Douyin e-commerce merchant management methodology

Recently, Douyin E-Commerce and Bain Company jointly released the "Douyin E-Commerce Merchant Management Methodology White Paper" (hereinafter referred to as "Methodology" and "White Paper"). Prior to this methodology, Douyin E-Commerce officially announced its new positioning as interest e-commerce.

01. Shelf e-commerce VS interest e-commerce

Before interest-based e-commerce, there was the era of shelf e-commerce, where corporate products were put on e-commerce platforms. When users needed to purchase a product, they would search for relevant keywords, brand names, or remember the merchant’s flagship store URL to enter the online store. Even with short videos and live broadcasts, the final transaction logic was still that the user reached the details page to complete the transaction. The logic was the same as that of a supermarket. Before people went to the supermarket to purchase, they had basically clarified their needs and made a shopping list. They only had to get a shopping cart from the shelf in the supermarket and then go out to check out.

The essence of shelf e-commerce is search. Users with clear needs buy and leave immediately. It solves functional needs. However, the underlying logic of interest-based e-commerce is completely different. It is more like a smart shopping mall. People’s shopping needs have risen to value needs, that is, not only "buying" but also "browsing", buying while looking, buying while playing, and purchasing decisions are completely driven by stimulated interests.

Traditional shopping malls are like content e-commerce, where people can also choose some stores of interest. However, in such a shopping model, the behavior of "people looking for goods" still exists. Interest e-commerce has taken a big step forward, which is to match product content with interested users to form discovery-based consumption. When you watch content that interests you, you are "unconsciously" "planted with grass", and the relationship between "people, goods and places" is reconstructed. Consumers who were originally unaware of their own pain points will have their pain points identified, their needs will be stimulated, and the consumers' life cycle value will be improved.

In the past, when people consumed, they would remember a certain brand or product through advertisements, offline recommendations, etc., and when they encountered related scenarios, they would actively think of the product and then buy it. However, many products that form an impression may be "a thing of the past", and even if there are better products now, people are completely unaware of them.

For example, some time ago I saw a short video on Douyin in which an expert recommended a kitchen gadget. This suddenly awakened my pain point. I didn’t even know that there were such products on the market, so I immediately placed an order to buy them. For example, at a meeting some time ago, an industry insider said that his family members watched Tik Tok to learn how to draw eyeliner, and from the short videos and live broadcasts, they felt that they also needed an eyeliner pen. From this point of view, from clarifying purchasing needs to being reminded of pain points, stimulating product interest and purchasing needs, and finally placing an order, consumer behavior is no longer simply for the purpose of purchasing products, but for a better life.

Interest-based e-commerce and traditional shelf e-commerce not only have different underlying transaction logics, but also have significant differences in traffic acquisition and conversion models. Although they both seem to be "gathering traffic, promoting conversion, and gathering sedimentation," traditional shelf e-commerce is a typical traffic funnel model, that is, by attracting traffic, interested users flow downward to the e-commerce details page for conversion, and then become members, retaining users layer by layer.

Interest-based e-commerce has turned into a snowball-like rolling growth model, which incorporates product conversion and user sedimentation data into the Douyin e-commerce recommendation model. Through products and content as carriers, potential consumers can be reached accurately on a large scale. As the user scale and transaction data continue to accumulate, the store gains "growth potential", and traffic acquisition is continuously calibrated and amplified, allowing the total business volume to enter a "growth cycle."

02. FACT business matrix

How to achieve snowball-like growth in Douyin e-commerce? How to plan your business in the four major tracks of Douyin e-commerce? How to match team capabilities? This methodology can effectively adapt to the layout and development of different enterprises in Douyin e-commerce at different stages. What are the details? Let’s break it down:

First, Douyin e-commerce has grown like a snowball

We have already talked about the difference between the snowball growth model and the traffic funnel model. In Douyin e-commerce, achieving "snowball growth" is the basic skill for business operations.

(1) Traffic aggregation: If you want to engage in Douyin e-commerce, you must clearly understand the characteristics of Douyin e-commerce. It is a new form of e-commerce centered on content. Traffic acquisition is mainly based on content, and the direction of content also determines the user circle. Traditional e-commerce mainly focuses on traffic operation, while Douyin e-commerce adopts a two-pronged approach of "content management and traffic operation". Good content makes users more accurate, and through refined traffic operations, free traffic and paid traffic can be turned around. If a merchant starts the cold start phase from scratch, the accuracy and magnitude of free traffic recommendations are relatively low. At this time, by selecting the target group through paid traffic, Douyin's recommendation technology will distribute the content to similar groups of people, thereby improving the efficiency of free traffic.

