These merchants who "listened to the advice" all started to make things because they saw two great potentials.

This article deeply analyzes the business strategies and successful cases of the Douyin platform, and explores how to achieve rapid sales and efficient e-commerce operations by understanding the needs and preferences of young users and creating differentiated hot products. The article provides brand merchants with a practical guide on how to succeed on the Douyin platform, and I hope it will be helpful to you.

618 is approaching, and brands are actively preparing for this mid-year shopping season. However, when everyone is busy with 618, we noticed that one platform is focusing on the 520 gift season.

This platform is Dewu. After studying it, I found that gift giving is actually the explosive node of Dewu's e-commerce. Among the 690 million monthly searches on the platform, 410 million are related to gift giving. The explosiveness of gift giving nodes is 3 to 4 times that of daily sales. Some merchants even reported 6 to 7 times. In addition to the explosive nodes, Dewu also has the characteristics of no investment flow, high average customer unit price, and less manpower investment. Therefore, it has become a treasure platform for many brands to "make money silently".

In 2021, Daofa wrote an article titled "Why is Generation Z addicted to "Douyin"? | Marketing Observation". Now, three years have passed, and Douyin has undergone many changes. The most obvious is that the richness of its product categories has been further improved, covering more than 20 categories including beauty, 3C digital products, home appliances, and food. Products such as Dove chocolate, Chow Tai Fook gold bracelets, and Xiaobu folding bicycles are all popular.

It's time to re-understand Dewu. What kind of platform is it now? How does it increase business and make money easily? We have summarized two key words to understand Dewu, and also reviewed the business methodologies of some excellent cases for your reference.

PART1 Behind the rapid sales, high labor efficiency and low operating costs

Among the brand merchants that we know of on Douyin, many mentioned the three points of fast sales, high labor efficiency and low operating costs.

For example, the original home furnishing brand "Zaowuji" sold tens of millions of water cups with only two people; a sports shoe merchant was operated by three people last year and achieved a scale of over 100 million; after a dealer of "Philips" settled in, the annual year-on-year growth exceeded 30%, and the customers were mainly new customers with a low return rate; "Dove" officially settled in Dewu in October last year and launched an exclusive gift box, with peak daily sales of nearly one million, and monthly GMV exceeded ten million within three months of settlement.

Why? The reason is that Dewu focuses on the target groups and styles, which reduces the transaction costs of buyers and sellers and improves transaction efficiency.

We can understand this with the help of "A Brief History of Business". Liu Run said in the book that the essence of business is transaction, and transactions face two natural barriers: information asymmetry and lack of credit transmission. In order to overcome the obstacles brought by the natural barriers, buyers and sellers must pay transaction costs, such as search, comparison, negotiation, and after-sales service. The evolution of business is to continuously cross the natural barriers and reduce transaction costs.

The development of Dewu can also be viewed from this perspective. Through third-party authenticity identification, Dewu has solved the natural barriers of transactions such as lack of trust between the two parties, and has also established the perception of consumers that authentic products are guaranteed, quality is trustworthy, and trendy products are top-notch.

In 2020, Dewu announced its positioning as a full-category trendy goods e-commerce and trendy lifestyle community. From "Dou" to "Douwu", to a certain extent, the challenges faced are similar to those faced by many niche brands: while maintaining its own tone and user stickiness, it uses trendy users to break the circle and expand to hundreds of millions of young users in China and a wider range.

In this regard, Dewu's solution is to define the characteristics of its own e-commerce by using people and styles to achieve natural diffusion. Specifically, it can be understood as two generalization paths. First, from genuine sneakers to new, trendy, cool and dazzling goods. Second, from young people to more young people across first-tier and fifth-tier cities, regardless of gender. Dewu has the youngest users among all e-commerce platforms, with users born after 1990 accounting for more than 90%, and a penetration rate of 70% among young people born after 1995 in China.

In other words, Dewu has become "a place for young people to buy new, trendy, cool and dazzling things". Therefore, Dewu focuses not on categories but on people and styles. Young and trendy are two key words to understand Dewu.

So, why can focusing on the right people and styles reduce transaction costs and improve transaction efficiency? Let’s look at three directions.

First, knowing the product reduces the number of returns and reduces the seller’s after-sales and operating costs. In simple terms, it means selling the right things to the right people. When consumers know what they want and what they have bought, the probability of returns will be reduced.

