Where to find growth in 2023? 丨Douyin VS Kuaishou e-commerce

In 2022, the e-commerce exploration of the two new traffic platforms, Douyin and Kuaishou, is focused on the theme of "growth". Douyin e-commerce has launched a strategic offensive against "traditional shelves", while Kuaishou continues to focus on "replenishment". In the following article, let us follow the author to predict: In 2023, what efforts will Douyin and Kuaishou e-commerce make around "growth"?

In 2022, for the e-commerce exploration of the two new traffic platforms, Douyin and Kuaishou, both are focusing on the theme of "growth". In line with their usual style, Douyin continues to be "aggressive" while Kuaishou chooses "stable".

In addition to "interest", Douyin e-commerce has launched a strategic offensive against "traditional shelves", trying to prepare for the arrival of the GMV ceiling and break the constraints of the trillion-dollar scale of live streaming e-commerce by extending the shelf scenarios; while Kuaishou continues to focus on "replenishment". On the one hand, it continuously optimizes the shortcomings on the supply side by developing brands and fast brands. On the other hand, it turns its attention to the delayed "short video e-commerce" module to tap into GMV growth outside of live streaming.

Different paths, similar effects.

In the uncertain economic environment in 2022, both Douyin and Kuaishou have achieved their "growth" goals. According to Kass estimates, in 2022, the GMV of Douyin e-commerce will approach 1.5 trillion yuan, while the estimated GMV of Kuaishou e-commerce is expected to exceed 900 billion yuan.

At the beginning of 2023, let's summarize the keywords of Douyin and Kuaishou e-commerce in 2022 and predict together: What efforts will Douyin and Kuaishou e-commerce make around "growth" in 2023?

1. Keywords of Douyin and Kuaishou e-commerce in 2022

In 2022, almost all of Douyin's e-commerce actions are centered around one word: "global interest e-commerce." As the name suggests, it is to complete the shelf e-commerce puzzle of "people looking for goods" under the consumption chain of "goods looking for people" such as interest e-commerce.

On this basis, Douyin e-commerce's industry operations have also been divided into two business lines, namely content business and shelf business. As early as August last year, Douyin e-commerce announced internally that the future team will focus on shopping malls and brands.

Why should we focus on "global interest e-commerce"?

The most direct reason is that the ceiling of interest e-commerce is relatively low and cannot accommodate the vast sea of ​​​​stars of Douyin . Li Hao, founder of Mars Culture and Kas Academy, once estimated that interest e-commerce will reach a bottleneck when it develops to the range of 3.5 trillion. In 2022, the GMV of Douyin e-commerce is estimated to be between 1.5 trillion and 1.6 trillion. At the current growth rate, the ceiling will appear by 2024.

Moreover, as an e-commerce business born on a content platform, the traffic that Douyin can allocate to its e-commerce business is limited. If the e-commerce business wants to achieve breakthrough growth, it must change the situation of transitionally binding content traffic.

So how to achieve higher GMV with limited traffic? The most common way is naturally to increase user repurchase, but this is exactly what Douyin lacks as it lacks social stickiness.

The lack of "repeat purchases" has also affected merchants' decision to view Douyin as a long-term business platform. This is also not conducive to Douyin's unlimited expansion of its e-commerce business. The existence of the above factors has accelerated Douyin's efforts to develop a central market.

Imagine if you were a brand merchant, and you had to pay extra fees for every content reach to potential users, even for fans, on Douyin, would you be willing to do so? Of course not, not only because of the increased cost of delivery, but also because it goes against the essence of brand management: to increase brand awareness and reputation, thereby reducing customer acquisition costs and increasing compound operating profits in the long run.

The launch of the mall has undoubtedly opened up a more centralized traffic management field for merchants in the "decentralized" content recommendation scenario. Compared with the logic of single products and explosive products in the live broadcast room, the mall is more like a long-term business platform for merchants. This can also alleviate the content and traffic anxiety of merchants to a certain extent, and enhance the certainty of operations on Douyin.

Of course, there is more than just "mall". Douyin's interpretation of "center place" also includes search and display windows.

Although more than half a year has passed and Douyin E-commerce has not announced the GMV contribution of the "central field" after its launch, from the data released sporadically during past promotions, we can vaguely feel that the GMV contribution from the central field is slowly increasing.

For example, during the 618 period, sales driven by the mall increased by 514% year-on-year, while sales driven by search scenarios also increased by 293% year-on-year. During the Double 11 Good Products Festival, the average daily sales driven by the mall increased by 156% year-on-year, and product exposure was 1.6 times that of the first half of the year.

