services to enhance user engagement.

Alibaba is investing heavily in its content ecosystem. The e-commerce giant announced at the Merchant Conference that over 50,000 new livestreaming hosts would make their debut during the annual mid-year discounts on Taobao and Tmall. 

Notably, on May 31, US tech giant Apple made its first foray into livestreaming on Tmall, an event that drew 1.28 million viewers. Football celebrity Messi also joined Taobao Live for nearly 20 minutes on June 14, as part of his Chinese trip schedule, which drew over 2.5 million viewers and even caused the stuttering of the livestream event when Messi came onto the scene.

JD Live is also leveraging top influencers to attract user transactions. Smartisan Technology founder Luo Yonghao, who previously had an exclusive partnership with Douyin, joined JD’s livestream on May 31 and helped sell goods for more than RMB 150 million.

Douyin is reportedly abandoning its goal of achieving RMB 100 billion ($14 billion) in total sales this year, as the business’ progress in the first half of 2023 has only reached one-tenth of the yearly target, falling extremely short of internal expectations.

Local media outlet LatePost first reported the news on June 10, citing a source close to the matter. While GMV is no longer the most important metric for the unit, the report said that exploring various ways to successfully run the food delivery business is now a more urgent priority for TikTok’s Chinese sibling.

Why it matters: Due to a lack of its own delivery logistic team, Douyin has relied on selling higher-priced set meal kits (which cut down the frequency of deliveries) and third-party delivery companies to offer its food delivery service. The approach is currently presenting challenges in scaling up the business.

Details: Starting in mid-2022, the short video platform has been testing food deliveries in Beijing, Shanghai, and Chengdu. Users in these three cities are able to order food for delivery within Douyin. But unlike market leaders Meituan and Alibaba’s Ele.me, restaurants selling goods on the Douyin platform need to use delivery riders from another service or deliver the food themselves, making the delivery cost run higher.

• Typically priced over RMB 100, meal kit takeaways are designed for several people to share and have longer delivery times compared to other platforms that prioritize individual sales and more timely delivery.
• In contrast to Meituan, which recorded a peak of 60 million in daily order volume for food deliveries last August, Douyin’s takeaway orders have experienced limited growth, with its average daily order volume from January to March reportedly remaining at around 10,000 to 20,000 units.

Context: Meituan and Ele.me now dominate the food delivery market in China, holding a more than 90% share of the market between them, highlighting the challenge for Douyin. Meituan has already begun a counteroffensive to maintain its leading position in the face of this new challenger.

• In March, Meituan introduced a marketing event called Shen Qiang Shou for merchants, which is currently being trialed in Shenzhen and Beijing. The promotional event allows users to purchase discounted coupons through Meituan’s own livestreaming or short-form videos, which can be redeemed for real goods within a specified timeframe.
• For consumers, Meituan conducts regular live commerce promotional events on the 18th of every month, with influential merchants selling discounted goods with the aim of stimulating demand. According to a Meituan statement, takeout vouchers worth RMB 86 million were sold on its first livestream shopping event, which lasted 11 hours on April 18.

In 2022, the marketing goals of many brands focused on ensuring a more predictable growth. But to succeed in China’s changing digital landscape in 2023, investing in an overarching marketing strategy across all digital media and e-commerce platforms will not work. Instead, brands should focus on a few essential platforms and utilize new features on Chinese social media platforms. Marketers should “invest small and win big” for potential growth in uncertain times. 

Here are some highlights from the top social media platforms in China that may lead brands to the next stage this year from a recently released 650-page long 2023 China Mega Report by ChoZan.

Top 3 social media platforms with exciting new features to utilize in 2023

1. WeChat

WeChat’s ecosystem offers common functions like chat and payments, but its video section Channels and search engines can provide new ways for brands to enhance their digital journey. WeChat Channels usage surpassed Moments in 2022, while monthly active users of WeChat search reached 800 million with a 54% yearly increase in search volume. Brands can connect with consumers across digital touchpoints using WeChat’s function, building branding assets. A search for “red packets for CNY” can lead to various advertising and brand-owned channel sections. Jewelry brand CHOW TAI SENG has secured a single sales campaign hitting 5 million yuan revenue leveraging search function and live streaming. Brands must target secure events (like the Chinese New Year, Spring Festival, etc.) with large followings and utilize exciting WeChat tactics to form smoother digital journeys.

2. RED (Xiaohongshu)

RED (Xiaohongshu) is known for its authentic user-generated content, making it a great platform for word-of-mouth marketing. In 2023, RED updated its platform with a “video” section to create a more diverse community with more video content. The platform downplays sales and instead prioritizes creating a comfortable social atmosphere, making it unique compared to other sales-focused platforms.

