The Huge Market: Why You Should Consider Cross-Border E-Commerce with China. What Are the Best Practices for Managing a Douyin Business Account?

Population: Approximately 1.4 billion. E-commerce penetration rate in retail: 44%.

Accessing this massive Chinese market online is what "China Cross-Border E-Commerce" is all about.

Japan's cross-border e-commerce to China has already grown into a ¥1.9 trillion market. This series explores hints for Japanese companies looking to expand their e-commerce presence in China.

This installment focuses on Douyin (TikTok), a national platform where users can post and view short videos, boasting over 600 million daily users.

It is gaining attention both domestically and internationally as a "social commerce" channel where users can purchase products directly on the platform without redirecting to external sites. Leading global companies and brands are establishing sales channels here.

How can Japanese companies grow their business on Douyin EC? Junji Mizuno, a planner at Dentsu CXC collaborating with Douyin EC Global (the Chinese IT company operating the platform), interviewed Huang Yi from Douyin EC Global about their growth strategy.

<Table of Contents>
▼Douyin EC's Most Important Keyword: "Omni-Interest Commerce"

▼What is "FACT+S," the Key to Brand Growth?

▼Boost Competitiveness with the "Synergy" of Recommendations and Advertising!

Douyin EC's Most Important Keyword: "Omni-Interest Commerce"

Mizuno: When Japanese companies enter Douyin EC, I'd like to hear more from Mr. Huang about how they can grow their business. The short-form video platform Douyin and its e-commerce service, Douyin EC, are known for their strong short-form video and live commerce content. Additionally, they feature an exceptionally robust recommendation system.

Huang: Yes. A major feature of Douyin EC is "Interest Commerce," where diverse video content is provided tailored to each user's individual interests. By enhancing the recommendation function to match products with each user's latent needs, we've cultivated a habit among users who have made a purchase once to repeatedly shop within Douyin EC.

Reference Article:Cross-border E-commerce in China via a Video Social Platform Used by 600 Million Daily Users!

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At the same time, more people are actively searching for products they want. We also recognize the need to provide diverse account management tools tailored to merchants (businesses operating stores). Therefore, starting in 2022, we upgraded "Interest Commerce" to "Omni-Interest Commerce" and positioned it as a new business strategy.
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Mizuno: "All-domain" means covering the entire customer journey, right?
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Huang: Exactly. It covers not only "purchasing" but also "exploration," "sharing," and all other purchasing behaviors. In terms of specific implementation, we're enhancing not just content recommendations but also the functionality of the e-commerce mall and the "search function" to help users easily find the products they want. We call this e-commerce mall the Douyin Mall. Imagine it as a shopping mall-style e-commerce site where users can browse products from various companies.

Mizuno: Thank you. At Dentsu Inc. CXC, we also research the entire spectrum of user behavior and have consolidated it into the 'Dentsu Inc. Infinity Model.' The current Douyin EC platform covers this full range of user behavior, correct?

Huang: It's been about a year since we launched our "All-Scope Interest Commerce" initiative, and we're seeing positive results. Douyin EC's gross merchandise volume (GMV) in 2022 achieved an 80% year-on-year increase. Within that, GMV from the mall platform grew by 277%, while GMV from users' independent searches increased by 159%.

Conversions through e-commerce channels like live commerce and short videos also increased, exceeding 50% for 56% of stores. The effect of All-Domain Interest Commerce has also significantly boosted traditional conversion channels.

Over the next year, Douyin EC plans to invest 10 billion RMB (approximately 200 billion yen) to further expand full-domain interest commerce and support merchants. Douyin Mall, in particular, is expected to drive new growth for Douyin EC ( ).

What is "FACT+S," the key to growing your brand?
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Mizuno: Now, let's delve into the key points for Japanese companies managing their Douyin EC accounts. Within the all-domain interest commerce ecosystem, what should companies and brands focus on when operating their accounts and shops?

Huang: For this, we propose the "FACT+S" methodology. This diagram categorizes elements on the left—such as live commerce and short-form videos—as "Content," grouped under "FACT." Elements on the right, like Douyin Mall, relate to the "Store" aspect merchants possess, termed "+S." We then place the concept of "Marketing Acceleration" as a cross-cutting element bridging content and stores.

Mizuno: First, could you explain FACT and +S separately?

Huang: FACT is an acronym for "Field," "Alliance," "Campaign," and "TopKOL." +S stands for "Search," "Shopping Center," and "Shop."

Field refers to live commerce conducted by merchants themselves, known as "in-house live streams." Live commerce involves selling products while streaming live video in real time. It holds a very high share in China's e-commerce market and is an indispensable sales method for Douyin EC as well.

In-house live streams allow brands to showcase their image and product appeal. Simultaneously, they build followers and team experience on the merchant's own account, establishing a stable and long-term business field.

Alliance refers to collaborations with numerous influencers. In China, influencers are called KOLs (Key Opinion Leaders) or KOCs (Key Opinion Consumers). This collaboration serves two purposes. One is "seeding." Partnering with influencers expands brand awareness. The second is sales expansion. Select products with strong appeal or price competitiveness and leverage influencer support to boost sales.

Reference Article:Interview with Top KOL Lin Ping! Chinese Influencer Marketing

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Campaigns refer literally to promotional events or special sales. Douyin EC runs various themed campaigns daily. These can be tailored for branding, new product launches, or large-scale sales promotions.