The head of the high-heeled shoe brand "Lily Wei" told Daofa that Dewu attracts consumers who have a deep understanding of the products, have a strong purchasing purpose, and have a high degree of cognition and expectation management of the purchased products. In addition, users who understand the products also make the traffic here more accurate, thereby reducing the operating costs of merchants.

Second, the products are of high quality and can be found quickly, which reduces the search and comparison costs for buyers. Dewu is a semi-managed model, and has strict supervision on the tone and quality of the products.

This kind of "strict selection" increases trust and reduces consumers' purchasing and identification costs. "When you want to buy something trendy and new, you can find what you want more intuitively and quickly on Dewu," said the person in charge of the badminton fitness brand "Pu Rui".

Third, people with similar interests can attract each other to place orders, which reduces decision-making resistance, the comparison cost of buyers, and the pre-sale cost of sellers. This mainly refers to the real user discussion atmosphere. On Dewu, different people will recommend the same product in a rich variety of dimensions. These UGC contents are more in line with consumers' real thoughts and help promote the completion of purchase decisions.

The person in charge of Pu Rui gave an example, "You want to buy something for your boyfriend, and you happen to see that someone else has also bought it, and said that her boyfriend was very happy to receive it, then you will be more confident to place an order."

In summary, Dewu's focus on core groups and product styles has improved the efficiency and accuracy of matching people and goods, allowing brand merchants to achieve twice the result with half the effort, and achieve faster sales, lower return rates, and higher profit margins.

PART2 Two key points of Dewu's operation: understanding people and making good products

After talking about how to understand Dewu, let’s take a look at how to use Dewu well.

After reviewing many cases of brand merchants, we have extracted two key points of Dewu's operation. First, understand people. In other words, see the real needs of young people and integrate them into life scenes. The life scenes here can be physical or spiritual.

The former is like the dormitories where students live. The home textile brand "Laffield" achieved a year-on-year sales growth of more than 130% in 2023. They seized the start of the school season in August and the students' demand for new beds in the new semester. They focused on the mattress category and achieved a month-on-month growth of more than 70%.

The latter is a virtual scene of an 18-year-old adult. High heels are often considered a symbol of maturity and independence. Lily Wei seized this opportunity and created the mentality of "the first pair of high heels in life" and "coming-of-age ceremony" on social media to meet young people's pursuit of a sense of ritual for growth. It has achieved a boom in Dewu, reaching 400,000 per day on gift-giving nodes such as the Chinese Valentine's Day and 520. The main promotion model of the event once accounted for nearly 80% of Lily Wei's entire Dewu performance.

It is worth mentioning that behind the "coming of age gift" high heels is a huge feature of Dewu - gift giving. Dewu consumers now repurchase 4.6 times a year, and gifts reach 2.9 times. The reason is not difficult to understand. After all, new, trendy, cool and dazzling things are naturally very suitable as gifts.

For brands, this means that Dewu has greater potential to be tapped. The two most obvious points are that it covers a wider range of categories and has a higher average order value.

From the perspective of covered categories, gifts can be given to oneself or to relatives and friends. For example, young people will buy health care products for their parents during the New Year Goods Festival, Women's Day, Mother's Day and other festivals. During Mother's Day, the number of orders for health care products in the Dewu category averaged 1,000 per day.

A typical category that may not conform to everyone's inherent impression of Dewu, but because it is very suitable for gift-giving scenarios, it has achieved rapid growth is gold jewelry. In 2023, the overall growth rate of Dewu's gold jewelry increased by 300% year-on-year.

In addition, compared with the platform promotion and product launch nodes, gift nodes are scattered throughout the year, and birthdays are bought as needed. For the brand, it brings an increase in time nodes. The head of the Douyin channel of the new life digital brand "BASE" said that the two turning points for the brand to achieve a breakthrough in Douyin's performance in 2023 are the two festivals of 520 and Chinese Valentine's Day, and after the holidays, the sales heat did not decline, but continued for several months.

The higher average order value is easy to understand. “I can’t bear to buy it for myself, so I wait for someone to give it to me as a gift”, “I can’t bear to use it myself, so I buy it as a gift to others”. Consumers’ psychological price for gifts is often higher than that for daily consumption.