Recently, Chinese actress Dong Jie’s livestream on RED delivered a sense of peaceful and soft-selling approach that differs from livestreams on other platforms. She has inspired many audiences to step back from the hustle and bustle of their life and slow down. According to RED official data, the viewers of her live streaming on Feb 24 exceeded 2.2 million and the cumulative GMV exceeded 30 million. 

By partnering with quality livestreamers and continuously delivering a unique brand vibe through stylish images and text, brands can further accumulate their digital assets and achieve long-tail effects. This kind of more immersive product seeding may turn more random customers into the brand’s loyal fans. 

Douyin

Douyin upgraded its “interest e-commerce” to “full-field interest e-commerce” in 2022, making refined management, creative livestream content, and beneficial partnerships with Douyin Shop vital in 2023. The platform’s traffic dividends are diminishing, with fewer users paying attention to random content. Consumers want unique, exciting, and convenient shopping experiences across various categories, taking the initiative to locate goods. In a fiercely competitive environment, brands must deliver high-quality livestream experiences to stand out.

A good example would be East Buy’s recent live streaming in the Greater Bay Area, which generated total sales of over 100 million yuan and more than 1.5 million overall transaction order volume. The brand was created by China’s education giant New Oriental and its success was due to its unique understanding of Chinese cultural experiences and audience’s emotional connections, offering a wide range of products including agricultural, food, and personal care.

Brands should continually explore creative ways to livestream on Douyin to impress customers. Leveraging Chinese cultural assets and aligning them with the brand can increase user stickiness and loyalty. Brands should also consider forming a closed loop by partnering with Douyin Shop.

Two niche Chinese social media platforms

Aside from the top three Chinese social media platforms, there are also a few niche platforms that brands can use in 2023.

Zhihu

For Zhihu, its approach prioritizes quality over quantity of content and is suitable for promoting high-cost goods like real estate, cars, education, and medical beauty that require informative and more in-depth content to guide consumers’ decision-making. Also, establishing a good content IP can help reach the target audience more precisely.  

Dewu

Dewu, a popular social media and e-commerce platform, began as a sneaker platform and evolved into an extensive marketplace. It attracted 7,000 brands, including major names like Michael Kors, Coach, and Adidas, who opened their stores on the app. Brands can utilize its various promotional tools like flash sales, group buying and coupons to attract consumer attention. 

Best Practices for Brands to Win in 2023 on Chinese Social Media Platforms

1. The emergence of WeChat Channels and search engine capabilities presents an unprecedented opportunity for brands to craft a more comprehensive and immersive digital journey for their customers. Brands should use these features for a more integrated customer experience, creating deeper connections with their audience.

2. The updated “video” section on RED offers brands a chance to create content that fosters community and emotional connection with customers, resulting in stronger brand loyalty and advocacy. Partnering with quality livestreamers and delivering unique brand vibes can create an immersive customer experience, turning customers into loyal fans.

3. Douyin’s upgrade to “full-field interest e-commerce” in 2022 highlights the importance of creative live-streaming content and beneficial partnerships. To stand out, brands must deliver high-quality live-streaming experiences that foster emotional connections with customers.

4. Craft compelling content that delivers consumer-centric information to drive engagement instead of being brand-centric. Collecting market data and analyzing consumer trends can aid in creating relevant content. Collaborating with KOLs/KOCs on platforms like RED and Douyin adds credibility via word of mouth and expands reach.

Any company looking to up its e-commerce game in China this year needs to adapt to the changing landscape. The industry structure has transformed, with new players like Douyin and Pinduoduo shifting towards mature e-commerce models and WeChat Mini Programs breaking e-commerce transaction volume records. COVID-19 and shifting consumer behavior caused online retail consumption to surge to 27% of total retail consumption in 2022, up 2.5% from the previous year.

The new “Big Five” (Alibaba, JD, Pinduoduo, Douyin, WeChat) competitive landscape emerged rapidly. Below are some insights from a 650-page 2023 China Mega Report by ChoZan about the changing e-commerce landscape in the country.

The new e-commerce landscape in China

China’s e-commerce landscape is rapidly evolving with the emergence of the new “Big Five” players – Taobao, JD.com, Douyin/Kuaishou, Pinduoduo, and WeChat. Each platform has its own unique characteristics and strategies to attract and retain customers.

