How to understand the Douyin e-commerce FACT model?

With the development of the Internet, the e-commerce industry is booming. Now, interest-based e-commerce as defined by TikTok has gradually emerged. So, what is the difference between interest-based e-commerce and other types of e-commerce, and how should its FACT model be understood? The author focuses on analyzing how the Douyin e-commerce FACT model helps growth. Let’s take a look.

1. What is interest e-commerce?

First of all, what is the difference between the “interest e-commerce” defined by Douyin and traditional e-commerce?

We can reinterpret interest e-commerce from the perspective of people, goods and places.

We have always said that the core point of interest-based e-commerce is the reconstruction of the "trading venue" - from the original form of people looking for goods to goods looking for people, matching interests through content and stimulating consumption. This is our reshaping of the venue. In addition to the reshaping of the venue, there are actually two other points: goods and people.

In terms of goods, we have changed the original form of traditional e-commerce product display. The focus of traditional e-commerce display is on the details page. Now we are using short videos/live broadcasts to display goods in a more three-dimensional and focused way. This can be said to be our content-based display of goods, which can stimulate consumption to a greater extent while gaining consumer trust.

From the human perspective, we have achieved discovery-based consumption, allowing users to discover more needs beyond the rigid demands in life, stimulating their entire shopping chain, and realizing an increase in the consumer's life cycle value.

This is an interpretation of interest e-commerce from the most basic perspective of people, goods and places.

By comparing traditional e-commerce and interest-based e-commerce, we can find that interest-based e-commerce will bring in more new consumers and increase business. The process of traditional e-commerce is that users search for products after they have needs, and then buy them, so purchasing a through train is a very important part of traditional e-commerce.

Social e-commerce is based on trust between people, and trust in products based on trust in people, but before that there is no demand. Only when demand arises will the corresponding purchase action be completed. Interest-based e-commerce is different from the above two. The first step is to stimulate interest, and then generate demand and purchase.

We will find that the demand stimulated by interest-based e-commerce brings new business growth, which is different from traditional e-commerce.

Let’s take a closer look at the purchasing process of consumers in interest-based e-commerce.

At first, consumers just wanted to check out Douyin and see something interesting. During this process, the consumer saw a video of a young lady applying eyeliner.

Although there are many eyeliners, when watching this video, consumers found that they can draw smoother eyeliners with the eyeliner in the video. This video has sparked a new demand: what consumers need is not the eyeliner already in their makeup bags, but the eyeliner introduced by the host in the video. Stimulate product demand and purchase through content.

There are two core points here: first, by making products content-based, we can better highlight the selling points of products; second, through interest-based recommendations, we can stimulate potential demand and generate new business growth.

2. Douyin e-commerce FACT business matrix drives business growth

We hope to use the FACT methodology to answer three questions for merchants: What is the growth logic of Douyin e-commerce? How to plan your business on Douyin e-commerce? How to match the organizational capabilities of merchants?

Many people lose something when interpreting this picture. This picture actually contains three core contents. To make it easier for everyone to remember, our methodology is called the FACT Matrix, and the FACT Matrix only answers our second question: how to plan business on Douyin e-commerce.

There are two other important questions here: What is the growth logic of Douyin e-commerce? The important information in the snowball model, from confluence, promotion of conversion, to aggregation and sedimentation, is likely to be missed. Another thing that is easily lost is the content-centric e-commerce business structure.

On the one hand, our business philosophy needs to shift to being content-centric. On the other hand, businesses need to be content-centric when building teams and organizations.

Don’t miss the three core points here, and don’t think that FACT is only equivalent to the four tracks of Field/Alliance/Campaign/Top KOL.

Snowball-like growth explains the growth logic of Douyin e-commerce.

It can be seen from Alibaba’s AIPL that traditional e-commerce follows the logic of a funnel. From the initial influx of traffic, to conversion, and then to sedimentation and repeat purchases, it is a logic that leaks down little by little from the top.

So when its business reaches a certain scale and the traffic entrance is already very open, its growth will actually be limited because your traffic has already reached a growth bottleneck. Business growth will then slow down.

But the snowball-like growth of Douyin’s e-commerce is a logic that will only get bigger as it rolls. In the logic of snowballing, in addition to the specific points of gathering traffic, promoting conversion, and gathering sedimentation, there are two core points that we want to convey.

One is: it gets bigger and bigger. This is a relatively unlimited growth concept that can break the traditional funnel.

Second, in the circle outside the snowball, the three points of converging flow, promoting conversion, and gathering sedimentation have a positive feedback logic.

This positive feedback is related to the distribution mechanism of our Douyin e-commerce. After I give you a certain amount of traffic, if I find that your video playback indicators are relatively good, I will give positive feedback from the initial stage of traffic distribution, and the merchant will be able to get more traffic. In other words, after the traffic comes in, my live broadcast room can achieve better GMV, or have better interactive effects, and promoting conversion can give better positive feedback to the traffic flow.

Similarly, polymerization and promotion of transformation also have mutual positive feedback. This positive feedback means that my fans and repeat purchase groups are users with higher weight to me. During the process of traffic distribution or conversion, I can find more accurate users when attracting new users and achieve the conversion goal.

During the entire process of Douyin e-commerce operation, we hope that brands can understand that Douyin’s traffic distribution and acquisition mechanism is different from the funnel logic of traditional e-commerce using centralized pages.

Snowball growth logic

3. Convergence of traffic: content management and traffic operation go hand in hand

Douyin e-commerce is centered on content, and the determination of traffic is based on judging the quality of the content attributes. Traffic operation refers to the coordination between free traffic and paid traffic.

