Bytedance’s E-Commerce Ambitions Look Beyond China

Key Takeaways: A more highly regulated tech environment in China is speeding up Bytedance’s plans for global e-commerce expansion. Douyin saw e-commerce sales reach $26 billion last year and hopes to see sevenfold e-commerce growth by 2022. Internationally, TikTok tested the waters with e-commerce last year via collaborations with Walmart and Shopify. The explosive growth of Bytedance’s Douyin in China and TikTok globally have given it enormous influence, leading companies to hire “Chief TikTok Officers” while raising concerns in countries like the United States and India over the past year. And in the run-up to an impending IPO, Bytedance is moving quickly to nab market share from Chinese tech incumbents like Alibaba via its pivot to e-commerce. China’s tech environment is currently rife with tensions. Over the past year, a major government crackdown in China has led to the scuppering of Ant Group’s planned mega-IPO, high-profile antitrust investigations, and a flurry of fines (including a record $2.8 billion against Alibaba). That’s left companies rushing to play nice with Chinese regulators while looking for potential revenue streams globally. For Bytedance, fresh off its triumph over the Trump administration’s attempt to force the divestiture of its U.S. holdings last year, this means aggressive moves to take advantage of its huge worldwide user base and much-hyped AI prowess to become a powerful force in e-commerce. Already, Bytedance’s Douyin has become an important conduit for brands to reach and sell to Gen Z in China, achieving an estimated $26 billion in sales last year, a feat that Taobao took six years to accomplish. By next year, Bytedance hopes this number will increase by nearly seven-fold to more than $185 billion. Meanwhile, the company is raking in ad revenue as companies clamor to get in front of Douyin’s 600 million-plus daily active users, and the video app will account for more than half of Bytedance’s expected $40 billion in domestic ad sales this year. Douyin’s selling point is that the app is basically tailor-made for the way Chinese consumers learn about brands and make purchases these days, which is to say, entirely on their smartphones. As Jing Daily columnist Tanya Van Gastel pointed out earlier this year, “China’s shoppers will not buy via internet browsers.” Everything from product discovery to research to completing the sale takes place on mobile devices. Bytedance seems confident that the rise of social commerce among younger consumers makes success in the world of e-commerce a certainty. Last month, the company detailed plans to fuse social commerce with Douyin by applying its algorithms to relentlessly push shoppable recommendations into its content streams, which it terms “interest-based e-commerce.” Bytedance’s blueprint to compete head-on against the likes of Alibaba and JD.com also entails greater vertical integration. Last year Douyin banned shopping links to third-party sites in its livestreams, launched a “Star Map” platform to match influencers with brands, and established its own payment platform. For e-commerce livestreamers, a benefit of choosing Douyin over the more established Taobao Live could be its recommendation algorithms, which can help newer sellers stand out more quickly compared to Taobao Live, where a handful of big names dominate sales. The story becomes even more interesting in its potential to go global. Currently, TikTok is far less feature-heavy than its Chinese counterpart, but this is changing quickly. Brands are now investing more in branded content, advertising, and influencer marketing to reach Gen Z on apps like Snapchat and TikTok, incorporating paths to purchase in short streaming programs and influencer broadcasts alike. Bytedance has reportedly set up a team in Singapore to start building out TikTok’s e-commerce infrastructure, and TikTok has already launched major collaborations with Walmart and Shopify. The key question is whether TikTok can build the same power in global e-commerce as it seems poised to achieve in its home market. As it looks to compete with the major e-commerce players back home, it will have to face off against efforts from Facebook and Snapchat to gain the upper hand in e-commerce. But what Bytedance boasts is the ability of its recommendation engine to help streamers quickly build their audiences, increasing stickiness and enticing sellers to sell and shoppers to shop.

Bytedance’s E-Commerce Ambitions Look Beyond China

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Published May 10, 2021

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Bytedance’s E-Commerce Ambitions Look Beyond China