Tips: In the early stage of the account, you can select the target audience through paid traffic, but in the mature stage, the quality of the intelligent recommended audience is better than that of the actively selected audience tags.

(2) Promoting conversion: The core of user conversion is the connection and matching between "people and goods". We optimize the product grouping strategy for potential groups and maximize conversion efficiency through live broadcast rooms and short video content operations. Douyin e-commerce uses the live broadcast room as the core touchpoint to stimulate users' potential needs. When users enter the live broadcast room, multiple marketing goals such as planting seeds, interacting, and converting are quickly achieved. It captures users' attention and achieves conversion, which places high demands on the anchor and the live broadcast team.

Tips: In Douyin e-commerce, a mature live broadcast room operation requires high-quality anchors, accurate speech skills, fine live broadcast rhythm, flexible product adjustments, quick response advertising, etc.

(3) Accumulation of users: This means user accumulation. From a long-term perspective, it means accumulating brand assets. From a short-term perspective, it means “increasing fans” and “repeat purchases.” There is a difference between Douyin e-commerce fans and traditional e-commerce store fans, and the reason is not difficult to understand. The former follow for content and interests, and they also acquire content on the platform every day. Under the recommendation logic, fans are more related, interactions are more diverse, and value is greater. The latter is connected with promotions and activities.

In terms of “aggregation and sedimentation”, it is necessary to make good use of tools so that you can better manage your brand’s digital assets and have a clear insight into user trends and needs. The tools include:

• Douyin e-commerce compass: Douyin store operating data for analysis and guidance
• Cloud map: Brand merchants accumulate crowd data of all interactive users on Douyin
• Juliang Qianchuan: Data Insights from Douyin Store Advertising
• Members Area: Brand management, operation of loyal users

Tips: In daily short video operations and live broadcasts, inviting viewers to interact and add fans is the most common and important accumulation action. At the same time, through a variety of marketing tools (such as fan coupons and fan lotteries), we can enhance fan stickiness, establish long-term trust relationships, and achieve long-term and sustainable conversions.

【Case】Peacebird Women's Wear's Snowball-like Growth

Since the second half of 2020, PEACEBIRD Women's Wear has entered Douyin e-commerce. PEACEBIRD Women's Wear uses long-term self-broadcasting every day as an entry point to accumulate accurate fans, cooperate with traffic delivery, find precise target groups, and at the same time focus on improving live broadcast content. At the data level, we paid attention to the changes in traffic, conversion, and sedimentation data, and continuously optimized the live broadcast room strategy based on data performance, ultimately achieving rapid growth in the brand's total sales: in just a few months, the average daily GMV increased from 100,000 to approximately 3 million.

• Traffic: In the early days of opening a Douyin e-commerce store, PEACEBIRD Women’s Wear had difficulty obtaining sufficient natural traffic due to its small number of fans and poor conversion capabilities. With more than 18 hours of continuous self-broadcasting every day, the brand has gradually accumulated a user group with high purchasing intention; by analyzing the portraits of this group of initial customers, PEACEBIRD Women's Wear was able to accurately locate the target group for paid traffic, which not only supplemented the source of traffic, but also improved the conversion rate, "pushing" the snowball forward, and the recommendations of free traffic began to increase. The accuracy of free traffic was also gradually optimized, becoming the basis for the store's growth.
• Promote conversion: PEACEBIRD Women's Wear continues to polish and optimize its content. Upgrade the decoration of the live broadcast room and the product display window; use hosts of different body shapes to explain the same set of clothes and fully display the selling points of the products.
• Focusing on the user life cycle, PEACEBIRD Women's Wear has close collaboration between the front and back ends: in the short term, it increases the number of followers for the account through word-of-mouth broadcasting to leverage short-term leverage; in the long term, it continuously improves customer service response speed and inventory status, ensures customer satisfaction with fast logistics and high-quality after-sales service, and greatly increases the repurchase rate.

Second, FACT business matrix

After understanding the logic and strategy of Douyin e-commerce's snowball-like growth, the four important "FACT" business positions in the methodology released this time tell merchants at different stages how to plan Douyin e-commerce. What exactly is FACT?

In the FACT business model, merchants’ self-broadcasting (Field) and influencer matrix (Alliance) help merchants build stable daily sales, while marketing activities (Campaign) and top KOLs help merchants achieve large-scale explosive growth in product sales.