1. Clear target users -> clear content direction

Douyin e-commerce has an algorithm model. The wheel of traffic can only start turning after relatively clear target users are identified. Therefore, it is very important to first clearly position the content direction based on the target user portrait.

2. Content quality x content quantity, improve traffic stability

This is easy to understand. When the quality of your content is high enough, you will definitely get weighted recommendations from the algorithm. The quantity of content means that whether it is short videos or live broadcasts, there needs to be a stable output to support stable traffic acquisition. The quality of live broadcast and short video content is the key to stimulating interest and obtaining traffic. Increasing the length of live broadcasts and the number of short videos can open up more traffic entrances.

Merchants need to maintain live broadcasts every day and send enough warm-up short videos before the live broadcasts. This is to improve traffic acquisition from the content perspective.

3. Refine traffic operations to make free and paid traffic flow

On the one hand, paid traffic can leverage the recommendation of free traffic, and on the other hand, free traffic can help locate the accuracy of paid traffic. By leveraging free and paid traffic, we help merchant accounts quickly start live streaming. The following diagram specifically illustrates how to use free and paid traffic in different stages.

When a live broadcast room starts, both free traffic and paid traffic are needed. Paid traffic mainly helps you get through the cold start phase. In this process, pay attention to positive feedback.

When paid traffic has positive feedback, it can help you leverage free traffic. However, if after paid traffic comes in, if the performance in all aspects (conversion/stay time) is relatively lower than the average level and no positive feedback is formed, the algorithm will not be able to help you obtain free traffic, and it will be difficult to improve ROI at this time.

Therefore, if our paid traffic is constantly burning, we should not expand it first. We need to take a series of operational actions to improve the live broadcast room's ability to handle traffic first.

When more free traffic comes in and there are more conversions and sedimentation, we will launch more targeted advertising. Qianchuan will have more precise audiences and attract them through paid methods. Therefore, paid traffic and free traffic complement each other. After we have a relatively stable supply of free traffic, we can experiment with paid traffic to expand to more people.

4. Promote conversion: Optimize product grouping strategy and content operation for potential groups

1. Find potential groups

The users accumulated through videos are not necessarily the precise audience for conversion, so it is still necessary to open live broadcast rooms frequently to achieve precise audience matching through live broadcast rooms. Accelerate the identification and growth of target groups through pre-heating videos, marketing tools, advertising, etc.

2. Optimize product grouping strategy

The combination and matching of traffic-generating items, profit items, and welfare items, as well as the length of explanation for each product need to be constantly optimized.

3. Mature live broadcast room operation plan

In the past, the conversion of traditional e-commerce revolved around the product details page, while the conversion of interest-based e-commerce revolved around the operation of all resources in the live broadcast room. Douyin's e-commerce live broadcast needs to meet multiple marketing goals such as traffic generation, grass-roots promotion, interaction, conversion, etc. A mature live broadcast room operation requires high-quality anchors, accurate wording, fine live broadcast rhythm, flexible product adjustment, quick response advertising, etc.

5. Accumulation: Daily operation accumulation, combined with marketing tools, to accumulate long-term user value

1. Optimize daily operations and focus on "increasing followers" and "repeat purchases"

Why should we focus on increasing followers? First, the fans’ GPM is much higher than that of new fans. Second, after having a stable fan base, it also plays a great role in increasing traffic. Regarding repeat purchases, from the perspective of product assembly, the live broadcast room must have products for old users, so that the operation efficiency will be very high.

2. Make good use of data tools to manage crowd assets.

The Douyin e-commerce compass provides analysis and guidance on Douyin store operating data; a cloud map of crowd data of all interactive users of brand merchants on the Douyin site; a huge amount of Qianchuan for data insights on Douyin store advertising; and a membership area to help brands manage and operate loyal users.

6. Layout of FACT's four major business positions

What roles do these four positions play respectively?

1. Field Merchant Self-broadcasting: Accumulate crowd assets and achieve long-term and stable operation

Establish brand and merchant personas, ensure stable product guarantees, improve pre-sales and after-sales guarantees (evaluation points are an important factor in the traffic distribution mechanism), closely coordinate advertising placement (make real-time adjustments at the minute level), and conduct comprehensive data analysis (tracking and optimization through the Douyin e-commerce compass).

2. Alliance Talent Matrix: Helps you enter the market quickly and amplifies your business growth

In the process of cooperating with influencers, we apply the optimization ideas of influencer matrix and analyze the effect of cooperation based on traffic acquisition ability x conversion rate. When the conversion rate is low, improve the matching degree between products and influencers; when the traffic is low, increase the influencer's conversion ability through paid traffic.

3. Campaign: Cultivate consumer awareness, obtain platform resources, and achieve large-scale sales explosion

Participate in more marketing activities, including platform promotions, marketing IP, and industry activities.

4. Top KOLs: Quickly create a high volume of "breaking the circle" and achieve a win-win situation for both product and sales

Mixed live broadcasts promote hot-selling items in a single pit, and special live broadcasts promote the entire inventory.

Build an e-commerce management team adapted to Douyin e-commerce:

• Content production**: responsible for short videos and live broadcast rooms
• Product management: responsible for product grouping strategy and supply chain capabilities
• Talent operation**: BD experts, establish stable and long-term cooperation
• Advertising: Accurate customer acquisition and efficient conversion
• Service guarantee: full-link customer service capabilities to ensure consumers' shopping experience

**Only for Douyin e-commerce

Author: heloimjudy

Source: heloimjudy