Douyin Supermarket, a dud

Recently, Douyin Supermarket, which is affiliated with Douyin Mall, was officially launched to users nationwide, and the "Spring Festival Open" event was launched simultaneously. At a critical juncture when national logistics and express delivery are stuck in a snail's pace, the next-day delivery experience provided by Douyin e-commerce and SF Express has really attracted a lot of attention. However, Douyin Supermarket also has problems such as too few products and no price advantage. Can such a Douyin store keep users "in love"?

Douyin Supermarket is very fast, but it is difficult for users to fall in love with it?

"Thanks to Douyin, SF Express is awesome." This is a product review that appears frequently on the Douyin supermarket page.

Recently, Douyin Supermarket, which is affiliated with the Douyin Mall product, was officially launched to users across the country, and simultaneously launched the "Spring Festival Non-Closing" event.

It is worth noting that the Douyin Supermarket was launched nationwide at the time when the "Spring Festival Open" event was launched from January 9 to January 28, which was a critical time when couriers went home one after another and the national logistics and express delivery fell into a slow rhythm. E-commerce competition entered a short vacuum period. At this time, Douyin e-commerce and SF Logistics provided users with a next-day delivery experience, which really attracted a lot of attention. A large number of buyer comments pointed to the same message - the experience of receiving a next-day delivery during the Spring Festival was excellent.

But this preemptive launch also has its price. The number of products in Douyin Supermarket is too small, and users can only choose a few items. The corresponding free shipping threshold is too high, which increases the cost of users to "take advantage of the bargains". At the same time, compared with mainstream e-commerce platforms such as Pinduoduo, JD.com, and Taobao, the product prices of Douyin Supermarket have no advantage, and are even lower than those of the expert stores on the platform.

Can such a Douyin store keep users "loved"?

01 Douyin opens supermarket, lowest price in 30 days

New e-commerce platforms must provide subsidies to retain consumers. For consumers, there are not many products to choose from in Douyin Supermarket, and what is more important is whether the price is cheap.

From the price point of view, Douyin Supermarket has three main killer weapons to suppress prices: new member coupons, Douyin payment coupons, and official subsidies.

Among them, the low-priced goods in Douyin Supermarket are mainly based on exclusive coupons for new customers.

Consumers of Douyin Supermarket are more accustomed to saying that they bought things from "Douyin" rather than "Douyin Supermarket". The reason is that the main source of traffic for Douyin Supermarket is Douyin Mall in the search scenario. Compared with Douyin's local life business that invites a large number of experts to recommend, Douyin Supermarket is almost independent of Douyin's algorithm + content system. "New Entropy" found that the products of Douyin Supermarket will be presented in green in the double-column product display, and the product details page will be marked "Official direct delivery, authentic guarantee".

When users see Douyin Supermarket products in Douyin Mall, they generally feel that they are "cheap". The reason is that in the "Products" channel under the Douyin search scenario, Douyin Supermarket products show the price after the coupon is charged for the platform's new user exclusive coupons. For example, Vinda S-code 100 x 6 packs of removable facial tissues, the mall shows the price after the coupon is 4.9 yuan, and after clicking to enter the Douyin Supermarket, the original price is shown as 10.9 yuan, and new users can receive a 6 yuan new user limited-time exclusive coupon.

The price reduction strength of the newcomer coupons varies according to the product category. For example, for 3C products such as mobile phones, Douyin Supermarket often gives out 13 yuan newcomer coupons, and high-priced alcohol is also in this range; paper towels and household cleaning products are generally 6 yuan; snacks, personal care and beauty products are mostly 4 yuan. Overall, Douyin Supermarket follows the principle that the higher the unit price of the product, the higher the strength of the newcomer coupon, but there are exceptions for some products. Some low-priced snacks, personal care and other products have received a price reduction of more than 6 yuan. These products are often included in the Douyin Supermarket "Hot Sale" area, and the platform's slogan is "No need to compare, it's the lowest in 30 days."

However, there are also restrictions on the use of the newcomer coupons, such as they can only be used within 1 day after receiving them, can only be used once for a product, and the second cup will be at the original price. When multiple products are settled together, only the newcomer coupon with the largest discount will take effect.

The second is Douyin payment coupons and Douyin monthly payment discounts. Users can get 5-20 yuan payment coupons by selecting Douyin payment and binding their bank cards on the Douyin supermarket order confirmation page; using Douyin monthly payment can instantly reduce 6 yuan, which is similar to the discount of Douyin local group buying.