1. Taobao, owned by Alibaba, has achieved full coverage of product categories, with a focus on clothing and beauty products. It has been introducing external anchors, including popular Douyin influencers, to boost live-streaming e-commerce sales. Taobao has also been expanding into industries with low penetration rates such as fresh products and automobiles while accelerating new product innovation.
2. JD.com, on the other hand, has returned to its low-price strategy, rushing into the “100 billion yuan subsidy” war, targeting Pinduoduo, with the aim of winning users with low prices. JD.com’s core categories remain home appliances and 3C products, but it has been increasing its investment in fashion and beauty categories.
3. Douyin/Kuaishou, both originally focused on live-streaming e-commerce, has now transformed into a comprehensive interest-based e-commerce platform with the addition of digital shelf e-commerce. Digital shelf e-commerce refers to the online merchandising and retailing of products in a way that replicates the experience of browsing physical store shelves. Douyin is more suitable for selling new and unique products such as clothing, underwear, and smart home appliances and is the main platform for brand promotion and new product launches.
4. Pinduoduo’s long-term strategy is focused on the agricultural sector, and the brand strategy is divided into two directions – attracting mature brands through investment and upgrading factories, and establishing their own brands through white-label or farm brands. The platform has achieved rapid growth through digital electronics and will focus on clothing and agricultural product categories in the future.
5. WeChat, owned by Tencent, has entered the high-quality content ecosystem competition in short video through Video Accounts, utilising social/private traffic to boost e-commerce. WeChat encourages high-quality, interesting, and useful video content, and connects advertising promotions with creator monetization needs. Its ecosystem of official accounts, mini programs, and enterprise WeChat can be integrated with video accounts, promoting repeat purchases. WeChat’s video live-streaming e-commerce primarily focuses on consumer goods such as clothing, food, and cosmetics, with an average order value exceeding 200 yuan.

Consumers plan to continue to spend more on the top five e-commerce platforms

KPMG’s 2022 year-end survey revealed that consumers intend to increase their spending on the Big Five platforms due to their expanded product options and enhanced shopping experiences. About 60% of consumers plan to boost their consumption on Douyin, while Pinduoduo ranks as the top choice for low-income groups.

Consumers’ willingness to spend is based on several sources. They are more rational spenders today, but purpose-driven marketing is indeed effective for them since consumers’ concern for their health and the environment is high. Additionally, convenience is another factor crucial for brands to connect with their target audience. On top of that, the changing social habits and increasingly in-depth services mean brands need to be flexible in social platforms and offerings to attract more consumers.

Top 5 ways brands can respond to the changing e-commerce landscape in China in 2023

1. Adopting an overall e-commerce strategy and repositioning flagship stores on Douyin and Pinduoduo

E-commerce platforms need to adopt a comprehensive layout and reposition their flagship stores on Douyin and Pinduoduo. Douyin is focusing on developing its digital shelf e-commerce, while Pinduoduo is leveraging its advantage in high-frequency consumer goods categories to become a comprehensive platform that meets diverse needs. For brands, as the digital shelf e-commerce landscape becomes evenly matched, Douyin/Pinduoduo flagship stores will play an equally important role as their Tmall/JD flagship stores.

2. Building a stronger cross-platform synergy and seizing the opportunity to enhance bargaining power with e-commerce platforms

As e-commerce platforms become increasingly mature, the overlap of their consumer groups will inevitably continue to increase, making it more difficult to expand user increment. However, it is a good opportunity for brands to increase their bargaining chip with e-commerce platforms in terms of traffic, product promotion, and consumer data transparency. Stronger cross-platform collaboration between brand and e-commerce platforms is worth exploring on both sides, especially in category differentiation, pricing, and promotion.

3. Reducing the reliance on livestream e-commerce influencers and strengthening content co-creation

The role of e-commerce live streaming, especially influencer live streaming, in “transactions” will be further weakened. Most influencers may find that selling standard or common products are losing their appeal to the public. Influencer live streaming will reach a critical crossroads, and influencers will need to attract consumers through better content. Currently, “selling-only” influencers who lack content will lose their competitiveness and gradually be phased out. Patterns may emerge where common goods are sold more through digital shelf e-commerce and influencers will focus on more niche products with strong digital content potential like trendy goods.

4. Developing innovative supply chain solutions

Innovative supply chain solutions such as direct sourcing and supply chain financing can help brands reduce costs and improve efficiency. Brands need to optimize their organizational structure, develop cross-platform e-commerce capabilities, accumulate universal key capabilities to support multi-platform development, and lay a foundation for other e-commerce models with future development potential, such as instant retail.

5. Improving consumer experience through data analytics and personalized marketing

Brands need to use data analytics and personalized marketing to improve the consumer experience. It can help brands better understand consumer behavior and preferences, and provide tailored products and services to meet their needs. With the convergence of platform models, the profit levels of brand flagship stores on various platforms are expected to gradually converge. In order to improve efficiency, brands need to optimize their organizational structure, develop cross-platform e-commerce capabilities, accumulate universal key capabilities to support multi-platform development, and lay a foundation for other e-commerce models with future development potential, such as instant retail.

Conclusion

To succeed in 2023, brands must adapt to emerging e-commerce platforms and changing trends. New players are continuing to emerge and grab a share of the existing market. Each platform emphasizes different aspects of marketing, including product pricing, content, and product categories. Brands need to understand these nuances and tailor their e-commerce strategies accordingly to effectively engage with their target consumers and drive sales.

