Douyin is creating an online supermarket, aiming to enter the comprehensive e-commerce industry?

Friends who often follow Douyin should know that Douyin has launched the "Douyin Supermarket" in the app. So how is Douyin Supermarket developing at this stage? In the field of e-commerce supermarkets, can Douyin Supermarket win a place in the hands of e-commerce giants that have been rooted here for a long time? Interested friends, let's take a look.

On January 28, Douyin launched the "Douyin Supermarket" in the app in a very low-key manner. There was no fanfare or preparation throughout the process, and there was not even a dedicated entrance - users had to search for "Douyin Supermarket" in the search bar or shopping entrance to start the service.

We speculate that Douyin Supermarket is most likely still in the trial stage.

To some extent, Douyin's move is not surprising. After all, for most people, Douyin has never stopped its ambition and actions to enter the e-commerce industry. Especially since Douyin launched hobby e-commerce, many people have judged that "with the development of time, hobby e-commerce will most likely eventually merge with traditional shelf e-commerce and eventually become a new form of e-commerce."

This also indirectly shows that Douyin has indeed achieved certain success in the field of e-commerce. Therefore, the "online supermarket" option, which has almost become a standard feature of e-commerce platforms, has naturally become the best option for Douyin to further expand its e-commerce territory.

From the outside, it seems that with such a huge traffic pool, it is only a matter of time before Douyin does anything. But it is undeniable that in the field of e-commerce supermarkets, it is probably not easy for Douyin Supermarket to gain a foothold in the hands of e-commerce giants that have been rooted here for a long time.

01 Douyin Supermarket breaks through the siege?

In fact, the local life sector has always been a huge pie. According to iResearch Consulting, the scale of China's local life service market was 19.5 trillion yuan in 2020, and this figure will grow to 35.3 trillion yuan by 2025. The online penetration rate of local life services will also increase from 24.3% in 2020 to 30.8% in 2025.

So we see that almost all Internet companies want to get a piece of the pie, and Douyin, which has huge traffic, is no exception.

In fact, as early as June 2022, some media reported that Douyin was preparing to launch its own business similar to JD Supermarket, and it had already piloted it in cities such as Guangzhou, Shenzhen and Hangzhou.

In November, Beijing Tiao Network Technology Co., Ltd. applied for the trademark "Douyin Supermarket" and directly reserved an entrance for it in the Douyin Mall. But interestingly, with the full official launch of "Douyin Supermarket", the independent entrance was not only not retained but completely disappeared, and you need to actively search for "Douyin Supermarket" in the search bar to enter the corresponding page.

Judging from the current situation, the most important thing for Douyin Supermarket at the moment is to find characteristics that are sufficient to compete with Tmall and JD Supermarkets which have been operating for many years, and to further strengthen and optimize its own supply chain.

Judging from the page appearance alone, Douyin chose a light green background color, and the overall page layout is relatively closer to JD.com, which shows that the overall gap between JD.com, Tmall, and Douyin is not that big. At the same time, perhaps because it has just been opened, the overall number of products is still relatively large compared to JD.com and Tmall.

Specifically, Douyin Supermarket’s products are mainly concentrated in some of the most common daily brands, and the variety of products of the same brand is still not at the same level as Tmall Supermarket. In addition, Douyin Mall has further set a threshold for free shipping for purchases over 88 yuan. In order to pursue shipping fee reductions, users will inevitably place an order to purchase multiple items at a time, but this also tests the richness of the platform’s products.

Therefore, in the coming period of time, Douyin is likely to accelerate the enrichment of its SKUs to support consumers' demands for diversified shopping. Of course, this is also a compulsory course for the layout of online supermarkets.

Looking further, in terms of price, the prices of Douyin and several other platforms are also very close. Taking the iPhone 14 256G version as an example, the price in Douyin Supermarket is 6,299 yuan. After inquiry, the price in JD Supermarket is also 6,299 yuan. This seems to indicate that Douyin is not prepared to compete with other platforms on the price side.

Finally, on the delivery side, Douyin chose to cooperate exclusively with SF Express. The vast majority of goods are shipped on the same day if ordered before 16:00. Compared with Tmall's next-day delivery before 23:00, and JD.com's ability to deliver in the evening if ordered in the morning, Douyin's advantage is not particularly obvious.

At present, Douyin does not seem to have a very obvious advantage over its predecessors Tmall and JD.com in the four most competitive aspects of online supermarkets: quantity, speed, quality and cost-effectiveness. Therefore, if Douyin wants to carve out a "bloody path" in the fiercely competitive online supermarket, it may need to find its own advantages in other aspects.