The third is official subsidies. Douyin Supermarket has officially subsidized some products, such as the 500g package of Three Squirrels Shachima with a reference price of 18.9 yuan, with a subsidy of 7 yuan; the reference price of Shanghaojia mustard-flavored garden potato chips is 8 yuan, with a subsidy of 1.1 yuan. Compared with Pinduoduo's 10 billion subsidy model, Douyin Supermarket's subsidies are mainly concentrated in the field of snacks and daily necessities with low customer unit prices, but there is no obvious price advantage. For example, the price of Shanghaojia potato chips mentioned above was 4.6 yuan for 50g in the official flagship store of JD.com during the same period, which is lower than that of Douyin Supermarket.

It is worth noting that the goods in Douyin Supermarket are fixedly shipped by SF Express. Orders placed before 16:00 in the afternoon can be delivered the next day. The logistics experience is very good for consumers, but the shipping price (within the weight limit) is 6 yuan for orders below 50 yuan, 5 yuan for orders between 50 and 88 yuan, and free shipping for orders above 88 yuan. For consumers, buying only one product with the largest subsidy is no longer the best "wool-grabbing option", and buying more products and spreading the shipping cost has become something that must be considered.

Overall, Douyin Supermarket’s low prices mainly come from new user coupons. This is quite different from Douyin’s group purchases, which often offer 50% discounts. Its product prices are only advantageous for first-time purchases, and the original prices are not as good as other e-commerce platforms. A Douyin user mentioned: “(Douyin Supermarket) has no discounts, not as good as Taobao and Pinduoduo.” This subsidy strategy is good for attracting new customers in the short term and taking over some of the consumption in the mall scene, but its long-term growth capacity is questionable.

02 Douyin Supermarket, only half the work

If compared horizontally with its competitors, Douyin Supermarket still has a lot of work to do.

For example, the core competitiveness of life supermarket e-commerce platforms is more, faster, better, and cheaper, which correspond to the number of SKUs, logistics and distribution efficiency, product quality, and product price. Among them, Douyin Supermarket has initially established a user reputation advantage in logistics efficiency and product quality, but has obvious disadvantages in price and number of SKUs.

In terms of the number of SKUs, taking the beverage category that is essential in supermarkets as an example, "New Entropy" found that Douyin Supermarket only has two carbonated beverages, five ready-to-drink coffees, two functional beverages, and four coconut juices, and no important categories such as ready-to-drink tea, purified water, and juice. Overall, the current number of SKUs in Douyin Supermarket is basically the same as that of a small or medium-sized supermarket, but some categories are in serious shortage.

An important category of life supermarket e-commerce platforms is fresh food. Whether it is traditional supermarkets or community group buying, they generally follow the product combination rule of "fresh food + snacks/daily necessities", achieving comprehensive coverage of low-gross-profit, high-frequency, essential products and high-gross-profit, low-frequency, non-essential products. However, Douyin Supermarket currently does not have a fresh food category.

From last year's small-scale test to this year's official launch, an important strategic adjustment of Douyin is to cancel the "hourly delivery" business of local merchants, which covers local categories such as fruits and vegetables. "New Entropy" believes that this is a correct adjustment. For Douyin Supermarket, the non-self-operated local fresh food hourly delivery business is more suitable for being classified into the algorithm scenario and recommended to local consumers in the form of content, while the supermarket business is more suitable for being classified into the search scenario and attracting consumers across the network with subsidized prices. The strategic value of the two is not high. But this also leads to the absence of the important category of fresh food in Douyin Supermarket, and customer acquisition is more dependent on the cost-effectiveness of specific products.

From the perspective of logistics efficiency, the cooperation with SF Express has ensured the logistics experience of Douyin Supermarket, and at the same time has helped Douyin Supermarket eliminate low-value users. Compared with non-self-operated e-commerce businesses, Douyin Supermarket emphasizes more on being an ecological supplement to the existing Douyin e-commerce, attracting consumers with high consumption power and high quality requirements.

In terms of product quality, Douyin Supermarket focuses on official selection and authentic products. Judging from current consumer feedback, Douyin Supermarket's authentic products are relatively stable. The advantage of this is that focusing on big brands is conducive to Douyin Supermarket's cultivation of consumer trust.

