Besides low prices, what else does Douyin e-commerce have?

Douyin is constantly expanding its e-commerce business layout. Faced with a crowded track and fierce competition, many Douyin live broadcast rooms have chosen to adopt a low-price strategy. So for brand owners, if they want to do a good job in Douyin e-commerce, what aspects can they consider? What will be the development trend of Douyin e-commerce in the future? Let's take a look at the author's interpretation.

Jet Li, Gong Li, Donnie Yen, Huang Xiaoming, Carina Lau, Jordan Chan, Louis Koo, Ray Lui, Rosamund Kwan... If they make a movie together, the box office should not be bad.

It is estimated that the film will be completed in some time, so they chose to "gather" in Xiang Tai's live broadcast room in December 2022 to cheer for Xiang Tai's first live broadcast of selling goods.

On December 19, Xiang Tai made her debut on Douyin live broadcast. Within 10 minutes of the broadcast, her popularity exceeded 800,000. Within 3 hours of the broadcast, sales exceeded 100 million, and sales for the entire day exceeded 300 million!

Xiang Tai once again showed the world the magic of Douyin e-commerce. The last time it was the boss of Qudian, Luo, who showed such "money power". Can doing e-commerce on Douyin be so simple and crude? How can brands do well in Douyin e-commerce?

1. Low prices are an open secret in live streaming

In addition to the traffic that was swept in by half of the entertainment industry sending blessings, the success of Xiang Tai's live broadcast room is also inseparable from the low-priced products of 8.8 yuan, 9.9 yuan, and 19.9 yuan. "Really cheap", "Really cheap", "9.9 kitchen paper, come and grab it"... On the day of Xiang Tai's live broadcast, many friends around her expressed such feelings.

Cheap and low prices are the guarantee of Xiang Tai's popularity. After each brand's anchor appears on stage, in addition to expressing their love for Xiang Tai, they will also "solemnly promise" that the price is exclusive to Xiang Tai's live broadcast room, and that prices can be compared across all platforms, even the lowest price in the past year. Hundreds of thousands or even millions of onlookers in the live broadcast room placed orders when they heard this.

Cheap, cheaper than Tmall and JD.com, this is actually the underlying logic of selling goods in Douyin and all live broadcast rooms. From Li Jiaqi, Wei Ya to Luo Yonghao and Xiao Yangge, it is the same. Some people may say that Dongfang Zhenxuan is different. Although Dongfang Zhenxuan has become popular with "chicken soup for the soul", Dong Yuhui's eloquence is just an embellishment. The cheap and low-priced goods still support the huge sales of Dongfang Zhenxuan.

Perhaps many people have forgotten that the earliest live e-commerce was not what it is today. As early as Double 11 in 2016, JD.com organized a 12-hour live event with more than a dozen celebrities participating. Liu Qiangdong also made his first live show, cooking big plate chicken and selling "running chicken". At that time, this type of live broadcast was more like a TV reality show, with celebrities singing and chatting in the live broadcast room as the "main course" and selling goods at the hour as the "side dish".

Because of this, live streaming e-commerce did not become popular in the early days. At that time, the core resources of e-commerce platforms did not lean towards live streaming e-commerce. It was not until later that "OMG, buy it! Buy it!" live streaming e-commerce truly transformed into live streaming e-commerce that mainly brought goods and supplemented it with live streaming. It was also from this time that low prices + price comparison became the fundamental reason for the popularity of live streaming e-commerce.

Everyone probably knows what happened after that. In 2018, Taobao Live's transaction volume exceeded 100 billion yuan, and 2019 became the "first year of live e-commerce". During the Double Eleven of that year, live broadcast rooms became the mainstream consumption method of major e-commerce platforms, and short video platforms also joined the Double Eleven with the help of live broadcast rooms.

Later, whether it was a big star anchor, a county magistrate anchor, or a brand executive himself, "cheap" and "low price" became the most frequently used words in the live broadcast room. From the perspective of consumer psychology, when placing an order in a live broadcast room, the goal is to get a cheaper price than usual, or cheaper than buying on a regular e-commerce platform. Otherwise, who would be willing to spend time listening to the anchor's "babbling"!

Therefore, even if she is a wealthy wife in Hong Kong and a big sister in the entertainment industry, Xiang Tai’s first Douyin live broadcast was no exception. She took out small commodities such as toothbrushes, snacks, cola, hand sanitizer, etc. priced at 8.8 yuan, 9.9 yuan, and 19.9 yuan to give back to fans and ensure the popularity of the live broadcast room.

2. Low price is the first law of retail

Low prices may not sound like a high-tech concept, but they are the most technologically advanced concept in the entire retail industry, including e-commerce. Low prices are not only used in live broadcasts, but also in e-commerce platforms and physical retail.

Before this year's Double 11, Liu Qiangdong sent an email to senior executives, reiterating that "low price was the most important weapon for our success in the past and will be the only basic weapon in the future." He also said that low price is "1", and quality and service are two "0s". Without the low price advantage, all other so-called competitive advantages will be reduced to zero.

Even a powerful company like JD.com also emphasizes low prices, which shows the importance of low prices to the retail industry.

If we look back at the development history of several major retailers, we can see the contribution of low prices. Huang Guangyu of Gome earned the nickname "Price Butcher" for his brutal squeeze on the profits of cooperating manufacturers; JD.com once said "Books are not allowed to make profits within three years" and "All large home appliances on JD.com are cheaper than those on Suning online and offline! And the price is so low that if Suning dares to sell for 1 yuan, JD.com's price must be 0 yuan"; Pinduoduo even offers 9.9 yuan free shipping everywhere...

In fact, even Walmart, the world's largest retailer, proposed the "Everyday Low Price" strategy in 1962, and made "Save money, live better" its company mission and commitment to consumers.