Before establishing a presence on e-commerce platforms, it is important to understand the target consumer group and their profiles.

ByteDance-owned video-sharing platform Douyin, China’s equivalent of TikTok, plans to offer its “group-buying delivery” service in more cities, but has no timeline for a national rollout, TechNode has learned.

Why it matters: The gradual entry into the food delivery sector of Douyin, the most popular short-form video app in China with nearly 700 million daily active users, poses a serious challenge in an industry which has been dominated for years by Meituan and Alibaba’s Ele.me.

• “We would consider expanding the [“group-buying” packages] feature to more cities in the future depending on the testing results, and there is no detailed timeline yet,” a spokesperson from Douyin’s life services unit told TechNode on Wednesday.

Details: In contrast to the food delivery services offered by its established competitors, Douyin’s “group-buying delivery” service enables merchants to promote and sell food packages that are generally for two or three people, via short videos or livestreams. Packages are then delivered to paying customers within a selected time frame.

• The feature was tested last December in three cities – Beijing, Shanghai, and Chengdu – before the launch of a self-registration service for local merchants in January.
• Merchants can use the third-party courier platforms that Douyin cooperates with, including SF Express’s SFTC, JD-backed Dada, and Shansong, or choose to deliver themselves.
• The group-buying packages fall under the short video platform’s local life services unit, which encompasses the food and restaurant, in-store business, and hotel and tourism segments. The emerging unit expects total sales to reach RMB 150 billion ($22.2 billion) in 2023, twice its actual GMV of RMB 77 billion in 2022, tech media outlet 36Kr reported earlier this year.
• Only merchants with physical stores can take up the feature in Douyin, which is available at a cost of 2.5%, and 5% to 10% in service fees to the platform and service providers respectively, local media outlet Jiemian reported on Tuesday. If the merchant uses a delivery service in cooperation with the platform, they have to pay about RMB 8 per order.

Context: China’s takeaway market has continued to grow in size in recent years, with Meituan dominating the industry to date. According to a report conducted by Zhiyan Consulting, Meituan took a 69% share of China’s food delivery market in 2020, while Ele.me accounted for 26%.

• Douyin tested a food delivery mini-program called “Xindong Waimai” in 2021, partnering with well-known brands such as HeyTea and KFC, but the platform was never officially launched.

ByteDance has moved Douyin’s vice president Zhi Ying to lead TikTok’s products and content business as TikTok becomes an increased focus of its parent company’s attempts to diversify revenue streams, according to a Wednesday report by local media outlet 36Kr.

Why it matters: Zhi Ying’s move reflects the importance of TikTok to ByteDance’s revenue growth, with the Beijing-based company set to involve more of its successful executives in TikTok’s development. In December, ByteDance also moved Chen Xi, former head of news app Jinri Toutiao, to head up TikTok’s e-commerce product development.  

Details: Zhi Ying worked for PricewaterhouseCoopers and Uber before joining ByteDance in 2016, where she led the operation and marketing of short video platform Huoshan. Later, she moved to oversee Douyin’s marketing and ran the company’s video-sharing app Xigua video.

• Zhi is “very competent and has a strong management style, while also being good at expanding business,” sources told 36Kr.
• Several TikTok managers, including those in charge of user growth, content style, and live-streaming, now report to Zhi, while she herself reports directly to Zhu Wenjia, head of TikTok’s products and technology.
• ByteDance’s revenue growth slowed in 2022 and the daily active user growth of its products was lower than expected, CEO Liang Rubo acknowledged at an all-staff meeting held in December. TikTok’s sister app Douyin has not publicly updated its user base numbers since it announced in September 2020 that it had more than 600 million DAU. 
• TikTok currently has over 1 billion users worldwide, with the short video app having a global penetration rate of less than 20%, while Douyin has reached nearly 54% in China, LatePost reported in October last year, citing a TikTok staff member.

Context: ByteDance is sending more senior executives from China with successful track records to TikTok at a time when US officials continue to heighten scrutiny of the app. TikTok CEO Shou Zi Chew is reportedly due to appear before the US Congress next month in connection with the platform’s privacy and data security. 

• More than 25 states in the US have banned TikTok on government-owned devices and a US House panel is set to vote in February on a total ban aimed at blocking TikTok from operating in the US.
• ByteDance is also seeking to expand into overseas markets with its team management platform Lark due to profitability challenges in the domestic market, Chinese media outlet Jiemian reported in early January.

ByteDance-owned short-video platform Douyin, China’s equivalent to TikTok, has set RMB 150 billion ($22.2 billion) as its annual target for local life service sales in 2023, twice its actual gross merchandise volume (GMV) of RMB 77 billion in 2022, Chinese media outlet 36Kr reported on Jan. 15. Douyin’s local life services unit head told 36Kr that the figure of 77 billion for last year was inaccurate, but declined to give specific data. 

