Why Social Commerce on Douyin is the Next Big Thing in China
Social commerce on Douyin is going to be the biggest thing to happen to marketing in China since the arrival of e-commerce.
The ground is rapidly shifting in the digital commerce landscape in China, and brands in the market are quickly taking notice — enter Douyin — the short video app owned by ByteDance, and the biggest thing to happen to the Chinese retail landscape since the arrival of e-commerce.
Douyin (also known as TikTok for China) developed commerce functionality just two years ago and it has already achieved more than US$150 billion GMV (2021). This year, its poised to substantially exceed those numbers and is quickly eating away market share of traditional e-commerce giants like Tmall and JD, thanks to viral content, natural commerce integration, and massive demographic changes among China’s millennial and Gen-Z consumers.
The short-video platform is not the first to tap into social commerce in China — WeChat and Xiaohongshu (Red) have all rolled out their own e-commerce models — but Douyin is, by far, the fastest growing.
Think about this — it is estimated that 70% of the growth of digital commerce in China came from Douyin in 2021!
In short, Douyin is becoming a crucial platform that any brand that is serious about China cannot afford to miss, and the most important development in the market since the arrival of e-commerce.
Why is China leading the world when it comes to social commerce?
In China, more and more people are online shopping via social media. It’s estimated that China’s social commerce market will grow to over US$1 trillion by 2024. Chinese consumers have started to embrace new ways of shopping that favour browsing and interaction over targeted product searches.
Fortunately, social commerce fits right in.
Social commerce is largely developed around social content, instead of serving ads of products.
The key to Douyin (and RED)’s success is that they are fundamentally social platforms that attract hundreds of millions of regular users for reasons other than just to shop. These platforms built around the idea of entertainment, so high-value content on these platforms is highly social and relatable.
Technology enhances creativity
The newly developed commerce functionality simply offers users the option of making instantaneous, friction-less purchases without changing apps.
For instance, if someone is scrolling through social feeds for entertainment and then sees an appealing product being discussed or demonstrated, they can immediately and seamlessly purchase it and have it on its way for delivery (all within the app).
What is Douyin?
Western audiences are often told that Douyin is TikTok. While TikTok was born out of Douyin and they share many common features, the 2 platforms are distinctly different and are separate entities. Its important to remember that users on these two short-video apps cannot interact with each other.
Douyin vs TikTok
While both Douyin and TikTok have the same signature short-video format, Douyin’s features are far more developed.
Features that are only available on Douyin include:
Both platforms feature trending hashtags and banner advertisements, but Douyin’s homepage also showcases ranking of top accounts in a range of categories, including celebrities and brands.
Furthermore, its keyword search algorithm ranks content from accounts with larger number of followers and verified business accounts higher, presenting a huge opportunity for brands. TikTok’s algorithm, on the other hand, in based on a post’s number of likes, comments, reposts, and engagement rates.
There is also a difference in the demographics of users. The majority of Douyin users are between the ages of 24 to 45, and come from well-educated backgrounds, and are well-informed. TikTok’s userbase, on the other hand, is much younger.
Last, while funny, relatable videos top the charts for both platforms, Douyin users are more drawn towards knowledge-based videos.
Douyin Commerce — A Massive Game-Changer
As with other social media apps in China like WeChat and RED, Douyin recently expand its commerce component — and that came in the form of flagship stores.
Launched in March 2021, these stores feature elements much like those of traditional e-commerce marketplaces, with banners, in-store search bars, categories, and vouchers.
And with just few taps, users can buy a product featured in a video or livestream, frictionlessly, without having to leave the app to complete their purchase with a third-party provider.
This makes Douyin a much more powerful marketing platform for brands and advertisers. Brands can not only partner with influencers (KOLs) to build awareness, but they also get direct sales for their products.
How Does it Work?
Douyin’s algorithm provides users with tailored content that is relevant to their interests and preferences. For instance, if a female user browses several short skincare videos every day, Douyin’s algorithm can filter content to reflect her strong interest in skincare. Then, when that user sees the right skincare product offered for her to purchase, she can do so instantly, inside of the app.
Step 1: Content
Step 2: Interest
Step 3: Purchase
Furthermore, the Douyin app will also categorize customers searching for beauty tools as prospective customers of other cosmetics products and increase the chance for these consumers to be exposed to additional beauty, and personal care content and products.
Actions such as product browsing, purchases, and other behaviours, enable the platform to continuously optimize for users’ interests and serve relevant ads. As a result, the app executes highly accurate product matching to the user’s interests, and therefore results in more conversions and repurchases.
Marketing on Douyin
Douyin is the hottest short video app in China right now, meaning that not only is it experiencing rapid growth, but users are also spending a lot of time on the platform (more than 2+ hours per day) and are frequently discovering many new accounts. This presents a golden opportunity for early-adopting brands to gain exposure (and followers) fast.
