Chinese version of TikTok transforms into e-commerce platform
by Katja Laska (exclusively for EuroShop.mag)
China is the world’s biggest e-commerce market. By the end of December 2020, there were 782 million online shoppers in China – which approximately equals the population of Europe. This number also accounts for 79.1 percent of the overall population of China’s internet users.
Social commerce is more than a buzzword in these parts: it is a mega trend. One of its trendsetters: Douyin, a social media platform designed to make a variety of short-form videos.
Elena Gatti, Managing Director Europe for Azoya and China e-commerce expert, explains the hype and reveals the possibilities of the Chinese version of TikTok.
Ms. Gatti, online shopping is part of everyday life in China. How does Chinese consumer behavior differ from other countries?
Elena Gatti: According to eMarketer, 81% of smartphone users in China use proximity mobile payments. That number is only 27% in the US and dips even lower in many European countries. China’s online shoppers take advantage of mobile devices. They use their smartphone to browse, shop and pay, completing all steps on one device.
There is another difference compared to the rest of the world: when it comes to online shopping, social ecommerce is quickly gaining steam in China. Livestream shopping is booming in China and has been embraced by the masses. Chinese consumers also trust word-of-mouth or recommendations from friends and family and feedback from other consumers more than other forms of advertising. Retailers and brands that plan on expansion in China should pay close attention to this aspect – Chinese consumers simply will not buy products with bad reviews.
Douyin is a global hit as the new trendy social media platform. How does it differ from its TikTok counterpart?
Douyin is owned by China’s young tech giant ByteDance, and TikTok is the international version. The two apps work in a similar way. Users use the platform to create, edit, and share short-form videos with special effects and sounds. The main differences pertain to added functions in the Chinese version and app availability across different regions.
Last year, Douyin has started to integrate ecommerce links into the app. Douyin KOLs (so-called Key Opinion Leaders) – or social media influencers as they are known in the Western world – can link Taobao or Tmall products with their Douyin videos, which means that Douyin promotes direct sales. Brands can also set up their own Douyin Store to sell their products. While TikTok still mostly focuses on entertainment, it has been working on its eCommerce offerings for some time.
How is the platform used for online shopping in China and what opportunities does this create for retailers?
As of August 2020, Douyin hit 600 million daily active users. The huge number of active users gives retailers and brands a platform to reach their target audience. This also allows retailers to find KOLs or influencers that fit their brand image to have them promote their brands and increase brand awareness.
There are three main ways to use Douyin for shopping:
- Adding shoppable product links to make direct purchases by clicking the link inside the short video.
- Selling via livestreaming on Douyin. During the livestream, retailers and brands can inspire their fans to buy products.
- Using the Douyin Official Flagship Store & Douyin Store.
When it comes to monetization, Douyin is a few steps ahead of its western counterpart. Douyin can already be fully used as an e-commerce platform today – whereas TikTok’s primary focus is (still) entertainment.
Why is Douyin so promising?
What makes Douyin special is its unique “recommendation system”, a service that suggests other products based on the user’s purchase history and product searches. The benefit of this so-called “interest e-commerce” concept lies in uncovering user needs. Over 85% of Douyin consumers are new customers, which opens up a whole new world of possibilities for retailers. According to third-party calculations, the gross merchandise volume of “interest e-commerce” is projected to surpass 9.5 trillion by 2023. For customers, Douyin is an exciting way to discover new products based on their personal interests and preferences. In other words, it allows them to continuously discover products they didn’t even know they needed until they were recommended.
What types of customers can retailers expect to meet on this platform?
Douyin’s product positioning is geared towards fashionable and young users in highly developed and densely populated areas – that being Tier 1 and Tier 2 cities based on the Chinese city tier system. When it comes to Douyin user profiles and characteristics, 60% of Douyin platform users have a bachelor’s degree or higher, primarily live in Tier 1 and Tier 2 cities, with 90% of all users being under 35 years of age. The male to female ratio is 4:6. The majority of users are female.
Most Douyin users were born in the 1990s and 2000s. These groups are highly accepting of new products and technologies, will share their lives on social media, and will follow the latest trends.
What are the top sales categories on Douyin?
Beauty and women’s fashion are leading the pack when it comes to Douyin shopping. From June to August 2020, fashion, home and pet supplies and beauty products were more popular than all other categories among the 100 top performing products sold in each category on Douyin. At the same time, sales of the top 100 products in each category accounted for more than 10% of sales for three consecutive months.
What’s your opinion: What’s next for Douyin?
According to a Jiemian News report from April 2021, more than 1,000 brands have set up Douyin accounts totaling over 580,000 fans. More than 40 brands feature over one million Douyin fans. In the future, Douyin will gradually create its own in-house e-commerce ecosystem. More and more brands will set up Douyin flagship stores as a new platform for product launches.