In Li Hao's eyes, both the mall and search are just supplements to the interest-based e-commerce model. The incremental GMV contribution brought by the pan-mall is expected to account for about 40% of the total GMV in 2023.

The core reason is that on interest recommendation platforms, users have developed a mindset that is fed by the system and that prioritizes entertainment, and it is difficult for the platform to change the mindset that has already been created for the first wave of users. Therefore, building user mindsets for Douyin Mall is much more difficult than improving the infrastructure of the mall itself. In addition, the traffic structure of short video platforms is naturally suitable for the display of non-standard products, as well as the limited-time live broadcast prices in the live broadcast room, which will affect the construction progress of Douyin Mall.

Like Douyin e-commerce, during the Double Eleven period in 2022, Kuaishou also opened a first-level traffic entrance for "Mall" in the top Tab bar, alongside "Discover" and "Same City", but the mall obviously did not become the focus of Kuaishou's e-commerce efforts.

Throughout 2022, Kuaishou e-commerce has been working hard around two keywords:

1. Fast Brand
2. Short video e-commerce

Regarding fast brands, Kas mentioned it in many articles in 2022. It refers to the new forces of merchants active in the Kuaishou ecosystem, most of which are white-label products in industrial belts. Kuaishou hopes to guide the high-quality white-label products among them to upgrade to "fast brands", thereby obtaining higher operating compound interests and a longer life cycle.

The creation of a fast brand carries two major dreams for Kuaishou:

1. Continue to increase the revenue of Kuaishou's internal circulation advertising, so that Kuaishou brand merchants can increase their investment in Kuaishou after making profits in the ecosystem
2. With the help of Kuaishou brand, we create high-quality goods with Kuaishou label, and optimize the user consumption experience on Kuaishou by providing products with "high experience-price ratio".

Although most Kuaishou brands are small and medium-sized brands and are far inferior to mature brands in terms of investment capabilities, they have a stronger sense of identification and belonging to the Kuaishou platform and are more willing to regard Kuaishou as a long-term operating platform.

Take the Kuaishou brand "Daisy" as an example. Although Daisy has started regular live broadcasts on Douyin and Video Account in 2022, Kuaishou is still its main battlefield for operations, and the core GMV is also contributed by Kuaishou's old friends.

However, Kuaishou has obviously also seen the limitations of the fast brand. Since the second half of 2022, Kuaishou e-commerce has also made efforts in two aspects around "growth".

1. Continue to strengthen support for short video e-commerce

Specifically, it includes two dimensions. The first is the proposed "public and private domain dual-wheel drive" business strategy. For merchants that focus on live broadcasting, they are encouraged to increase the output of short video content to capture the GMV increase of users placing orders through short videos outside the live broadcast room; the second is to support the flow of trailer videos, especially for merchants that focus on short videos to bring goods, so as to increase the conversion rate by increasing the exposure rate of content;

2. Launch of the “New Product Super Plan”

We are committed to creating 100 new products with sales exceeding 100 million yuan and 10,000 new products with sales exceeding 10 million yuan, and providing them with the traffic support they need for growth. It is worth mentioning that the new products mentioned in the "Kuaishou New Product Super Plan" do not require merchants to come up with new products that have never appeared on the market, but encourage them to continuously enrich their existing inventory and increase the user's click-through repurchase rate through continuous "new launches". Most of the participating merchants are mature brands.

Judging from the effectiveness of these two strategies, short video e-commerce has the fastest growth and the most sexy stories. Kas believes that it will also become a keyword for Kuaishou e-commerce in 2023. For merchants and individuals with short video content capabilities, they may wish to try their luck in selling goods through short video trailers on Kuaishou.

2. In 2023, where will Douyin and Kuaishou seek growth?

So in addition to short video e-commerce, what other opportunities and possibilities are there for Douyin and Kuaishou e-commerce in 2023?

Kas believes that Douyin will become "Kuaishou-like", and Kuaishou will become "Douyin-like". Does it sound incredible? Let us continue to analyze it.

Let's look at Kuaishou first. According to Kuaishou's financial report for the first three quarters of 2022, the cumulative GMV of Kuaishou's e-commerce reached 588.8 billion in Q1-Q3. Referring to the GMV data of Kuaishou's e-commerce in Q4 2021 and the impact of force majeure such as logistics paralysis caused by the relaxation of epidemic control, Kas believes that the annual GMV of Kuaishou's e-commerce in 2022 will be around 900 billion, an increase of about 30% compared to 2021.

