Douyin, the popular Chinese video streaming app boasting 600 million daily active users, is reportedly developing its own wine and spirits e-commerce platform, throwing its hat in the ring to capture the country’s lucrative drinks market by leveraging its live-streaming strength.
According to Chinese media reports, Douyin is building a sales team and recruiting buyers to sell wine and spirits on the app through live streaming and short videos. Its new e-commerce business will mainly sell non-Moutai Baijiu and other alcoholic drinks.
According to an unnamed person in charge of Douyin e-commerce at its parent company ByteDance, the move is to diversify wine and spirits products offered on its platform. Douyin will “make some new attempts in self-operated wine and spirits business”, the person confirmed the news to Chinese media “Tech Xingqiu” (Tech星球).
The viral social media app first entered the e-commerce battleground to compete with retail giants Alibaba and Pinduoduo in early 2018. By allowing stores to open on Douyin, the app has achieved RMB 500 billion (US$78.6 billion) transaction volume in 2020 and reportedly had a target of RMB 1 trillion (US$157 billion) in 2021.
If the new wine and spirits e-commerce is successful, Douyin may expand its business scale to include delivery services in towns or physical stores, a person close to Douyin’s parent company ByteDance told Tech Xiuqiu.
Lucrative wine business on Douyin
In 2021, the size of short video users in China reached 934 million, 90.5% of the country’s total netizens, while live streaming users reached 703 million, government agency China Internet Network Information Center (CNNIC) said in a report.
With Douyin’s live streaming tools and tailored content recommendations to users, it quickly became an important tool for brands to find potential customers and interact with them anytime and anywhere. Users can also get exposure to various stores with just a few clicks.
Among all the products, Douyin’s enormous user base developed a growing thirst for wine and spirits. A report from ByteDance said the number of Douyin users showing interest towards wines and spirits has surpassed 67 million in December 2020, up by over 62% from the same period in 2019.
As one of the leading video streaming apps in China, Douyin has already attracted well-known wine merchants, such as “1919” and “Jiuxian“, celebrities and online influencers to sell wines on the viral live-streaming platform. In December 2020, there were more than 27,000 wine merchants on Douyin, a staggering growth of almost 600% from January, according to Trend Insight, the digital marketing platform owned by ByteDance.
But interestingly, the number of key influencers with millions of followers is still relatively small. In 2020, wine-centred accounts with over 10,000 followers are only about 1500 on the platform. This was already an increase of 329% from previous year, which means the platform’s wine KOL landscape is virtually uncontested.
The monthly transaction amount of wines and spirits on Douyin has reached RMB 80 million (US$12.6 million) and rose by 70% in H2 2020, according to Tech Xiuqiu‘s report.
Douyin’s interest to grow its self-operated wine and spirits e-commerce seems in line with the company’s overall strategy to boost its e-commerce ecosystem.
When Douyin banned the inclusion of third-party websites link on its live streaming platforms in 2020, it was seen as a move to trap the profits on Douyin from going into third-party e-commerce like Taobao and JD.com.
In 2021, Douyin revealed its ambition in e-commerce by joining 618, one of China’s most popular e-commerce shopping festivals on June 18, to compete with retail giants. It also created a shopping app called “Douyin Box” for fashion and trends to attract the young and tech-savvy consumers in the same year.
The foray into drinks e-commerce will however not be the first time that Douyin’s parent company ByteDance had targeted the wine and spirits business.
In 2018, ByteDance produced its own light-aroma baijiu brand “Suiwo” targeting youngsters. It also produced a red wine brand “Byte Vivant” by working with a winery in Ningxia, China’s premium wine region. With insufficient promotions, the online sales performance was disappointing at the time.
Since then, ByteDance has been testing waters with e-commerce.
In March last year, Douyin helped brand accounts to launch their flagship stores on the platform with a set of powerful tools including campaign banners, vouchers and product recommendations, setting up a model for its future e-commerce business.