Late Exclusive丨The ceiling of live broadcast e-commerce is approaching, Douyin has found a new way out

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The Douyin e-commerce department was officially established more than two years ago, and the platform’s commodity transaction volume exceeded one trillion yuan. It took Pinduoduo 4 years to reach the same number.

The success of Douyin e-commerce relies on the mature domestic logistics and payment system, and relies on algorithms and star anchors to recommend popular products. But perhaps more importantly, Douyin has 700 million daily active users. The next growth space for live e-commerce will largely depend on how much traffic Douyin allocates to it.

“LatePost” learned that Douyin conducted several tests in the first half of 2022 and found that once the e-commerce content displayed by Douyin exceeds 8%, the user retention and user usage time of the main site will be significantly negatively affected.

A Douyin source revealed that once users experience a very bad experience in Douyin e-commerce shopping, many will leave Douyin completely, or even stop reading short videos.

It is understood that Douyin currently distributes 7%-8% of the traffic to e-commerce, including short video content on a small yellow cart (shopping cart) and e-commerce live broadcast rooms. The short video content that is displayed on the screen but does not hang a small yellow car is not included. “This ratio will not change significantly in the next period of time.” said the Douyin person mentioned above.

Combined with data such as traffic ratio and user purchase behavior, Douyin believes that the GMV (commodity turnover) ceiling of live broadcast e-commerce is about 20,000-3 trillion yuan.

The relevant person in charge of Douyin e-commerce denied this figure to LatePost.

“LatePost” learned that Douyin e-commerce is expected to reach a turnover of 1.5 trillion yuan in 2022, and it is rapidly approaching the ceiling.

In order to solve the problem of limited growth space in the future, Douyin decided to turn around and grab share from the stock market-in May this year, it opened a “mall” entrance on the Douyin homepage. When users click in, they will see a shopping page similar to Taobao and Pinduoduo.


Douyin “Mall” interface

“LatePost” learned that the target of Douyin e-commerce by the end of 2022 is 1.5 trillion yuan, and this figure is planned to reach 3 trillion yuan in two years, which is 1.25 times the market estimate of Pinduoduo’s GMV in 2021.

“Mall” will undertake most of the growth tasks of Douyin e-commerce since then. In 2023, Douyin’s “mall” plans to achieve a turnover of over 1 trillion.

Douyin live e-commerce and short-video e-commerce once brought a new incremental market to the industry. It reconstructed the framework of people, goods, and markets, and provided users with a new shopping experience. When the merchants launch a head-to-head confrontation, Douyin still needs to answer the most basic questions: what kind of value is provided to users, and why do users come to Douyin Mall for shopping.

The ceiling of live e-commerce is approaching

In May 2022, when Douyin Group CEO Zhang Nan participated in a commercialization-related employee union, he compared the unreasonable behavior of various businesses to ask Douyin for traffic to “mining”, saying that this would lead to loss of users, “” hollow out the traffic”. She said that between commercialization and user experience, the most important thing to do is “balance”. For example, Douyin e-commerce can convert and cultivate users’ purchasing mind through recommendation, and realize long-term active repurchase of users by optimizing mall channels and merchant accounts.

The pursuit of balance also means that the traffic and resources that Douyin can ultimately give to e-commerce and local life businesses are limited, and it is clear how much these businesses will eventually grow in the future.

The same is true for Kuaishou E-commerce. In the first half of 2019, shortly after Kuaishou officially established its e-commerce business department, a group of senior executives and former Alibaba chief strategy officer Zeng Ming calculated the ceiling of the business. Douyin e-commerce is about 1.5 trillion. It is understood that the growth of Kuaishou e-commerce has slowed down this year, and GMV is not far from the ceiling calculated at that time.

In addition to being limited by the traffic ratio of the Douyin market, the Douyin e-commerce business itself has many shortcomings.

A low NPS metric (Users’ Net Promoter Score for a product) is one of the prominent problems. The lower the NPS indicator, the lower the reputation of Douyin e-commerce among users, and the lower willingness of users to consume again.

When the NPS is negative, it means that the number of people who do not recommend the service after the purchase exceeds the number of people recommended. Douyin e-commerce currently has an NPS of about -12%. In 2021, the minimum NPS value of Douyin e-commerce has reached -30%.

The relevant person in charge of Douyin e-commerce once again denied this figure to LatePost.

In the first half of 2022, when ByteDance founder Zhang Yiming participated in a Douyin e-commerce bimonthly meeting, the only comment on the business was that “there must be a path and a target time point to get NPS right”. Douyin e-commerce company plans to turn its NPS negative to 1% by the end of the year.

Douyin e-commerce also adjusted its algorithm this year, adjusting the traffic according to the comments and like ratios in the e-commerce live broadcast room. If the content of an e-commerce live broadcast room is more popular with users, it will get more traffic, even if the merchant does not buy much advertising.

Previously, Douyin’s e-commerce algorithm recommendation mainly considered indicators such as advertiser bids, conversion rates, and users’ obvious “dislikes”. Merchants need more advertising fees in exchange for users. “After all, the ROI (input-output ratio) is basically not right,” a number of Douyin service providers and merchants joked, “Douyin makes money, and no one wants to take it home.”