Top KOLs are a select group of influencers who wield significant influence over user purchasing behavior. Collaborating with Top KOLs for major promotions and sales helps build strong trust relationships with users. Furthermore, creating buzz around a Top KOL partnership generates momentum for the brand, significantly boosting visibility and driving sales. There are cases where partnering with a Top KOL has achieved tens of millions of RMB in sales during a single livestream.

Mizuno: So these four elements form the "FACT" framework, the key to brand growth on Douyin EC. Live commerce is similar to Japanese TV shopping, but its live nature allows for direct interaction with users, enabling continuous product explanations and immediate purchases. Is there an optimal combination of FACT elements?

Huang: The combination of FACT elements is flexible. It depends on the product's awareness level and the brand's current situation. For example, some brands focus solely on Field (in-house live streams) and Alliance (collaborations with influencers), while others build brand image and boost sales by combining Alliance with TopKOLs.

Mizuno: I see. Next, could you explain the approach to the "+S" section on the right side of the diagram?

Huang: Think of the three S's as operational methods concerning Douyin EC and Douyin Mall—essentially, the "storefront" customer touchpoints for merchants. While FACT focuses on content delivery to users, the concept of a "dual-engine" approach—combining content and storefront—is crucial.

Search focuses on SEO measures like product names and hot keywords. It involves understanding what users search for within Douyin and optimizing to make it easier for them to find your brand.

Shopping Center is about store layout design. This includes evaluating best-selling products and supply, participating in the platform's promotional channels, and refining your "product cards."

Shop involves optimizing your own store, including customer support.

For merchants, these three S's offer three key values: developing business potential, acquiring new users, and reducing operational costs.

In fact, sales not driven by content like live commerce or short videos account for 30% of Douyin EC's total revenue. This means sales originating from the digital shelf—the storefronts within Douyin—are that significant. While content is certainly important, the three S's are essential for growing the fundamental sales base within the mall.

Mizuno: By the way, the term "product card" might be unfamiliar to Japanese companies. What exactly is it?

Huang: Essentially, it's the product thumbnail image. Within Douyin EC, it's extremely important and forms the foundation of everything. Alongside the product photo, it includes copy and basic information.

It's "the first thing users see" about that product. It's not only displayed within the mall but also appears in search results, short videos, and during live commerce events. Therefore, how clearly and memorably you can design the product card is a major point. Its quality greatly impacts sales.

Boost competitiveness through the "synergy" of recommendations and ads!

Mizuno: Douyin EC promotes the concept of "marketing acceleration," combining it with content and mall operations. What exactly is this concept of marketing acceleration?

Huang: Specifically, it refers to ads within Douyin and promotional tools or events organized by Douyin itself. We also provide advertising menus for merchants using Douyin EC. We offer these elements as a marketing solution called "Jolyosenkawa." By using ads and promotional tools, merchants can significantly amplify the reach of their excellent content.

Mizuno: So Douyin is doing interest-based commerce across the entire platform, and ads and promotional tools make it easier to reach more users.

Huang: Exactly. Douyin's recommendation engine ensures the content reaches users who are highly compatible with it. "Jiliang Qianchuan" is an exceptionally powerful tool. For instance, you can set various traffic acquisition goals, such as search keywords for short videos. After launching ads, you can also set various conversion goals, including cost-effectiveness. Features like automatic bidding make it easy for merchants to efficiently purchase ads. Data analysis and diagnostic functions are also provided, enabling precise, data-driven ad placement.

Another crucial aspect is the synergy between "Recommendations" and "Ads" for a given product or brand. While the specific mechanism is omitted here, Douyin's signature recommendation engine ensures users receive the most relevant content. High-quality content gains competitiveness within the recommendation traffic. Refining these recommendation-related elements improves the efficiency of ads placed on "Juyou Qianchuan." Conversely, accurately targeting users through ads accumulates recommendation parameters for your product and account.

Mizuno: I see. It's precisely this synergy between "recommendations" and "advertising" that enables brand growth. That's why, while advocating the "FACT+S" methodology for brand growth, we also provide a system for effectively placing ads.

At Dentsu Inc. CXC, we also support Japanese companies in creating compelling content (FACT), building effective stores (+S), and executing impactful ads and promotional campaigns (marketing acceleration) within Douyin.

Huang: We want companies worldwide to utilize Douyin EC as the optimal platform in the Chinese market for targeting both branding and sales. There are already several success stories among Japanese brands. We will continue to enhance its functionality in multiple areas, so we strongly encourage you to consider entering the platform.

From left: Junji Mizuno of Dentsu Inc., Tao Lin of Douyin EC Global, and Yi Huang

Douyin EC Global and Dentsu Group Initiatives

January 2023, Douyin EC Global members and Dentsu CXC members. With creativity born from deep knowledge of the Chinese market, we support your cross-border e-commerce in China—from SMEs to large corporations!

The Dentsu Group has developed original solutions and sales packages for Japanese companies engaging in cross-border e-commerce in China, leveraging the services of "Douyin EC Global," which operates Douyin EC.

• You're already doing cross-border e-commerce but are dissatisfied with sales growth or advertising ROI, seeking new approaches or breakthroughs.
• Want to start small overseas using short-video platforms while keeping initial investment low.
• For overseas business, you seek not just outsourcing partners, but business partners who will grow together with you.
• Want to be among the first to implement cutting-edge "Interest Commerce" and accumulate know-how and insights applicable to future domestic business.

If you are interested in cross-border e-commerce targeting China, please feel free to contact Dentsu Inc. CXC!

Business Transformation Division, Dentsu Inc. China Xover Center
&nbsp;＜ dentsucxc@dentsu.co.jp＞

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