Why it matters: Climbing sales for local life services – encompassing food delivery, travel bookings, and other retail sales – point to the business becoming increasingly important for Douyin’s revenue growth in 2023 as the platform continues to take on established delivery and life services giant Meituan. ByteDance CEO Liang Rubo previously acknowledged that the company saw slower revenue growth than expected in 2022, while growth in daily active users for its products was also lower than the targets set early in the year.

Details: Douyin is confident of hitting the full-year 2023 sales goal of RMB 150 billion for its local life services unit, as internal estimates show the unit’s GMV ceiling to be between RMB 260 billion to RMB 280 billion, a source told 36Kr.

• The food and restaurant segment comprises half of Douyin’s life services sales target, with in-store business and hotel and tourism expected to bring in RMB 45 billion and RMB 30 billion, respectively.
• The business development team at Douyin’s local life services unit has shrunk from 3,000 to around 1,000 personnel as the video platform pushes more work to help merchants improve their operational capabilities onto third-party service providers, the report cited an unnamed source as saying. Douyin subsequently denied that this downsizing had taken place.
• The local life services division underwent a new round of organizational restructuring after ByteDance put former products and commercialization strategy leader Zhu Shiyu in charge of the unit last October. Notably, the business development team was resegmented by industry, instead of geographic region.
• Douyin’s widespread popularity is largely thanks to its addictive algorithms. A person close to the platform told media outlet Huxiu that each new Douyin user enriches the labeling process, and that this method is also now being applied to local life services. The unit divides users into three categories: people who purchased a certain product, people who searched for, followed or liked a certain product, and potential customers based on their age, work, and lifestyle.

Context: Douyin’s entry into local life services, which began in 2021, is seen as a big threat to industry giant Meituan, which brought in RMB 129 billion in revenue from core local commerce, including food delivery, in-store purchases, and hotels and travel in the first three quarters of 2022.

• Douyin still performs weakly in terms of the order completion rate of its group buy offerings, which at only 60% in 2022 is unchanged from 2021. Meituan’s rate, by comparison, is nearly 90%.
• Douyin users are seemingly still hesitant about the platform’s content-driven group buying feature, in which users purchase coupons prior to consumption via in-feed videos, the 36Kr report noted. Users can apply for a refund if they decide not to use the coupons, but take-up has still been slow compared to Meituan, where users usually buy coupons after completing in-store consumption.
• Some agents in Meituan’s low-tier markets have asked merchants to pick a side as competition hots up, encouraging them to cooperate with either Douyin or Meituan, according to 36Kr.
• In December, China’s three major express courier platforms – JD backed-Dada, SF Express’ SFTC, and Shansong – announced that they would begin providing same-city logistics services for Douyin’s local life services arm in a major expansion of ByteDance’s push in the sector.

Major Chinese tech companies like Xiaomi and Baidu are increasing their offerings in fictional short video series, an area in which established short-video platforms Douyin and Kuaishou excel. These short dramas are typically low-budget, under 10 minutes per episode, made for verticle viewing and target mobile users. Many of these short video dramas are adapted from web fiction, some are original content. 

Local online media Tech Planet reported on Monday that ByteDance, Baidu, and Xiaomi have recently increased their offering in short video series and are looking to “deeply cultivate the online literature and short drama industries”.

Why it matters: The adaptation of web fiction and online literature into new “mini-dramas” offers Chinese internet companies a new model for monetization amid sluggish advertising growth – potentially attracting new users and increasing time spent on the app. Tencent, Kuaishou, and Alibaba are all considering expanding their presence in the sector according to the report.

Details: The report said that Baidu, Xiaomi, and ByteDance are keeping the production cycle for these short video series within 10 days, with production costs mostly within hundreds of thousands of yuan (under $1,400). 

• The report said Xiaomi has recently launched an app called “Duohua short video (our translation)” allowing paid users to watch short video series, which are still mainly provided by third parties. The Chinese phone vendor acquired e-reader service provider Duokan Technology in 2012 and now offers third-party web novels through the app.
• Baidu’s online free novel app Qimao also plans to start a short video business, and has been hiring related talents recently, the report said.
• TikTok’s parent company ByteDance started its online novel business in 2015. Its free literature app Tomato Novel has reached 93.27 million monthly active users as of December 2021, and the Beijing-based firm also has at least eight paid novel apps. The company uses Douyin, which has more than 600 million active daily users, to distribute short video series.
• Douyin also sees the online novel business as a new way to tap into more potential users, with TikTok’s sister platform testing a dedicated novel channel on the homepage of its tablet app this June, which allowed users to select and read e-books. 
• Short-video platform Kuaishou also excels in short video series. There are more than 2,000 series with over 100 million views on the platform, with genre spanning from romance, country to animation.
• Kuaishoul also launched its first novel app Kuaishou Free Novel this September.
• Kuaishou and Douyin have already launched numerous short series, with the former stating in its creator meeting held in July that the number of daily users watching Kuaishou mini-series has surpassed 260 million, and half of these users watch more than 10 episodes on the app every day.
• Chinese long-form video platforms, including Youku, iQiyi, and Tencent video, have also invested in short series productions and added a quick link to this content type on their apps’ home pages.

