Original link: https://www.latepost.com/news/dj_detail?id=1707
“LatePost” learned that Douyin e-commerce has recently made a series of organizational adjustments, aiming to more efficiently introduce and support industry belt merchants and white-label merchants with lower commodity prices. Douyin e-commerce is still actively recruiting industry belt service providers to complete the introduction of merchants. It is also understood that in 2023, Douyin e-commerce will increase the assessment requirements for “order volume” without lowering the GMV (gross transaction) target.
The above changes show that improving the richness of products and emphasizing cost performance are becoming the current priority tasks of Douyin e-commerce.
Contrary to traditional e-commerce platforms such as Taobao and Pinduoduo, which focus on low prices first and then upgrade their brands, Douyin e-commerce has chosen to give priority to brand merchants since its birth in 2020. It is understood that after three years of development, the occupancy rate of the “Dou 2000” brand merchants of Douyin e-commerce has exceeded 98% in March 2023. “Dou 2000” refers to the top 2,000 brand owners in Taobao and Tmall.
In the past, no matter how fierce the domestic e-commerce competition was, Douyin e-commerce, backed by more than 700 million daily active users and super algorithm recommendation capabilities, could still quickly develop without large subsidies and insufficient products. Big GMV. In 2022, the GMV of Douyin e-commerce will exceed 1.6 trillion yuan, second only to Taobao, JD.com and Pinduoduo.
But also starting from 2022, as the ceiling of the Douyin live broadcast e-commerce model is approaching , the team began to invest more resources in the development of shelf e-commerce scenarios centered on malls and search.
“LatePost” learned that during the internal research of Douyin e-commerce, it was found that when a certain percentage of users enter the mall to shop, they will jump out of Douyin to other e-commerce companies during the period from putting the goods in the shopping cart to paying. platform for price comparison. This shows that when users consume in the shelf scene, they are no longer so easily stimulated by content and talents to consume quickly-these were the methods that Douyin e-commerce relied on for success.
In order to achieve further growth, Douyin e-commerce began to become like a traditional e-commerce platform, and began to compete with competitors for the most basic ability-richer and more price-effective products. Introducing a large number of white-label merchants can help Douyin e-commerce achieve this goal as quickly as possible.
Multiple organizational adjustments to increase the importance of white label merchants
In order to support small and medium-sized businesses, Douyin E-commerce once established a business development center in July 2022, which was placed side by side with more than ten industry operation groups such as clothing, jewelry, and food. Ren Muqing reported. It is understood that all merchants with an average daily sales volume of less than 30,000 at that time were assigned to this center. Prior to this, Douyin e-commerce was completely divided into businesses according to the industry, no matter whether they were large or small, brand or white brand.
But soon the team found that it was too simple to integrate all these small and medium businesses into one center. Due to the huge differences between different industries, it is difficult to unify operations, and the growth rate of businesses is slower than expected.
“LatePost” learned that in May 2023, Douyin e-commerce made a new round of adjustments – breaking up more than ten existing industry operation groups and business development centers, and finally divided them into A and B. groups.
It is understood that all brand merchants will enter Group A, and non-brand merchants will enter Group B, and each group will be subdivided into different industries for targeted operations according to their respective situations. For example, in the field of jewelry, Chow Tai Fook, which belongs to the brand, will be included in Group A, and jewelers without brands will be included in Group B. The level of sales will no longer be used as the criterion for classifying merchants.
Group A is managed by Mu Qing, who is in charge of Douyin e-commerce operations; Group B is in charge of Zhao Rui, who has recently transferred from Byte’s commercial sales department to Douyin e-commerce. They all report to Wei Wenwen, president of Douyin e-commerce.
Compared with the previously established business development center, the importance of group B, which now undertakes similar functions, has been greatly improved. It also set up an independent strategy team, led by Huang Yuanjian, the former head of TikTok Brazil’s e-commerce.
At the same time, Douyin e-commerce has also reformed the assessment criteria for merchant operations – Group A, which is dominated by brand merchants, pays more attention to GMV; Group B, which is dominated by white-label merchants, pays more attention to order volume.
Prior to this, Douyin e-commerce tried to focus on order volume without distinguishing between industries and types of businesses. A Douyin e-commerce person told “LatePost” that if you only focus on GMV, the business team will focus on the top big brands and big anchors that are easier to make high sales; White label merchants with limited sales will not be taken seriously. After the adjustment, the business team will be driven by new goals and will increase their focus on small and medium-sized businesses.
