With low prices and weak reach, is Douyin e-commerce approaching Pinduoduo?

Recently, Douyin has made important changes to the merchant recruitment rules for the low-price flash sale channel in the mall, including merging entrances, adjusting quotations, and extending the price traceability period. At the same time, it has launched a price comparison channel "Find a Good Price" so that users can easily find the lowest price for the same product in the mall. This series of actions shows Douyin's determination to penetrate the low-price market and is actively adjusting its e-commerce structure, which not only affects merchants, anchors and consumers, but also heralds major changes in Douyin's e-commerce ecology.

Douyin once again penetrates into Pinduoduo's low-price territory.

According to "Tech Planet", Douyin e-commerce has once again revised the "Douyin Mall Low-Price Flash Sale Channel Investment Rules". The core changes include: merging the "Hot Sale Flash Sale" and "Daily Flash Sale" entrances, adjusting the quotation, extending the price traceability period, etc.

At the same time, the Douyin Mall page launched a price comparison channel "Find a Good Price". Through this function, users can find the lowest price of the same product in the mall, and the entrance is on par with Douyin e-commerce's current key business "Hourly Delivery".

Since the beginning of this year, Douyin e-commerce has been active in the low-price track, showing signs of imitating Pinduoduo.

In February, Douyin E-commerce set "price power" as the highest priority task for 2024. It is another e-commerce platform that has clearly promoted "low price" as a core strategy internally after Pinduoduo, Alibaba and JD.com. In May, Douyin E-commerce conducted a small-scale internal test of the "automatic price change" function, which supports merchants to entrust the platform to change prices according to market conditions within the conditions set by the merchants.

It is worth noting that Douyin e-commerce has also recently weakened the influencer live broadcast. According to 36Kr, Douyin is reducing the proportion of traffic allocated to influencer live broadcasts and tilting the traffic to high-quality short videos and brand store broadcasts.

Combining the two actions, it is not difficult to see that Douyin e-commerce is adjusting its e-commerce structure, not only continuing to expand the proportion of shelf e-commerce, but also no longer focusing on big anchors. What impact will this series of changes have on all players? And what changes will it bring to the Douyin e-commerce ecosystem?

1. With a super low price of 0.01 yuan, Douyin embarks on the path of Pinduoduo

In the era of consumption downgrade, low prices have become the most direct and effective means of attracting customers.

As a result, batches of bargain hunters began to flock to Douyin: 0.01 yuan tissues, 0.01 yuan hair bands, 0.01 yuan trays... The bargain hunters shared their "trophies" on the social platform with great success. These "bargains" were not obtained by users exploiting platform system loopholes, but were super low prices after Douyin e-commerce provided coupons.

Currently, the upper half of the Douyin Mall homepage includes multiple entrances to low-price areas.

For example, the main feature is the "super value purchase" of official subsidies and group buying; there is a "low price flash sale" where you can buy different products of various categories for 1 yuan. Click on the product details to see that most of the stores are brand distributors or white-label stores, rather than official brand stores.

The position of "Super Value Purchase" is higher than "Live Selection"

The newly launched Douyin channel "Find Good Prices" is subdivided into multiple categories: selected, 9.9 capped, women's clothing, personal care and cleaning, and mother and baby.

This channel will personalize product recommendations based on user preferences. The "Compare Prices" channel is marked on the right side of each product link. Clicking it will display other prices of the same product on the Douyin channel.

The fight for dominance in the low-price market is also reflected in Douyin's other e-commerce actions.

Recently, Douyin e-commerce has launched a number of policies for small and medium-sized merchants, including free commissions on merchandise cards, reduced deposits, and lower commissions. Among them, daily necessities are the main category, and it is also one of the easiest e-commerce tracks for small and medium-sized merchants and white-label factories to enter.

According to LatePost, Douyin has been actively introducing white-label and small and medium-sized businesses since 2023, concentrating these low-priced brands on shelves mainly in shopping malls. In 2024, Douyin's low-price strategy will be extended to the content field: shopping malls and short videos will vigorously recommend low-priced goods, while live broadcast rooms will continue to carry high-priced goods mainly from brands.