In order to solve this problem, Douyin e-commerce has introduced the indicator of “advertising investment/GMV” as the assessment target of the industry operation team for 13 different industries since this year. After that, how much definite GMV can be brought. But at present, the cost reduction of merchants is limited.

Although many improvement measures have been made, “the ceiling of live broadcast e-commerce is approaching” has become a clear consensus within Douyin e-commerce. The Douyin “mall” has high hopes by the high-level executives, and it will become the second growth curve to push up the Douyin e-commerce ceiling.

Do a shelf e-commerce in Douyin

It will reach trillion GMV next year

Douyin once pinned its hope of breaking through the ceiling of live e-commerce on the independent e-commerce application Douyin Box. The Douyin box is aimed at the trendy shopping needs of young people. When you open it, it will be a short video played in full screen. The main difference from Douyin is that these videos are all for sale.

Douyin Box will be launched at the end of 2021, and the GMV target is very aggressive. According to the internal plan, Douyin Box will complete 40 billion yuan in sales in 2022, this figure will increase to 300 billion yuan in the second year, and the third year’s goal will exceed one trillion yuan.

The relevant person in charge of Douyin e-commerce denied this figure to LatePost.

However, the results of Douyin Box have been unsatisfactory since its launch. “LatePost” learned that 80% of users who enter the Douyin box from the Douyin main station and external diversion will not open the app the next day. Byte’s patience with new projects has always been limited. Seven months after its launch, Douyin Box has suspended its external launch and promotion. The person in charge, Xu Luran, has also transferred to Douyin Express to be in charge of e-commerce projects. Now the video likes of Douyin Box are mostly single digits.

After the Douyin box failed, Douyin e-commerce pinned its last hope on the Douyin main site. In May 2022, the Douyin homepage launched the “Mall” entrance.

Douyin e-commerce is very determined to build a trillion-dollar “mall”. “LatePost” learned that the GMV target of Douyin “mall” this year is 330 billion yuan, which is about 20% of the overall GMV target of Douyin e-commerce this year. By the end of next year, Douyin “mall” plans to sprint 1 trillion yuan in transaction volume.

An employee said that at the end of September this year, Mu Qing, the head of Douyin e-commerce operations, directly renamed a Douyin operation group as “Trillion Mall Iron Army”. He explained that adding “mall” to the group name is because Douyin e-commerce has entered the second stage from “goods looking for people” to “people looking for goods”. Before that, the focus of the Douyin e-commerce operation team was to watch the e-commerce live broadcast conversion of merchants and anchors; now the focus is on commodity supply and commodity operation to ensure that consumers can buy better quality and richer categories. commodity.

To make the “mall” become the second curve that pushes the growth of Douyin e-commerce, commodity abundance is a problem that must be solved.

In the live broadcast and short video scenarios, Douyin e-commerce can use algorithms to recommend and create many popular and star products; traditional shelf e-commerce satisfies the needs of users to actively search, requiring the variety of products to be as diverse as possible. A Douyin e-commerce person described, “If Taobao and Tmall’s product richness is 100%, Douyin e-commerce is now only 40%.”

At the beginning of 2022, Douyin e-commerce listed the top 2,000 brand merchants by sales on Tmall, with the goal of allowing all these brands to enter the Douyin “mall”. It is understood that about 92% of the target brands have entered Douyin.

It is not enough for brands to come in, the Douyin “mall” also needs them to bring enough products. Mu Qing, the head of Douyin e-commerce operations, is directly responsible for the investment promotion of the “mall”. He and his employees have a goal of “Douyin 2000 coverage”, which requires the above 2000 brand merchants to be listed on Douyin and Taobao. , Tmall’s product coincidence rate should reach more than 80%. For example, if a brand has 100 products on Tmall, there are at least 80 products on Douyin.

In order to increase the exposure of the “mall”, Douyin adjusted the product page. After users place an order, if they want to view their own orders, they must first enter the “Mall”, and then jump to the page for inquiring about the delivery and logistics progress of individual orders. This design allows users to glance at the “mall” while viewing personal information. Before that, users only need to enter the personal center of Douyin to view.

Douyin “mall” is not only in Douyin’s main application. Douyin Express Edition, Toutiao Today, and Tomato Novels are also on the “mall”. On the investment side, different products are differentiated to a certain extent. For example, the “19.9 yuan cap” activity of the “mall” in the main app of Douyin has become “9 yuan and 9 free shipping” when it reaches the Douyin Express Edition.

“LatePost” learned that Douyin e-commerce is also preparing to re-launch tens of billions of subsidies, and is currently in the process of attracting investment.

E-commerce is currently the most important growth driver for Byte. After the boom of Douyin e-commerce, merchants put more advertisements, allowing the byte commercialization department to move from an advertising platform to an operating platform. Now, in a downturn in the general environment, they still get more advertising revenue. At present, more than 40% of byte’s advertising revenue is contributed by e-commerce. The success or failure of the “mall” will determine how long Douyin’s e-commerce can continue to grow.

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