But the benefits of being an early adopter don’t just stop at quick exposure and easy engagement.
Today, advertising on Douyin not only costs a lot less than any other platform in China with a similar total audience, but it also yields far better results. There are far fewer advertisers on Douyin compared to other platforms, so the channel (and its ad inventory) is far less crowded (think Facebook advertising in North America in 2014).
And because any advertising is native to the discovery process, Douyin users are fine with commercial content and short sponsored videos, given the content itself is entertaining.
In short, an early adopter brand will see Douyin provide the best return on ad spend (ROAS) of any channel or platform in China — for at least the foreseeable future.
Traditional Marketplaces vs Douyin Commerce
Traditional e-commerce platforms are transaction-based where brands are competing for consumers’ existing attention and business. Douyin’s content creation model, on the other hand, gives every user the opportunity to gain attention and exposure through engaging video creation.
The core of Douyin’s social commerce is to help users discover their potential needs, then accurately match those needs with relevant products. The beauty of the marriage between social and commerce is that savvy brands can steal the spotlight by creating interesting, hyper-native content that combines short video product seeding with livestreaming.
Brands go from satisfying existing demand (traditional e-commerce) to generating new demand (Douyin commerce).
Success of Douyin Commerce
Douyin builds a direct bridge between creators and consumers, playing an important role in product discovery and triggering interests. Short-video is its main driver of traffic and algorithm-powered curation makes sure the right viewers are watching.
While it is still early in the life of Douyin, the app’s unique short-videos and livestreaming combination model has become a potent marketing pillar of some of the most successful brands in market. Short videos attract tons of traffic (especially among Gen-Z and millennial consumers) for livestreaming, effectively boosting user demand and conversion efficiency.
Furthermore, Douyin’s livestreams often feature strong, distinct personalities. Each influencer (KOL) has their own style, image, and a fixed audience base. Livestreaming with distinctive and unique personal characteristics is the one of the main reasons why Chinese users enjoy watching livestreams on Douyin.
And since Douyin requires livestream e-commerce transactions to be completed on the platform instead of being directed to third-party platforms, it forms a closed loop where users never stray from the app.
Your Product Inventory Will Thank You
Have you ever run out of your top sellers on a particular platform, and then have the algorithm from that platform punish your brand for (temporarily) not being able to instantly satisfy a customer’s demands?
Fortunately, with Douyin, that is no longer a problem.
Because Douyin isn’t a traditional e-commerce marketplace, the platform isn’t solely focused deriving more performance marketing dollars from your account in order to hawk more top sellers to customers.
If your account follows the terms and conditions of the platform and provides high-value, creative, and engaging content, your brand should not get punished by the algorithm, and your audience can continue to grow.
Then, when your inventory comes back, you can start running conversion focused ads once more to drive sales.
Advantages of Douyin’s Social Commerce
The key advantage for Douyin commerce is that the whole process — from awareness building to final purchase — is integrated into the platform. There is no need to switch platforms and purchases are built into the users’ broader behaviour inside of the app.
Chinese audiences do not arrive on Douyin with the intention to shop or discover product — they arrive to spend time and have a laugh or learn something valuable.
Users are attracted to the content in the videos or the KOLs’ product seeding — there just happens to be a commerce transaction at the end of the interaction!
As a result, Douyin represents a particularly good channel for brands in product categories like fast-moving consumer goods (FMCG), fashion and apparel, beauty, packaged foods, health and wellness, and more.
As social commerce has become the norm in China, most Chinese social media platforms have worked to integrate e-commerce into their apps. Nobody has done it quite as successfully as Douyin, however.
For brands looking to enter Chinese digital commerce market, Douyin marketing is, arguably, the best way to reach Chinese Generation Z and millennial consumers.
Despite launching its commerce presence just 2 years ago, Douyin has already consolidated its position in the industry in China. It now ranks among the top five digital commerce platforms in China.
Whether you have an established brand looking to break into the Chinese market or a small start-up looking for a foothold, knowing how to successfully navigate China’s digital landscape is a mandatory skill. Therefore, it is important to have an experienced partner to guide your business through this new environment.
At WPIC, we’re a verified Douyin Partner (and the first such organization in the West) that provides brands both content and commerce solutions for their entire Douyin operations.
Our team provides organizations with everything they need to successfully run their Douyin account — from making short-videos to operating the flagship store (across cross-border and domestic commerce), partnering with KOLs for livestreaming, coming up with a marketing strategy, and even handling warehousing and logistics.
If you’d like to learn more about how we can help empower your commerce strategy on Douyin, contact us today.
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