Judging from the price of goods, Douyin Supermarket has limited overall sales despite the small number of SKUs. Taking the six popular flash sales products observed by "New Entropy" as an example, four of them have a unit price of around 30 yuan, and the sales volume is 650, 3000, 79 and 636 respectively. Two products have a unit price of less than 8 yuan, and the sales volume is 3300 and 1400 respectively. The shipping capacity limits the platform's ability to negotiate large-scale orders to suppress the purchase price. Many consumers said that some products in Douyin Supermarket are not as cost-effective as those on Taobao and Pinduoduo.

This means that after the new customer subsidy, Douyin Supermarket still faces considerable pressure to acquire customers.

03 Dreams are sweet, reality is bitter

Douyin Supermarket is one of the scenarios where Douyin takes over active traffic from users.

At the Douyin e-commerce second ecological conference on May 31, 2022, Wei Wenwen, president of Douyin e-commerce, officially upgraded "interest e-commerce" to "global interest e-commerce". The data basis is that Douyin found that users' search behavior with product intentions increased by 217% compared with last year; at the same time, users' Douyin store PV (page visits) increased by 279%; Douyin Mall's annual GMV increased by 6 times. Douyin's judgment is that "there are huge opportunities."

From the background, the Douyin platform as a whole is at a critical juncture where the advertising business is growing sluggishly and it is making efforts to expand into larger markets such as e-commerce and local life. Among them, food and beverages, personal care and household cleaning, household daily necessities, and maternal and child products covered by supermarkets are high-frequency core categories. Entering these categories through the self-operated supermarket model is conducive to entering a larger consumer market and supplementing the supply-side layout of global interest e-commerce.

As Wei Wenwen mentioned, the new e-commerce field concept, Douyin's huge traffic will overflow in active scenarios such as shopping malls and searches. The supply-side construction of these people's product-finding scenarios will help more users develop fixed consumption habits and bring about comprehensive and long-term growth. The related consumption growth will also drive Douyin payment and other businesses. According to Douyin's plan, the new field will contribute more than half of the business in the future.

Judging from the current performance, Douyin Supermarket has basically achieved its mission - attracting Douyin Mall users to buy daily consumer goods in one stop through large subsidies for new users. With the efficiency of SF Express logistics and relatively cautious product selection strategy, Douyin Supermarket can provide consumers with a relatively ideal user experience. With the rapid increase in traffic of Douyin Mall, the growth space of Douyin Supermarket is also expanding.

But at the same time, Douyin Supermarket faces considerable competitive pressure.

Taking community group-buying platforms as an example, Meituan Youxuan, Duoduo Maicai and other platforms have basically completed the coverage of major cities in China. The advantages of these platforms are low prices and rich categories. Although they cannot support door-to-door delivery in terms of logistics, they can also achieve next-day delivery in terms of timeliness. In comparison, Douyin Supermarket has no cost-effectiveness advantage. Taking other e-commerce supermarket platforms as an example, there are already products such as JD Supermarket and Tmall Supermarket on the market, which have first-mover advantages in terms of category richness, product quality and cost-effectiveness.

The only advantage of Douyin Supermarket is its large traffic volume, but the core is the large traffic volume of algorithm-driven content. The precise consumption traffic in the mall scene is not the main part. If Douyin Supermarket only uses the product recommendation traffic in the Douyin shopping scene, it will have no advantage. To expand, it must be connected with the algorithm-driven content system. However, from the current product form, Douyin Supermarket is still a product focused on active scenes.

Currently, Douyin Supermarket has been launched nationwide, but it is still undecided in its marketing positioning. The official account of Douyin Supermarket officially entered the platform on August 10 last year, but did not publish any informative content; in addition to the "no need to compare, it is definitely the lowest price in 30 days" in the supermarket products, there is no accurate summary of the platform's subsidy strength, which is in sharp contrast to Pinduoduo's vigorous promotion of the 10 billion yuan subsidy. The phenomenon of consumers "knowing Douyin but not Douyin Supermarket" was born out of the above background.

There are signs that Douyin Supermarket has either not designed a good self-positioning or has not shown greater ambitions. Douyin Supermarket has a long way to go to support more than 50% of the business in the new Douyin field.

Author: Baiji; Editor: Yuejian

Source public account: Xinentropy (ID: baoliaohui), insight into business variables and exploration of the essence of business.