Douyin e-commerce has also made corresponding adjustments in traffic distribution, including adding more “order volume” weights.
When an employee invites Mu Qing, the person in charge of Douyin’s e-commerce operations, to attend some meetings, he will also directly ask: “Will this be related to ‘order volume’?” If so, he will attend first.
However, it is almost unrealistic to uniformly assess merchants of different industries and sizes with order volume. There are many types of e-commerce industries, and their characteristics vary greatly. A typical example is that compared with products with relatively low unit prices such as clothing and food, the mobile phone industry with a high degree of branding generally has a higher unit price, and consumers are more cautious when placing orders. It is unreasonable to evaluate different industries by order volume .
In order to win more traffic, some brand merchants began to sell more samples instead of genuine products, in order to guide users to place more orders.
In the end, this target adjustment only lasted for just two months. Since May, the team has formulated targeted assessment objectives according to the respective characteristics of Group A and Group B. Whether it is a white-label merchant in a brand or industry, or a merchant in a different industry, they all have a clearer development strategy.
Among them, what Group A needs to do is to carry out refined operations for the brand, so that sales will “stable and increase”. For example, to connect with the e-commerce operation of local merchants, it is necessary to look at the brand pallet and price power in more detail, and to find experts who can adapt to the brand’s tonality. Group B, which tends to be white-labeled, needs to start by introducing more industrial belt merchants. According to the characteristics of different industries, let white-label merchants learn how to operate in the Douyin e-commerce ecosystem and achieve large-scale growth.
Return to traditional e-commerce competition
Douyin e-commerce is the fastest growing e-commerce platform in China. Last year, the payment GMV reached 1.6 trillion yuan, and this year’s target is 2.3 trillion yuan.
There are various statistical calibers for e-commerce GMV. Payment GMV refers to the total amount paid after placing an order, excluding returned goods. But the more mainstream statistical caliber is the order GMV-as long as the order is placed, even if the payment is not completed in the end. According to calculations, the order GMV of Douyin e-commerce accounts for nearly 70% of Pinduoduo.
Nowadays, when Douyin e-commerce takes the shelf market (mall, search) as a more important business position, the richness and price power of commodities become extremely important, and it will also face the main “low price of the whole network” Pinduoduo compete.
Since the beginning of this year, Douyin e-commerce has targeted Pinduoduo to introduce more low-priced explosive products, and at the same time recruited a large number of service providers in industrial belts, using their power to find more small and medium-sized businesses to operate and sell products here. It is understood that the number of orders for goods with prices below 20 yuan has increased rapidly in Douyin e-commerce.
Compared with the previous Douyin e-commerce, which needs to spend a lot of energy to leverage a limited number of brand merchants with a stronger voice, the market supply of white-label merchants in the industry is unlimited, and the platform has stronger control over them.
According to “LatePost”, Douyin e-commerce also established a commodity center in March this year. This is the first time that Douyin e-commerce has formed a project team around “commodities”, with the purpose of providing a richer supply of commodities and formulating sales strategies. Prior to this, Douyin e-commerce focused on short videos and live broadcast content recommendations. This model has relatively low requirements for the richness of platform products.
A former Douyin e-commerce employee summed up the current product strategy of Douyin e-commerce as: People have what they have, and I have it first. That is, products owned by other platforms, Douyin must also have them; with a rich supply of goods, Then make the price better. Recently, according to the strategic priority, the team is expanding a large number of products that cannot be found in Douyin e-commerce.
For Douyin, the bigger challenge is how to make these merchants willing to further reduce commodity prices when operating on Douyin e-commerce.
One of the reasons why Pinduoduo can achieve “low prices across the entire network” is that it concentrates massive traffic on a limited number of products and makes them popular, and merchants can make profits through the model of small profits but quick turnover.
In contrast, Douyin e-commerce does not lack the ability to “explode” products, but in the past this was more reflected in content scenarios centered on short videos and live broadcasts. However, most industry belt/white brand merchants generally do not have content planning and operation experience, so it is not easy to create a blockbuster product here. In the shelf scene where Douyin e-commerce focuses on development, there is not enough traffic and mature methodology to create explosive products.
Douyin has achieved rapid growth in the e-commerce industry by relying on the brand-new short video and live broadcast delivery model. As the further growth space that the traffic model can bring to it is limited, it will inevitably face direct competition in the same dimension as Taobao and Pinduoduo, and this is far more difficult than it imagined.
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