Merchant self-broadcast (Field)

Self-broadcasting is the most basic business front for merchants. To do a good job of self-broadcasting, merchants need to first establish brand personality, which will help enhance user awareness and narrow the distance between the brand and users. For example, the anchors in the Peacebird live broadcast room all have a unified image and launched the "PB Girl Group". Anchors of different styles of girl groups can not only show different styles of clothing, but also have accumulated a large number of loyal fans. Since the broadcast started in October 2020, the number of store fans has grown from less than 20,000 to the current 1.61 million. Secondly, merchants’ self-broadcasting has higher requirements for the supply of goods, requiring merchants to have a quick-response product team and establish complete pre-sales and after-sales services. In addition, merchants’ self-broadcasting can be coordinated with advertising (Juliang Qianchuan), and comprehensive data analysis can be conducted through Douyin e-commerce related tools (Douyin e-commerce Compass).

Talent Matrix (Alliance)

The influencer matrix should not be simply understood as influencers bringing products, but rather as merchants establishing long-term and close cooperation with influencers with a high degree of matching, thereby increasing sales and expanding brand awareness.

Since joining Douyin in June 2020, Li Ziqi currently has more than 55 million followers. Her company insists on using its own team to cultivate the expert matrix. From a strategic perspective, the Li Ziqi brand has designed a "strong content of self-media accounts + strong sales of expert matrix" model. In less than a year, it has obtained more than 2,000 experts to promote products. By 2021, monthly sales have stabilized at more than 10 million.

I'MINT (Yimeizhi) sugar-free mints had annual sales of 30 million in 2018; in 2020, it became a hot-selling product on the Douyin product list online, with an annual GMV of more than 250 million. In terms of I'MINT's cooperation with experts, we have cooperated with an anchor who had only 10,000 fans. On the first day, he only sold 1,000 yuan through live broadcast. On the second day, through preheating short videos + live broadcasts, his GMV immediately soared to 30,000. After years of trial and error, I'MINT's partners have now expanded to the top of the pyramid - top influencers, anchors and celebrities, with the highest single-game sales reaching 500,000. It is precisely under this step-by-step and steady investment strategy that the company's performance has grown by leaps and bounds. In 2020, the average ROI of Douyin’s sales promotion was about 1:5, and sales have doubled every month since August 2020.

Tools and platforms related to the talent matrix: DouLink (offline product selection meeting to help match people and products), Selected Alliance (online convenient matchmaking platform), Nebula Project (online talent recruitment activity), and Live E-commerce Base (offline space and talent butler service).

Campaign

Various marketing activities can lead to concentrated transactions with high turnover in a short period of time, such as platform promotions, marketing IP activities, such as Douyin Super Product Day, Douyin New Product Day, Douyin Newcomer Release, etc. There are also various industry activities, such as "DOU Creative Designer", which is an exclusive activity for original designers in the apparel industry. When merchants participate in marketing activities, they must make complete and sufficient preparation plans. The general process is: from the preparation period to lock in the matching of people and goods, to the warm-up period to ignite the content, accumulate purchasing mindsets through influencers and topics, and on the day of the event, conduct a comprehensive launch to create a single-event explosion. After the big promotion, the return period begins. Merchants can continue to promote products through short video clips of the event, attract traffic and increase followers, and continue to retain potential users.

Be & Cheery participated in the Douyin Super Brand Day event. By integrating the resources of brand, celebrity and influencer, Be & Cheery accumulated more than 14 million views through multiple short video contents on the official topic of Be & Cheery #BaicaoweiBaoZangNianHuo#, which fully warmed up for the Super Brand Day. On the day of the event, advertising that was highly coordinated with the live broadcast room provided sufficient traffic foundation for the sales explosion. Ultimately, the live broadcast on Super Brand Day achieved an impressive result of over 10 million views, and at the same time helped the brand account gain nearly 300,000 followers.

Top KOL

The "China Digital Marketing Trend Report" for two consecutive years in 2020 and 2021 showed that more than 60% of advertisers increased their investment in KOL marketing and promotion with conversion and sales capabilities. In Douyin e-commerce, the cooperation methods with celebrities and top influencers are usually divided into mixed-length and special sessions.

Whoo, a skincare brand from South Korea, achieved an astonishing record of over 300 million in sales for a single event and 289 million for a single product by aggregating resources from top V influencers such as the Guangdong couple and Douyin Super Brand Day. Through multiple collaborative tests in the early stages, the best cooperative products were selected. On the day of the event, multiple departments including the live broadcast room, advertising, customer service, and logistics worked together to ensure an explosion in sales that day. After the event, the day's main hit product, Tianqidan, also became a hotly discussed product on the entire platform, helping to open up the channel for subsequent cooperation with more influencers.