Of course, Douyin is not without advantages. At the current stage, Douyin's advantages lie in its traffic scale, content ecology and algorithm recommendations. How to break away from the past online supermarket logic based on "search" that requires users to actively look for products, and use its own advantages to create its own characteristics , seems to be the key to whether Douyin can succeed in the supermarket field.

But from the current perspective, the core of Douyin e-commerce's rapid rise in the past - interest and recommendation - is difficult to be directly copied and applied to Douyin Supermarket. After all, the supermarket is separated from the traffic system dominated by interest recommendations, and stimulating consumers' purchasing desire by watching videos is not suitable for Douyin Supermarket.

Perhaps as time goes by, Douyin Supermarket will still need to spend a lot of time and eventually complete the basic capabilities of online supermarkets such as price, logistics, SKU, and quality, and seek the possibility of breakthroughs in areas that it may not be good at.

02 Continuously increasing local life and improving its own e-commerce system

So, why is Douyin so persistent in taking such a path that is not easy to walk, and even a bit difficult?

Simply put, Douyin is likely seeking to become a comprehensive e-commerce company rather than a simple video-based merchandise sales platform.

In fact, over the past year, consumers have also changed with the changes in the environment, and these changes are the basic logic of survival for platforms and merchants. Or to put it more specifically, whether it is traditional shelf e-commerce or interest e-commerce represented by Douyin, both sides are constantly trying to absorb the other's breakthroughs to make up for their own shortcomings.

This is also why in the past year, people have seen the boundaries between interest-based e-commerce and traditional shelf e-commerce becoming increasingly blurred.

For example, Douyin further upgraded its interest e-commerce to global interest e-commerce in 2022, started to build a shelf e-commerce platform, increased the proportion of mall and search traffic, strengthened supply chain management, and increased the importance of "goods"; increased the governance of the platform's goods-carrying ecology and moved towards standardization...

Similarly, traditional shelf e-commerce companies such as Taobao are also continuously increasing their investment in the live broadcast field, and further increasing the proportion of recommendations on product homepages, or introducing more anchors and store owners to broadcast themselves.

In fact, both parties obviously understand that the two e-commerce models of interest and shelf will most likely not become two distinct models in the future, but will gradually merge.

Specifically, according to relevant reports, the proportion of traffic that Douyin currently allocates to e-commerce is between 7% and 8%, including short video content with the shared yellow cart (shopping cart) and e-commerce live broadcast rooms. Short video content that appears to be selling goods but does not include the shared yellow cart is not included.

In addition, Douyin conducted multiple 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.

This means that the consumption space opened up by Douyin through personalized recommendations essentially has a growth limit. Therefore, increasing user stickiness to its own e-commerce platform in another way that will not cause user disgust becomes the key to the next step of growth.

Of course , from another perspective, when Douyin proposed the concept of "global interest e-commerce", it means that Douyin e-commerce will cover the diversified shopping needs of users in all scenarios and links, and bring new growth to merchants through the synergy and interconnection of short videos and live broadcast content, shopping malls, search and other fields . In short, it is a complex of "traditional comprehensive e-commerce + live broadcast e-commerce".

Therefore, this time the Douyin Supermarket also has some significance as a pathfinder. From traffic entrance to product display, Douyin Supermarket follows the underlying logic of traditional comprehensive e-commerce. Even though the transaction volume contributed by the "mall" to Douyin e-commerce is still relatively low, its main points such as self-operation, next-day delivery, and authentic products all hit the pain points of consumers' online shopping. With the continuous operation and optimization of Douyin Supermarket, it can also be said that it has made a good start for the subsequent development of "Douyin Mall" (similar to JD.com's self-operated comprehensive e-commerce).

03 Conclusion

Of course, in addition to these strategic factors, a very important key is that the maturity and penetration rate of online supermarkets are far lower than people think.

According to the "Chain Supermarket Operation Report (2022)" released by the China Chain Store Association, chain supermarket companies faced a complex environment and challenges in 2022, but as of the end of October 2022, nearly 70% of companies still achieved year-on-year sales growth.

Among them, 95% of the companies saw an increase in online sales, while the remaining 5% remained flat. The growth in online sales offset the negative effect of the decline in offline customer numbers. At the same time, the report stated that in 2021, the average online sales share of the supermarket industry was only 6.5%.

This naturally means that online supermarkets are still a track with great potential to be explored. Even though there are already two giants, JD.com and Tmall, in the track, it does not mean that latecomers such as Douyin have no chance to grow up and compete with them.

Author: Morketing

WeChat public account: Morketing (ID: Morketing)