Douyin's heavy bet on the low-price strategy may, on the one hand, be based on the fact that Pinduoduo has become popular with its low-price image and its market value has surpassed that of its e-commerce predecessor Alibaba. On the other hand, it is also to enrich the platform's all-round development of product demand and meet the needs of users in different price ranges.

It is worth mentioning that Pinduoduo is also taking precautions in the low-price war.

On the eve of 618, Pinduoduo launched the "automatic price following" function, which can analyze the selling prices of competing products in real time, help merchants automatically adjust prices, attract users at lower prices, and obtain traffic.

Once this function was launched, it caused dissatisfaction among some small and medium-sized businesses.

Some merchants said that this move is equivalent to Pinduoduo's testing the lower limit to drag merchants into a more intense price war, which has repeatedly compressed profit margins. In the long run, merchants can only find ways to save costs, resulting in lower and lower product quality, and eventually the entire e-commerce market will fall into the phenomenon of bad money driving out good money.

As low prices become an unavoidable topic in the e-commerce industry, brand merchants are also troubled by frequent price comparisons between platforms.

The person in charge of a clothing brand told the editorial department of Xinbang that if the products registered for the promotion are not priced the same low across the entire network, they will most likely be disqualified from participating in the next event. "The platform monitors product prices in real time on a daily basis. It can be said that the right to control prices of products is not in the hands of us merchants now."

2. Having lost the “lowest price on the entire network”, is Dabo exiting the market?

While TikTok is aggressively attacking low prices, live streaming by experts is also showing signs of weakening.

In the early years, live streaming by experts opened up new territory for Douyin, laid the foundation for early users to think of Douyin as a live streaming e-commerce platform, and gave birth to one “top influencer” after another.

From Luo Yonghao, who retired after the completion of "True Return", to the first "Crazy Little Brother Yang" with over 100 million fans, to Jia Nailiang who topped the list of sales during the 618 shopping festival this year, the position of Douyin's "No. 1 salesperson" has been constantly changing, which also shows the uncertainty of expert anchors to a certain extent.

The controversies faced by top anchors have also exacerbated this uncertainty.

For example, Dong Yuhui and his independent portal "与辉同行", although they have long been ranked in the top ten of Douyin's sales list, during this year's 618 promotion, the traffic of "与辉同行" was lower than usual. Dong Yuhui himself also admitted in a talk show that he resists selling goods and is disgusted by the word "Internet celebrity".

Whether it is the uncertain "number one flow" or the discussion of controversy, the key factor that influences consumers' final orders is the "lowest price on the entire network."

As early as 2019, Li Jiaqi said that the reason he could get the "lowest price on the entire network" was because merchants wanted to quickly increase sales and obtain platform promotion, and used advertising fees to subsidize. However, as the tide of the first generation of head live broadcasts gradually receded, the dominance of the "lowest price on the entire network" was also returned to the platform itself.

During the 618 shopping festival this year, some consumers said that the price of the sweeping robot they bought in Li Jiaqi's live broadcast room was more expensive than that of other e-commerce platforms. Li Jiaqi explained that "the price was abnormally low due to system reasons and the quantity was small", but this statement did not convince consumers. Later, after more feedback from consumers, Li Jiaqi's live broadcast room returned 800 yuan of live broadcast room red envelopes to consumers.

The reason for this is that there are more and more anchors selling goods, which has led to a decrease in merchants' dependence on top anchors, and more and more brands are choosing to build their own live broadcast rooms.

The person in charge of a daily necessities brand told the editorial department of Xinbang that compared to giving the right to the lowest price to Douyin's expert anchors, brands at this stage prefer to reserve the lowest price for store anchors. The costs such as the slot fees and commissions that were once given to the anchors are now used by the brand to operate its own stores.

The "2023 China Live Streaming E-commerce Industry Research Report" shows that the scale of China's live streaming e-commerce market will reach 4.9 trillion yuan in 2023, of which store broadcasts will account for 51.8% and live broadcasts will drop to 48.2%.