Third, organizational transformation and upgrading

Merchants and brands operating on the Douyin e-commerce platform need to build organizational capabilities centered on content. In the Douyin e-commerce FACT business matrix, content production capabilities are particularly important, because both products and influencers require content. Merchants need to upgrade their organizational capabilities in five dimensions, namely: content production, product management, influencer operation, advertising, and service guarantee. In other words, the team must have these five capabilities to provide support for good content, good products, and good services.

At present, there are various forms of Douyin e-commerce teams in corporate organizations, but no matter what form they are, these teams have the above five basic capabilities. Common forms include:

• The Marketing Department manages the Douyin e-commerce team and focuses on marketing content;
• The e-commerce department manages the Douyin e-commerce team and focuses on sales growth;
• Independent Douyin e-commerce team to achieve rapid response.

03. How should enterprises seize the opportunities of interest-based e-commerce?

With the increase in people's income, the advancement of technology, changes in content formats and many other factors, people have turned to video and live streaming to obtain content and goods. The interest e-commerce represented by Douyin e-commerce integrates content with purchasing experience, and the link is shorter. It will not only bring new growth to the company, but also is the consumption method and lifestyle of the future younger generation of consumers. In the previous article, I have introduced how to do Douyin e-commerce. As for the question of "how should enterprises seize the opportunities of interest e-commerce", I use a formula to express it:

Sustainable growth of enterprises = thinking x organization x method

What does this formula mean? If companies want to achieve sustained growth, they need to constantly iterate and upgrade their thinking and clearly formulate future strategic directions. Organizations must also transform and upgrade to match new market opportunities. Just like interest e-commerce will need more content talents. Once the thinking has changed, the strategic direction is right, and there is good organizational capability, there needs to be a practical methodological support. Specifically for Douyin e-commerce, please refer to the following suggestions:

1. Change your mindset: adopt a content-centric snowball-like growth mindset;
2. Organizational change: In line with the characteristics of interest e-commerce, e-commerce management and organizational capabilities with content as the core;
3. Method practice: FACT business matrix, Douyin e-commerce merchant management methodology practice.

04. The significance of Douyin e-commerce merchant management methodology

Some people say: Some methodologies look good, but they are wrong when used!

I think that most companies that apply various methodologies poorly simply copy them. Lack of thinking is the main reason for the "failure" of the methodology. They have not analyzed their own corporate status, capability matching, user portraits, product matching, etc. Of course, flaws in the methodology itself cannot be ruled out. If it is a closed-door methodology, then the chances of failure in actual operation will definitely be very high.

Observe the business methodology of Douyin e-commerce merchants, which comes from practice, and is not simply summarized by a third party, but by the official platform.

Release, massive data support, a lot of merchants' front-line practical experience, platform strategy and tool integration, belongs to the empirical methodology. We will find that on the Douyin e-commerce platform, each merchant will use different strategy combinations in the FACT business matrix. Some will focus on the merchant’s own broadcast (Field), some will focus on the expert matrix (Alliance), etc.

So, what is the significance and value of the emergence of Douyin e-commerce merchant management methodology for enterprises and industries?

(1) New: After Douyin launched its interest-based e-commerce positioning, more and more companies are preparing to enter the market, and many researchers have become interested in Douyin’s e-commerce business methods. It cannot be simply defined as a new channel, it integrates content and sales conversion. The new model requires new thinking, and new thinking requires new methods. The emergence of this methodology is a refresh and upgrade of cognition for both enterprises and the e-commerce industry.

(2) Fast: Let more companies understand how to grow quickly. When a company has "good content, good products, and good services", it can find potential users faster and achieve explosive growth in product sales through an effective and valuable FACT matrix model.

(3) Stability: Many companies are reluctant to try new methods or channels, mainly because they are worried that the cost of trial and error is too high. When there is no effective methodological guidance in the market, blindly entering the market may just mean “paying tuition fees.” If there is an official, continuously iterative methodology to refer to, there will be a clear path for corporate transformation and upgrading and the creation of new brands.

Final Words

A good methodology will enable an enterprise to develop faster and more steadily, and a good methodology itself also needs to be continuously iterated and deepened.

Buffett: "Life is like rolling a snowball. The most important thing is to find very wet snow and a very long slope." On the "long slope" of interest-based e-commerce, Douyin e-commerce discovered "very wet snow" through "precise interest recommendations x massive user needs."

Are you ready for the snowball growth opportunity?

Author: Wei Jiadong

Source: Wei Jiadong