Starbucks entered Dewu in May 2023, focusing on high-value water cups and gift-giving scenarios, and launching new products every month. For young people, water cups are a carrier for playing memes and expressing themselves, and they also like to use water cups to express their feelings. The average customer price of Starbucks water cups on Dewu is higher than that on other platforms, and it is also their fastest growing platform.

The second key point of Douyin’s operation is to make good products and create differentiated best-selling products.

Dao Fa mentioned it a long time ago. This is no longer the era of "one stall for all channels". Brand merchants need to have the ability to customize pallets for channels, which is especially important in Dewu.

First of all, the crowds covered by Dewu are very unique and need special analysis. Secondly, Dewu is displayed in the form of tofu blocks and waterfall flow, and the core browsing unit is the product rather than the store. On such a platform with products as the core and no investment in traffic, it is very important to let the products bring their own traffic.

If you want to create a hit product on Douyin, product selection is crucial and pricing is also important.

Let's first look at product selection. The criteria can be summarized in four words: new, trendy, cool, and stunning. How to achieve this specifically?

First, it is a joint venture, holding hands with IPs that young people like. For example, Yili Yogurt cooperated with the line puppy, which was sold out in 3 days; in the winter of 2023, Disney hand warmers topped the hand warmer sales list for more than a month. It can be seen that as long as it meets the preferences of Dewu consumers, from food to daily necessities, many categories have opportunities.

Of course, in addition to joint ventures, there are also more "self-reliant" methods, that is, to capture the hearts of young people through distinctive products. For example, a badminton racket sold out by Pu Rui on Douyin, with white as the base color, matched with three popular colors: coral pink, sunset gold, and rose purple, with a gift box and two free grips. At the peak, 4,000 rackets were sold in a single month.

Another example is the "little gold beans" of "Chow Tai Fook", which come in various shapes such as hearts, ingots, and paper cranes. Many young people regard it as an investment fund, and in the comment area they say "saving money every time becomes empty talk, but buying gold can save money painlessly, and strive to have one every month", which captures the tangled psychology of the young generation of "wanting to save money and wanting to spend money".

For mature brands like Chow Tai Fook, Dewu can be a starting point and testing ground for brand rejuvenation. Chow Tai Fook will work with Dewu every two weeks to continuously optimize search recommendations, content seeding, trends and other aspects.

Let’s look at pricing. When we talk about hot products, we often think of low-priced items driven by early adopters and low decision-making thresholds. But this is not the case with hot products on Dewu. What’s important is the “value for money”.

Take Lily Wei's high-end shoes for example. They are priced at around 400 yuan. The person in charge told DaoFa that this is a price that is affordable but not high-end. It can attract students and young people who have just started working, and it also gives the brand enough profit margin to ensure good products and good services.

Consumers on Dewu have no shortage of purchasing power. For example, in the category of car aromatherapy, the price of the top single product on Dewu is 220 times the industry average. Therefore, when setting prices, brands should pay more attention to whether they cover enough people and whether they provide a sense of quality and design. Products with a "good value for money" that are both practical and can bring surprises and provide emotional value have a better chance of becoming hot products on Dewu.

In addition, when it comes to "making good products", brand merchants and Dewu are working in the same direction, so they should be good at using platform resources. For example, for new products, Dewu has special support plans, such as targeted support for high-quality natural traffic, commission-free products, marketing and content differentiated operations, etc. For new merchants, Dewu also has a 30-day commission-free, 0 yuan deposit policy, and helps new merchants get started quickly through 30 days of close companionship.

PART3 Analyst Comments

Daofa has always said that a core change in new marketing is the shift from shelf logic to crowd strategy. The key to brand competition has become matching content, products, scenes, and crowds to stimulate consumer demand and initiative.

Interestingly, Dewu looks like an oversized shelf, offering rows and rows of goods, but in fact, Dewu's goods have a clear crowd and scene orientation, in order to provide young people with the most suitable products, which is also the embodiment of the crowd strategy. The key to the integration of product and effect is people-oriented, and Dewu puts the focus of people-oriented on the starting point of marketing 4P, that is, products. For brand merchants, this may be a simpler and more direct solution. There are preferential policies for settling in Dewu now, if you are interested in settling in.