From the perspective of Douyin e-commerce, brand store broadcasts are more stable and better able to cooperate with the platform's low-price strategy. At the same time, brand merchants' information flow advertising on Douyin is also a very important source of advertising revenue for Douyin.

According to official data from Douyin e-commerce, in more than half a year after its launch in 2021, the revenue generated by Douyin's e-commerce advertising platform Juleliang Qianchuan accounted for 35% of the platform's total advertising revenue. In 2022, the GMV penetration rate of Juleliang Qianchuan merchants reached 85%.

Without the lowest price advantage, expert anchors can still increase the number of orders in a short period of time by listing welfare products and driving traffic to the live broadcast room. In May of this year, Douyin's live broadcast traffic rules changed from "intensive transactions" to "stay time", which means that anchors need to use richer live broadcast content to increase the length of time users stay in the live broadcast room.

The head of a traffic investment agency told us that in several live broadcasts by experts he managed this year, the proportion of paid traffic was higher than in previous years. As for how to leverage the natural traffic at this stage, he is still in the process of exploring.

3. Shelves vs. Content: Douyin e-commerce seeks a balance

Low-price shelves and live broadcasts by experts are two sides of the same coin of Douyin e-commerce.

In 2022, Douyin e-commerce proposed to enter the "global interest e-commerce" stage, and the platform also expanded from the content field to the "shelf field + content field". Judging from the current actions of Douyin e-commerce, shelves and content are not in a tit-for-tat confrontation, but are seeking a balance between the two.

According to 36Kr, this year the GMV generated by Douyin product cards (including showcases, search, Douyin mall, guess you like, etc.) will account for more than 40% of the entire Douyin e-commerce market, and the rest will be short videos and live broadcasts. In 2025, Douyin product cards will account for more than 50%.

Although Douyin has denied the claim, some brands have recently discovered the benefits of Douyin's shelf scenes.

"Yuanchuan Research Institute" once reported that Fangli, a cosmetics brand established four years ago, has been ranked first in the sales of cosmetics/perfumes/beauty tools on product cards through the linkage of live marketing and shelf scenes, and the transaction amount in shelf scenes accounts for more than 50%.

Although brands have found business opportunities in Douyin e-commerce, the frequent promotional content also directly affects the user experience. Some netizens said on social platforms that they now see 2-3 e-commerce content in almost every 10 Douyin videos.

Douyin also intends to separate its e-commerce business. Whether it is the Douyin Box launched previously or the Douyin Mall App launched recently, they are all Douyin's attempts to explore the waters. However, Douyin's e-commerce business has grown from the content soil of Douyin, and the two are closely interdependent.

This scene is similar to Taobao's previous move to divert livestreaming sales to the DianTao App. At that time, many top Taobao anchors, including Li Jiaqi, would guide viewers to download the DianTao App during livestreaming and distribute exclusive red envelope benefits. However, as of now, the results are not significant.

It is worth mentioning that when Douyin and Pinduoduo were fighting fiercely over "low prices", Alibaba had already intended to withdraw.

After the 618 shopping festival ended this year, Taobao Group held a closed-door meeting for merchants. A core change was that Taobao weakened its absolute low-price strategy, that is, from 2023, the search weight distribution system based on "five-star price power" was weakened and changed back to distribution based on GMV. At the end of February this year, Taobao Special, which mainly featured special price, also faded out of the historical stage, and Taobao Special merchants will move back to Taobao.

When Douyin e-commerce was focusing on shelf e-commerce, it was seen by the industry as borrowing from Taobao's shelf model. Now it is getting closer and closer to Pinduoduo's low-price strategy, which shows the change in model.

How long the price war will last depends on the supply chain capabilities of the factories behind the brands, and this critical value cannot be tested again and again. When Douyin e-commerce raised the banner of low prices, this battle targeting Pinduoduo has entered the countdown.

Author: Xiaoba, Editor: Truffle