Can Douyin steal Taobao’s Singles-Day thunder?

By CHENG Lu

ZHANG Chi manages online sales for a personal-care product company. She usually spends most of her time on Taobao and Tmall, but this year, her boss told her to pay more attention to Douyin.

“The traffic is huge. We needed a new source of revenue, one that can still grow fast,” she said.

No room for error

Two years since Douyin openly declared war on Alibaba, a former partner, the short video platform has become a force to be reckoned with in the ultra-competitive e-commerce world. With seven hundred million DAU, it has attracted companies from mom-and-pop shops to multinationals. All but two of the top 20 clothing brands on Tmall have opened shops on the short-video platform, Uniqlo being the latest to the game. In other categories, the overlap is just as prominent.

“I made 100 million yuan in the first month. The next month, it was 5 million,” said WANG Cheng, who oversees Douyin sales at a clothing company. His boss opened the account in May, and Wang, with plenty of experience on Douyin already, was his first hire.

Tech news outlet Late Post reported that Douyin had sold 1 trillion yuan worth of goods in two years. To put the number in perspective, Pinduoduo labored for four years to reach this goal. Despite the size, sellers already have to fight to survive. At any given time in the afternoon off-peak hours, there are at least 100,000 influencers going live.

“If we are not live, customers will walk into someone else’s channel,” he said. The algorithm doesn’t leave much room for error. “Yes, you can boost your sales extremely fast. That is, if you happen to have a popular host. If someone else goes live tomorrow, you may get only half as many viewers.”

Buy three, return two

Although most platforms have refrained from lavish campaigns for this year’s Double 11 sales festival, it is by no means a quiet one for Douyin. There are all the gimmicks – coupons, analytical tools, full-cycle sales solutions, –perfected by competitors like Taobao. Douyin tells sellers, that its “four gateways,” short videos, live streaming, searches and online shops, will help them “open up a new frontier of e-commerce.”

But sellers, at least the small ones, fail to see much appeal in the big numbers, which can be a problem in themselves. Videos encourage impulse purchases, which overwhelm sellers. Orders that can’t be shipped immediately are often canceled. Products are returned when customers realize they don’t need the products after all

“In the summer, 80 percent of our dresses were canceled or returned,” said Wang Cheng. Across all his categories, the average return rate is around 60 percent.

The algorithm favors high volumes, so sellers have every incentive to lower prices at the cost of quality. An unspoken rule in the apparel world is that the best goes to brick-and-mortar and the second best to Tmall. Douyin gets whatever is left.

Douyin is still to find the best ways of turning viewership into sales. Most live-streaming viewers don’t buy anything. They are either unimpressed by the goods offered, or they simply want to be entertained by their favorite influencers and nothing more. In contrast, whoever fires up Taobao and Tmall does so to spend money. In other words, Douyin is for showcasing, not selling. Alibaba is not going away any time soon.

All work and no payback

On October 24, the first day of Double 11 sales, 460 million people watched Austin Li go live on Taobao. For mid-sized sellers like Zhang Chi, who can’t possibly afford to be represented by mega influencers, it is another chilling reminder that the winners take it all.

“The result of me toiling day and night for weeks is nothing compared to being mentioned by Austin Li, or anyone as big as him,” she said.

Taobao has been trying to sign more influencers, including a handful of A-list ones, in the hope that competition among them means more viewership and better deals for sellers.

This year’s Singles Day is not a happy one for Zhang Chi. Sales are 30 percent lower than last year’s, and she is worried about web traffic and price wars. Also unlike in previous years, platforms are quiet on sales, pointing instead to the diversity of choice, sustainability and user experience.

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