China’s e-commerce shake-up: TikTok sister app Douyin woos merchants in direct assault on Alibaba, Pinduoduo

Tracy Qu
·4-min read

Beijing-based ByteDance, the world’s most valuable start-up at US$400 billion, is wooing merchants to its premier short-video platform by touting the benefits of selling on Douyin, the Chinese version of TikTok, in a bid to challenge the country’s larger online retail platforms.

The platform, Douyin E-commerce, staged its first official “ecosystem conference”, an offline event that puts the ByteDance-owned platform on a collision course with Chinese e-commerce giants Pinduoduo, and Alibaba Group Holding, the owner of the South China Morning Post.

Douyin E-commerce vice-president Mu Qing said in Guangzhou that the platform will cultivate at least 1,000 businesses with annual sales above 100 million yuan (US$15.3 million) in 2021, 10,000 individual merchants with annual sales of more than 10 million yuan, and at least 100 “hot” products with annual sales above 100 million yuan.

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“The story of Douyin E-commerce has just started, and we hope to grow with you together,” said Douyin E-commerce head Bob Kang Zeyu, according to a transcript of his speech.

Douyin and its sister app TikTok have turned ByteDance into China’s most valuable start-up. Photo: Reuters
Douyin and its sister app TikTok have turned ByteDance into China’s most valuable start-up. Photo: Reuters

“We have 600 million daily active users and the largest group of domestic content creators,” he said. “We are also confident in our ability to offer recommendations based on personal interests, and there is a big chance for us to do it well.”

Douyin’s latest effort is set to invigorate its already substantial presence in the domestic e-commerce market. The platform tripled its gross merchandise value (GMV), or the total value of products sold, to 500 billion yuan last year over 2019, 100 billion yuan of which came from its own e-commerce channel, according to Chinese tech media LatePost.

By comparison, Pinduoduo reported 66 per cent GMV growth in 2020 to 1.67 trillion yuan. Alibaba’s GMV, which includes sales on popular e-commerce platforms Taobao Marketplace and Tmall, also exceeded US$1 trillion in the 2019/2020 financial year to March 2020. Alibaba is expected to release its GMV figure for last financial year in May.

As one of China’s most popular social networks, Douyin has already been throwing its weight around in the e-commerce industry since it started allowing merchants to sell their wares through a built-in sales channel in 2019. Last year, the company banned links to competing platforms, including Taobao and Pinduoduo, and built up other necessary capabilities such as delivery and payment services.

Douyin has also been able to leverage some of the country’s biggest live-streaming talents. Among China’s top 50 e-commerce live-streamers, 12 of them sell on Douyin, according to Pangqiu Data. Luo Yonghao, the No 1 live-streaming seller on Douyin, sold 400 million yuan worth of products in March.

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Douyin is planning to continue its hot streak by doubling its GMV to 1 trillion yuan this year, LatePost reported. The Douyin E-commerce chief played down the goal, saying GMV is not currently the platform’s main target. However, he also noted the role Douyin can play in driving demand, saying consumers will want a product when they see the right video.

The Chinese retail market is poised to become the first in the world with most sales coming from e-commerce. E-commerce revenue is projected to make up 52.1 per cent of total retail sales in China this year, up from 44.8 per cent last year, according to a report by research firm eMarketer earlier this year.

As Douyin forges ahead in e-commerce, it has its work cut out for it in the fiercely competitive market. In a recent surprising turn, Shanghai-based Pinduoduo surpassed Alibaba to become China’s largest e-commerce platform by number of annual active buyers, reaching 788.4 million by the end of 2020 compared with Alibaba’s 779 million.

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