But as mentioned earlier, this increase is still brought about by Kuaishou's deep exploration of high-quality merchants within the system, especially native Kuaishou brand merchants/anchors.

In 2023, Kas believes that under the pressure of growth, Kuaishou will inevitably, like Douyin, expand its e-commerce moat around the two directions of "mall" and "search".

However, Kuaishou's efforts to develop a "pan-mall (search + recommendation + mall)" also face two major challenges: first, shelf e-commerce is most tested on the platform's ability to control supply chain resources , but the natural category restrictions of live streaming e-commerce and the limited enthusiasm of brand merchants to enter Kuaishou e-commerce will affect the perfection of products and categories in the Kuaishou mall. Once the products and categories do not meet the user's search expectations, it will ultimately affect the final conversion rate. At this level, Kuaishou, as a "newcomer" on the shelf, is obviously facing greater challenges than Douyin. After all, there is still a visible gap between the two in terms of brand inventory; second, Kuaishou's efforts to develop a pan-mall also face the problem of building user minds . Users who are accustomed to being fed content and who prioritize entertainment on content platforms will find it difficult to actively search and consume.

However, Kuaishou’s efforts in the pan-mall are not without advantages. The most intuitive one is that users’ natural trust in the Kuaishou platform and its private domain advantages mean that the link for them to actively place orders through channels such as the mall and search is shorter . However, before fully “enjoying” this advantage, Kuaishou still has a long way to go in replenishing its inventory and improving its mindset.

Therefore, the strategy of developing brands and trust-based e-commerce, which has been implemented since 2021, will continue on Kuaishou e-commerce in 2023. The former will still focus on replenishing inventory, while the latter will focus on improving conversions.

Turning our attention to Douyin, on the first day of work in 2023, Douyin launched a big move: Douyin Supermarket. Through the Douyin APP search bar, enter "Douyin Supermarket" to search for the official account and supermarket entrance of Douyin Supermarket.

In Kas's view, the launch of Douyin Supermarket is actually an important step for Douyin to continue to develop its "central field" in 2023, optimize the category width and product depth of the mall, and strengthen the "search-push" experience .

Moreover, a characteristic of online supermarkets is that the products are highly standardized. Most of them are high-frequency products for daily needs of users. Not only do they have a high repurchase rate, but they can also share the supply chain behind them with the shelf e-commerce promoted by Douyin. Unlike non-standard products, they are not overly dependent on "content traffic". This is consistent with the strategic development direction of Douyin's e-commerce (mall and brand).

In addition, Kas believes that in 2023 , Douyin will also refer to Kuaishou and do more work around small and medium-sized businesses.

Small and medium-sized businesses have two values ​​for Douyin:

1. Many of these businesses regard Douyin as their only business operation platform, and are more "loyal" to Douyin and more willing to invest. After making a profit, they can further increase Douyin's advertising revenue.
2. To meet the product consumption needs of multi-level active users on Douyin, when Douyin e-commerce goes deeper, it is also necessary to use differentiated pallets to meet the needs of people with differentiated consumption capabilities, and further improve their consumption stickiness and repurchase rate.

Especially for small and medium-sized brands with outstanding performance, they can also leverage the grass-planting advantages of the Douyin ecosystem, the commercial product system of Bytedance, and the closed transaction loop of Douyin e-commerce to grow into a true "Douyin brand."

Although the concept of Douyin brand has a long history and many brands claim to be "Douyin brands", the number of times Douyin officially mentions them and the empowerment actions are not continuous. Kas believes that a true "Douyin brand" should be born on Douyin, planted on Douyin, and have core sales on Douyin, but the brand power is not limited to Douyin brands.

In the first two years of the rapid development of Douyin's e-commerce, Douyin has been working on the optimization of the supply chain. Among them, attracting mature and excellent brands to settle in is the focus of Douyin. However, as the brand settlement goals are achieved in stages, Kas believes that in 2023, Douyin will turn its attention to small and medium-sized and industrial belt merchants who are doing very well on Douyin, and help them quickly grow into "Douyin brands" through support of funds and resources (traffic, etc.), and build exclusive pallets with Douyin labels.

This means: 2023 may also be a year that cannot be missed for small and medium-sized businesses to leverage Douyin to achieve super-fast growth.

However, no matter how many predictions there are, 2022 will eventually become the past.

In 2023, Kas also looks forward to witnessing the turbulent new year of live streaming e-commerce with each of you.

Author: Call me Sister Na

Source: WeChat public account "CaasData" (ID: caasdata6)