For years, traditional e-commerce platforms like Taobao, JD.com, and Pinuoduo held a dominant grip on China’s online market. However, in recent years, live streaming e-commerce made a significant impact, challenging the traditional model.
Yet, since 2022, the popularity around live streaming on various e-commerce platforms has waned, as consumer interest began to decline. Coupled with increasing concerns over false advertising, the live streaming e-commerce sector appears to be cooling down. In response to this shift, Kuaishou e-commerce announced in September 2022 that it would launch a shopping mall channel.
For overseas brands seeking to enter the Chinese market, the question now is: how can they effectively navigate Douyin’s evolving marketplace, blending content with commerce to spark sales growth?
- Shelf E-Commerce Makes a Comeback
During the 2022 Double Eleven period, Douyin’s mail saw a total exposure of goods reaching 78.6 billion and 531 products achieving over one million yuan in single-product GMV within the shelf scene. Compared to the 2021 Double Eleven event, the number of products sold increased by 134%, and the daily GMV in Douyin’s search scene rose by 142%.
图片来源: 抖音电商营销观察
By July 2022, Douyins Mall accounted for approximately 20% of its GMV, with plans to increase this share to over 50% in the future. The launch of Douyin’s mall has significantly boosted its e-commerce business, signaling a shift towards strengthening shelf e-commerce as evident by platforms like Douyin and Kuaishou.
These days, many live streaming influencers have faced controversies such as tax issues, counterfeit products, and false advertising, contributing to a decline in consumer trust.
As a result, rational consumption has become a growing consensus among users, leading consumers to increasingly prefer the reliability and transparency offered by traditional shelf e-commerce platforms.
This trend was particularly evident in 2021, as shoppers, no longer enamored with the low prices often seen in live-streamed sales, turned to shelf e-commerce for superior shopping experiences and more dependable delivery times. In fact, live streaming GMV on the three major platforms, Douyin, Kuaishou, and Taobao, accounted for only 13.7% of China’s e-commerce market in 2021. Some institutions predict live streaming e-commerce will reach a GMV of RMB 6.5 trillion by 2025, claiming 25% of the total e-commerce market, while traditional shelf e-commerce continues to dominate nearly 75% of the market space.
Source：摩根士丹利研报
It’s evident that after years of development, shelf e-commerce remains a dominant force in the market. Despite the rise of live-streaming e-commerce, it seems unlikely that shelf e-commerce will be easily displaced.
- Building A Successful Shelf E-Commerce is Not Simple
Shelf e-commerce, fundamentally a “centralized e-commerce” model, emphasizes rational consumption, constrasting with the “decentralized” nature of live-steaming e-commerce, which thrives on impulsive consumption. This distinction highlights why shelf e-commerce is regaining momentum as consumer behavior shifts toward greater rationality.
The current structure of the Douyin and Kuaishou Mall resembles Taobao’s. In fact, Douyin and Kuaishou appear to be adopting a “Taobao-ization”
Examining the strategy of “Doukuai,” these platforms initially relied on content-driven traffic, adopting a “goods finding people” approach. However, as traffic growth reached a plateau and disruptions in live-streaming e-commerce become more frequent, they must shift towards a “people finding goods” mindset. This transition is essential for uncovering new business opportunities in e-commerce, The success of traditional e-commerce platforms has demonstrated that a wells-structured “shelf” model, supported by a shopping mall framework, can significantly boost GMV and enhance user retention.
However, transitioning to shelf e-commerce is no easy feat for live-streaming platforms such as Douyin and Kuaishou
Taobao and Tmall dominate in clothing and beauty products, while JD.com excels in 3C products, and Pinduoduo is recognized for agricultural goods. In contrast, Douyin and Kuaishou lack a distinctive niche. Data from 2022 illustrates this challenge: during the 618 period, Douyins Mall’s daily visitors reached 150 million, yet the conversation rate was only 2-3%. Similarly, during the 2022 Double Eleven period, visitor numbers peaked at 300 million, but the conversation rate dropped to just 1.2%
At the core of this issue lies the supply chain, representing the most significant challenge for Douyin and Kuaishou in their transition to shelf e-commerce
- The Convergence of Content and Shelves
For Douyin and Kuaishou, building shelf-based e-commerce platforms is not the goal. The emerging trend points toward the seamless integration of content-driven and shelf-based e-commerce, with content commerce becoming a significant focus.
Take Taobao, for example—it continually enhances its content features, incorporating browsing, live streaming, curated selections, and homepage information flows to ignite consumer desires. JD.com places its “Grass Planting” channel prominently at the center of its homepage navigation, while Pinduoduo features “Duoduo Video” as a primary entry point at the bottom of its homepage.
This evolution illustrates that Douyin and Kuaishou are actively expanding their shelf-based e-commerce capabilities, while traditional e-commerce giants are intensifying their content-driven strategies.
The boundaries between content-driven and shelf-based e-commerce platforms are dissolving, leading to a natural convergence of the two models. In the next phase of e-commerce platform competition, no entity can thrive in isolation. True integration may hold the key to driving transformative changes and shaping the future of the industry.
- Brands are Venturing into Shelf-Based E-Commerce via Live Streaming
Australian Brand Vinda: initially entering Douyin e-commerce in 2021, Vinda, despite its industry status, ranked only third or fourth in its category on Douyin.
Upon deeper analysis, Vinda realized that Douyins traffic allocation wasn’t solely dependent on traditional metrics, but also on brand and product strength. Focusing on this insight, Vinda capitalized on its core strengths, emphasizing high-performing products that delivered excellent consumer experiences. They tailored their sales pitches to encourage interactions and attention toward their store and complemented their strategy with high quality short videos for paid advertisements. As a result, Vinda’s Douyin store saw steady growth, culminating in first place in its category during the 2022 Double Eleven shopping festival.
The merchant’s experience highlighted that setting up a Douyin store could lead to significant growth with minimal team expansion, often requiring just 2 to 4 additional members. By focusing on foundational store operations, brands could achieve respectable conversion rates.
However, after enjoying the initial surge driven by Douyin Mall’s new entry and brand momentum, merchants need robust operational strategies to sustain performance growth.
Overseas brands at the forefront have already mastered the nuances of Douyin’s e-commerce system. By skillfully combining content-driven and shelf-based strategies, they are well-positioned to seize new growth opportunities at the intersection of these fields.