Context: China’s web literature market size has exceeded RMB 30 billion with 502 million users by the end of 2021, according to a report conducted by the Chinese Academy of Social Sciences.

• Major internet companies recorded a slowdown in advertising growth amid sluggish macroeconomic environment, for example, Kuaishou posted a 6.2% growth in advertising revenue in the third quarter, compared to a 32.6%, 10.5%  growth year-over-year in the first and second quarter this year, respectively.

ByteDance-owned Douyin has achieved its yearly target set for local life service ahead of schedule, reaching RMB 50 billion ($6.98 billion) GMV in October, Chinese media outlet 36Kr reported, citing several unnamed sources.

Why it matters: The short video app, which has more than 600 million daily active users, introduced functions like ordering food and tickets, and booking travels directly into it. These moves put the content giant in direct competition with Meituan and Ele.me — two established local service players.

Details: Douyin’s local life unit has now provided a variety of daily services, including buying food ordering recommendations and sightseeing tickets, and booking hotels, parent-child activities, and sports and fitness events. Users can complete those purchases in the video app. 

• The 36Kr report said short videos contributed nearly 50% to the platform’s fast-growing life services sales, while live-streaming and search contributed 35% and 18% to the total GMV growth, respectively.
• A direct link to purchases can appear in the bottom left corner of a related short video. For example, a user watching a video of a plate of steamed fish might see a link to a nearby restaurant serving the same or a similar dish. Those links can nudge users to place orders without leaving the current app.
• Douyin is also reportedly piloting food delivery and group buying delivery services in the southwestern Chinese city of Chengdu soon. But merchants still need to contact couriers themselves for delivery if they currently get takeout orders in the city.

Context: The popular short video platform is being used by merchants as a new way to get a broader range of consumers, while Douyin is also expecting to accelerate the monetization process from the local lifestyle unit, which has huge development potential.

• The overall market size of China’s internet local life service industry has reached RMB 2.6 trillion, growing 15.1% from a year earlier, according to a report conducted by consulting firm Qianzhan, with the figure expected to reach RMB 4 trillion by 2025. 
• The line between content platforms and retail platforms is increasingly blurring, for example, Meituan also tested a short video function this May. 
• Moreover, established players are seeking partnerships in the hope of defending their advantages. Meituan and Kuaishou reached “strategic cooperation” last December after rival Douyin set up the life service as the company’s core business. In August this year, Douyin and Ele.me also announced cooperation, though it has not yet been implemented.

Correction: an earlier version of this article miscalculated the US dollar amount of the GMV.

E-commerce giants Alibaba and JD kept silent on their Singles Day sales totals this year, the first time they chose not to publicize the data from their gross merchandise volume (GMV) performance. Alibaba said the results were “in line with last year’s GMV performance,” while rival JD claimed its growth rate exceeded the industry average.

Why it matters: The decision of Alibaba and JD, the two main participators in the year-end shopping festival, to not disclose their sales totals is in stark contrast to previous years when both have been quick to trumpet the amount of money brought in. The move comes against the recent backdrop of the Chinese authorities’ reining in of tech companies and could also indicate an underwhelming performance after years of rocketing growth. 

Details: Although the two major players failed to publicly confirm their sales totals, Chinese media outlet Yicai cited statistics from Xingyun Data on Nov. 13 showing that overall sales across all platforms during this year’s Singles Day hit RMB 1.1 trillion ($157.1 billion), up 13.7% year-on-year. 

• Sales from China’s top e-commerce platforms, including Alibaba’s Tmall, JD, and Pinduoduo, increased just 2.9% to RMB 934 billion, Xingyun Data reported.
• The total value generated by the live e-commerce arms of short video platforms Douyin and Kuaishou was RMB 181.4 billion, an increase of 146.1% over the same period last year, according to Xingyun.
• Douyin’s e-commerce arm has declined to release specific GMV figures since it began participating in Singles Day in 2019, instead offering alternative statistics. According to the data provided by Douyin on Nov. 12, the cumulative hours of live e-commerce on the platform during this year’s event increased by 50% to 38.21 million hours compared to last year, with 7,667 live rooms seeing sales surpass the RMB 1 million mark this year.
• Alibaba said in its press release that they saw strong growth this year in categories including sports and outdoors, pet products, collectible toys, and jewelry. 
• Sales of consumer electronics and home appliances also grew across the major e-commerce platforms this year. Mobile phones and home appliances were generally the categories to break RMB 100 million first on multiple platforms, though this is due to the high unit price.
• “A combination of economic and regulatory factors are leading the platform companies to emphasize customer loyalty and sustainability instead of GMV,” Jacob Cooke, CEO of e-commerce marketing firm WPIC, told TechNode. He added that the platforms are also hesitant to celebrate their GMV numbers amid the government’s common prosperity and anti-monopoly drives. Cooke’s company frequently helps foreign brands to sell on Chinese platforms.

