The future of Douyin’s “Interest-based E-Commerce”
Back on April 8, Douyin’s President of E-Commerce, Kang Zeyu ( 康泽宇), announced Douyin’s new focus on “Interest-based E-Commerce” at their inaugural e-commerce ecosystem conference.
What is Interest-based E-Commerce?
This new concept has aroused the interest of many people. Can budding entrepreneurs start a business focusing on Interest-based E-commerce? What is Interest-based E-commerce? Is it worth doing?
Let us take a step back and think about it. There are many e-commerce platforms nowadays. Some focus on providing a broad range of goods, and others are focusing on specific markets. Some focus on cross-border e-commerce. All platforms and KOLs have the capability to sell things. What makes Douyin competitive or special as an e-commerce company?
On the Douyin platform, there are very rich life and art content. You may view an interesting video or live broadcast. And it may be a product that appealed to you; a piece of clothing, a food material, a book, or even a game. Your interests are pique as you learn more about the products and their production process. In the comment area, viewers are interacting in real-time. The support staffs keep the users engage and help build up trust in their products. The entire shopping process is enjoyable. The sales staffs address your queries about sizing issues and you happily proceed to place an order.
The entire process is a mix of high-quality content and a shopping experience. The content, products and social interactions make the entire shopping experience enjoyable. And that further entice you to continue shopping for more.
What makes Douyin’s Interest-based E-Commerce special?
I have spent my career growing with the Internet industry. Douyin has obvious advantages that are difficult to reproduce.
They are :
- Huge user base and diversity of users;
- Mature recommendation technology and distribution technology;
- Platform governance ideas for sustainable development.
Huge user base and diversity of users
Back in August 2020, Douyin’s DAU exceeded 600 million. They are far ahead of other competitors in the short video and live-streaming apps market. Users can find products that may interest them. Likewise, many businesses have found good sales conversion on the platform.
Douyin started with a slogan to help users “Record the good life” for those who remember. Users are already watching and sharing their good life on Douyin. What if Douyin starts to help users achieve a good life?
How can they do it? By helping users discover products that can improve their quality of life. This value proposition is very clear and convincing.
Mature recommendation technology and distribution technology
The most important function of the platform is to bridge merchants and consumers. And among them, Douyin has the strongest distribution and recommendation technology.
I have the opportunity to speak to several MCNs about the current situation of the short video industry. One of them shared with me: “Talented creators have opportunities on any platform. But, they have more opportunities on Douyin because the distribution mechanism is the most accurate.”
The same is true for products. No matter how good the product is, it must reach the right users in the right scene. Whether it is a short video, live broadcast, or other content formats, the format itself is not the key. Rather, the key is to find interested people; hence the focus on Interest-based E-Commerce.
Platform governance ideas for sustainable development.
Sustainable development and social responsibility will be an important part of e-commerce platforms.
Across the industry, we are seeing an emphasis on respecting intellectual property. It is not good enough to increase the GMV, the important thing is “quality GMV”. There is a need to identify illegal products, track merchants, and guarantee consumer rights. Only then will the GMV be sustainable.
Since July 2020, more than 1 million illegal products are removed from the platform. More than 300,000 illegal products are intercepted before they hit the shelves. No growth is worth sacrificing user experience.
At the same time, supporting businesses of all types helps increase the variety of products to meet the different interests of users. For example, agricultural products and traditional crafts have seen a surge in demand since they are made available on Douyin. It also helped users meet specific needs.
Conclusions
We have seen China’s e-commerce industry grew through different stages over the last 10 years.
Before 2011, in the early stage, the major platforms competed for having the widest range of products available.
From 2011 to 2014, we saw the rise of mobile e-commerce. Major players competed for a better mobile user experience and vertical integration.
By 2015 and 2019, China’s e-commerce has entered a mature stage of development. Besides competing on user experience and features, major platforms compete on delivery performance. And we see a race to strengthen logistics and other infrastructure.
Post-2020, the e-commerce market has been highly mature. Most have thought that all e-commerce space has been identified. Yet, Douyin discovered new opportunities. It shows consumers continue to have unmet needs and new channels are available to businesses to further grow their revenue.
In the future, using Douyin will be like visiting a theme park. Rich content is projected to you as you flipped through the videos. Instead of visiting traditional stores, you are enjoying entertainment while discovering new products.
I believe that Interest-based E-Commerce will capture the hearts of digitally native millennials. Perhaps, Interest-based E-Commerce can be a spark that helps revitalise the tourism industry as well.
After all, the GMV for Interest-based E-Commerce is set to grow beyond CNY9.5 trillion by 2023.
I first published this article on my Substack: Startups Weekly. Hope that more readers will find this article useful on the future trends of e-commerce.
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WeChat ID: yeksoonlok
LinkedIn: https://www.linkedin.com/in/yeksoon/