Low prices are the result, and how to achieve low prices is a test of the company's capabilities. The low prices of e-commerce companies were initially benchmarked against physical retailers. Taobao's benchmarks were offline clothing stores and department stores; JD's benchmarks were Gome and Suning. When these two companies rose to prominence, e-commerce was not so popular, and clothing and home appliances were new categories that had just started to be sold online, which had the advantage of "dimensionality reduction" compared to offline.

Looking around, Pinduoduo and Douyin are more like two "ruthless people". When Pinduoduo rose, almost all categories had been e-commerce, and its benchmark could only be mature e-commerce platforms. The reason why it can still offer low prices is that it relies on the social dividends of WeChat and the low-cost traffic brought by fission gameplay. In other words, the cost of selling things here is lower, so merchants are naturally willing to pass on the profits to consumers.

Douyin e-commerce is a completely new species. It is a trading platform based on video content. It is not a traditional shelf-style sale, but a short video content and live broadcast room. The reason why it can achieve low prices is, on the one hand, due to its traffic dividend. Douyin is a traffic depression, and short videos are almost the mobile application that consumes the most time for everyone; on the other hand, based on the traffic advantage, Douyin reduces the operating costs of merchants, especially compared with mature e-commerce platforms.

For example, if a merchant has a budget of 100,000 yuan for an event, it may not make much splash on JD.com or Tmall. But on Douyin, there are many fish in the sea, and it can also gain fans through the official account, killing two birds with one stone. This is why more and more brands regard Douyin as an important e-commerce platform, and even bet everything on Douyin.

For example, "Shirt Lao Luo" is a typical e-commerce brand that bet on Douyin and relied on Douyin to rise. It has produced clothing for many big brands. In 2021, the founder Lao Luo participated in the "Ace Factory" project launched by Douyin e-commerce and began to incubate its own brand. At present, Shirt Lao Luo has more than 1.1 million Douyin fans. During this year's "Douyin 618 Good Things Festival", the GMV of a single live broadcast of men's clothing by "Shirt Lao Luo" exceeded 2 million yuan, ranking first in the platform's shirt category sales.

3. Next stop of Douyin Mall

Live streaming is only a part of Douyin e-commerce. The complete Douyin e-commerce also includes short video streaming and the recently promoted shelf e-commerce - Douyin Mall. These two e-commerce forms are still mainly low-priced. Especially Douyin Mall, its promotional advertisements are similar to those of Pinduoduo and Taobao, and the main slogan is "factory direct supply, free shipping for a few dollars".

Douyin e-commerce has been proven to be successful by relying on live broadcasts and short videos to bring goods. So why is it still necessary to focus on shelf e-commerce?

First, we need to meet greater user demand. The shopping paths of several of Xiao Yige’s friends have changed: they used to go directly to Tmall and JD.com to place orders, but now they go to Douyin to search first to see if the price of the same product in the live broadcast room is lower.

In May of this year, data from Douyin's e-commerce showed that outside of the content scenarios of short videos and live broadcasts, users' search behavior with product intentions increased by 217% year-on-year, Douyin store page views increased by 279% in 2022, and Douyin Mall's GMV increased by 6 times.

In the past, Douyin’s live broadcasts and short videos were more about “goods finding people”. When users browsed related content, they naturally received product information - became interested - and placed orders to purchase. This is why Douyin e-commerce calls itself “interest e-commerce”.

Nowadays, more and more users browse Douyin not only for entertainment, but also for active searches with clear shopping intentions. In this case, shelf e-commerce takes over the purchasing needs of these users. Although "people looking for goods" seems to be the way of traditional e-commerce, the real shopping needs cannot be ignored. For brand merchants, more and more users with shopping purposes are pouring into Douyin, and Douyin is becoming an indispensable position for merchants' online operations.

The second is to meet the needs of more merchants. The more here refers to both the increase in the number of merchants and the more needs of a merchant. It can be expected that more and more brand merchants will enter Douyin, including mature brands, such as Uniqlo, which started live streaming on Douyin in September, and some cutting-edge brands or newly hatched brands. Brands of different sizes and stages naturally have different expectations and needs when conducting e-commerce business on Douyin.

For example, some new brands need to operate content on Douyin, attract fans, and build their own traffic pool. However, mature brands such as Uniqlo have their own traffic, and in less than four months, they have nearly one million fans. For some big brands, Douyin e-commerce also requires building a team and planning content, which is also a considerable investment in manpower and material resources. However, shelf e-commerce is relatively mature, and anyone who has done e-commerce can quickly get started.

For emerging brands, shelf e-commerce can also help them build their brands. In Luo's opinion, the mall can better show the brand tone. "From visual design to brand copywriting, from product details to brand stories, they can all be presented in a high-level aesthetic way in the mall, which can effectively precipitate brand value."

It can be expected that more brands will enter Douyin Mall in the future and do e-commerce in the form of traditional shelves + short video content + live broadcast. As the platform grows bigger, there are only two ways to maintain the low price advantage.

One is to win by scale . Due to the large number of users and transaction volume, merchants are willing to make concessions through the platform and sell at a low profit but high volume.

The second is to win by efficiency , that is, the platform should create higher transaction efficiency for merchants, reduce their operating costs, and merchants are willing to invest more resources in the platform to make profits. But no matter which path is taken, the final result is efficiency.

For Douyin Mall, shelf e-commerce can help it quickly increase volume and achieve greater economies of scale, but it will also inevitably bring about problems such as high traffic costs and increased business operating costs. How to improve efficiency and reduce costs while expanding in scale will be a real test for Douyin e-commerce and will also determine how far it can go in the future.

Author: Zhan Bing, Editor: Qi Ran

Source public account: yidu finance (ID: yiducaijing2021), more love, deeper observation.