Context: Over the past two years, China’s tech companies have been dealing with weak consumption, especially after many local governments imposed strict Covid control measures earlier this year. Data from China’s National Bureau of Statistics showed that the total retail sales of consumer goods were only up 0.7% year-on-year from January to September.

• Logistics is limited in many areas amid rising Covid cases, which has also affected consumers’ shopping enthusiasm to some extent.
• In 2021, Alibaba recorded its slowest-ever growth since the company appropriated Singles Day and turned it into a consumerist festival, with sales increasing 8.5% from 2020 to RMB 540.3 million. Earlier this year, JD also saw the slowest expansion in its GMV total for its 618 shopping festival since it first disclosed figures for the event in 2017.

TikTok’s Chinese version Douyin announced on Tuesday that its online sales more than tripled for the year ending in April, an impressive growth rate for the e-commerce upcomer when other majors are slowing down due to an economic downturn in China.

Why it matters: Chinese short video platforms like ByteDance-backed Douyin and Kuaishou are quickly taking away the market shares of e-commerce giants like Alibaba, JD, and Pinduoduo, thanks to their widely popular social content.

• Douyin chose to announce sales numbers and growth plans on the eve of China’s 618 shopping festival to build momentum for the mid-year spending frenzy, a local media outlet in Chengdu reported.

READ MORE: 618 is not just about e-commerce platforms anymore

Details: Douyin’s gross merchandise value (GMV) surged 320% year-on-year in the year ending in April as the company sold more than 10 billion products, president of Douyin E-commerce Wei Wenwen said (in Chinese) at a Douyin e-commerce conference on Tuesday.

• At the online meeting, Douyin rebranded the concept of “interest e-commerce” as “full-field interest e-commerce” after rolling out the idea last April. The company hopes to highlight its ability to attract consumers through multiple channels such as short videos, livestreaming, its search function, and more, said Wei at the conference.
• The firm didn’t give a specific GMV figure, but people with knowledge of the matter told Caixin that Douyin achieved more than RMB 800 billion GMV in 2021 and is expected to bring in between RMB 1 trillion and RMB 1.2 trillion this year. However, the company said the figure is “inaccurate” in response to Caixin. 
• Douyin E-commerce, which became a stand-alone business unit only two years ago, achieved fast growth by tapping into Douyin’s 600 million daily active users. Douyin generates more than 200 million short videos and holds 9 million livestream sessions per month in a bid to convert user attention to sales. 
• Douyin’s Wei said she believes plenty of opportunity remains in the sector and that the platform aims to take more than 50% of the industry’s growth market in the future.

Context: Although still holding the lion’s share of the market, Alibaba, JD, and Pinduoduo are recording decelerated growth as they face macroeconomic headwinds, regulatory challenges, and pandemic control measures.

• Alibaba’s global consumer-facing businesses generated RMB 8.3 trillion in GMV for the year ending in March, remaining relatively flat compared to the RMB 8.1 trillion recorded a year ago. In 2021, Pinduoduo’s GMV increased 46% year-on-year to RMB 2.4 trillion, while JD’s GMV grew 26.2% year-on-year for the same period. Kuaishou’s GMV increased 78.4% year-on-year to RMB 680 billion in 2021.
• Douyin’s e-commerce sales dwarfed its global sibling TikTok, which reportedly achieved nearly RMB 6 billion GMV in 2021.

Livestream e-commerce is proving to be a trend with staying power, rather than a flash-in-the-pan phenomenon driven by pandemic-crazed online consumption.

E-commerce sales achieved through livestreaming represented more than 10% of China’s total online retail sales in 2020, according to data from iResearch. The research agency forecasts that the proportion will reach 24.3% by 2023. 

E-commerce giants, such as Alibaba and JD.com, as well as short video sites, notably Douyin and Kuaishou, have tapped into the livestream boom to boost their online commerce businesses.

For now, e-commerce platforms still rule the livestreaming roost, but Douyin and Kuaishou are catching up quickly as Chinese users’ experience and shopping preferences evolve. Experts we talked to said short video apps pose a threat to Alibaba’s dominance in live e-commerce.

READ MORE: How e-commerce and livestreaming became frenemies

Same service, different operating rationales

From a user’s perspective, e-commerce and short video apps offer very similar livestream shopping experiences. However, the operational models of these two types of platforms mean they approach live e-commerce differently.

Users on e-commerce platforms like Taobao and JD open these apps with clear shopping intentions. Therefore, the livestream sales performance of stores on Alibaba’s Tmall depends on the traffic to the store or brand itself, an employee from a business process outsourcing company in the livestream industry told TechNode. 

“If the store (brand) is well-recognized and has its own user base, the sales will be high, and vice versa,” he explained, asking to stay anonymous because his employer did not give him the permission to speak.

Meanwhile, the primary goal of livestreaming on Douyin is always to drive sales—not platform branding or customer relations—said the same source. “Most Douyin users haven’t established the habit of shopping on the short video platform. It’s highly probable that they are diverted to the livestreaming session for potential impulse buys while browsing some funny video clips.” 

It’s thus not surprising that Taobao’s traffic is more stable while traffic from Douyin and Kuaishou tends to be sporadic and unpredictable. The difference in platforms leads to different demands on livestreamers and support teams. Tmall store livestreamers tend to adopt a lean approach. One livestreamer can run a session after becoming familiar with prices and basic product information.

In contrast, Douyin’s livestreamers, whose primary goal is to retain audience attention and convert that attention into sales, usually need about three support staff to run a session. The extra staff perform tasks such as uploading the product links and changing prices, he explained.

Douyin versus Kuaishou

As for the livestream battle within the short video arena, Douyin has the upper hand over Kuaishou so far. Douyin aims to reach RMB 1 trillion ($160 billion) in gross merchandise value (GMV) on its platform this year. Meanwhile, Kuaishou expects to achieve a GMV of RMB 650 billion this year. That’s a downsized adjustment from the beginning of the year, when it set a GMV target of between RMB 750 billion and RMB 800 billion. 

“Kuaishou’s commercialization started earlier by building e-commerce based on social trust and connecting directly to the starting point of the supply chain,” said Xin Youzhi, a top livestreamer widely known as Xin Ba. He has 95.6 million followers on Kuaishou. 

To compare Kuaishou and Douyin, the livestreamer sales star explained that Kuaishou has a strong bond with users, who have dubbed themselves lao tie, or “buddies” in English, a term of endearment for the fans of livestream hosts. First gaining popularity among users in China’s lower-tier cities, the Tencent-backed firm is often described as the less sophisticated rival of ByteDance-owned Douyin. 

Merchants on Kuaishou were among the first to adopt the C2M (consumer-to-manufacturer) model, under which they directly give user feedback to upstream supply chain manufacturers. They thus can significantly reduce the marginal and intermediate costs and enable customers to buy more affordable products.

Meanwhile, Douyin has more social media features than Kuaishou. But the two video platforms are learning from each other to strengthen their e-commerce ecosystems, said Xin.

Short video as e-commerce challengers

E-commerce platforms are still far ahead in livestream e-commerce revenues. Taobao Live achieved a GMV of more than RMB 500 billion in the 2021 fiscal year ended March 2021. Douyin’s livestream GMV was RMB 100 million in 2020, according to a comparable fiscal calculation standard adopted by Alibaba. Douyin boasted a livestream GMV of RMB 500 billion in 2020, of which RMB 100 million was achieved through Douyin stores, according to a report by Forward Research Institute.

Compared with e-commerce platforms, short video platforms have advantages in terms of customer traffic and livestreaming scenarios, according to Xin Youzhi.

“Livestream e-commerce” for now puts the emphasis on e-commerce, not livestream. “Users on e-commerce platforms like Taobao and JD will buy, with or without livestreams,” said Sandy Shen, VP analyst with the digital commerce team at research and advisory company Gartner.

“As people spend more time on short video platforms, the apps could become super apps like WeChat, which cover every aspect of our daily lives, including e-commerce,” said Shen. 

Young shoppers lead the way

The trend is already apparent among Chinese youth. “Millennials, the core user group of short video apps, could be easily converted to consumers on these platforms,” said Shen. 

She added that short video apps are becoming an important entertainment and information channel for people from lower-tier parts of the country, where e-commerce platforms like Alibaba and JD have lower penetration. For this group, it’s natural for them to buy through a platform they are familiar with, according to Shen.

User attention is only the first step on the way to winning the e-commerce market, however.

“In the early stage, the live commerce industry relied on customer traffic, KOLs and livestreamers, but the core of live commerce is still e-commerce. That means e-commerce is always driven by products rather than by people. Customer traffic is not a panacea,” said Xin, who also runs his own retailer and livestream company Xinxuan Group.

In the meantime, the industry is also getting to the point where it has to face and adapt to a new developmental stage. The industry needs to push its limits with respect to people, goods and business models, according to Xin.

The short video apps still need time to improve behind-the-scenes capabilities from supply chain and logistics to KOL talent training and regulation compliance, Xin added.