eCommerce: Douyin
Douyin Missed Half Year eCommerce Sales Goal Due to Weak Consumer Spending
Douyin fell short of its half-year eCommerce sales goal, impacted by weak consumer spending and fierce competition, leading to significant growth rate decline.
Article by Cihan Uzunoglu | July 30, 2024
Douyin Missed eCommerce Sales Goal: Key Insights
Missed GMV Target: Douyin fell short of its GMV target for the first half year of 2024, influenced by weak consumer spending and stiff competition, resulting in a sharp decline in its eCommerce growth rate during the second quarter.
Impact of Price Wars: Intense price wars and reduced consumer spending have significantly impacted Douyin’s GMV growth, causing a notable decrease in retail order values.
ByteDance-owned Douyin, the Chinese version of TikTok, fell short of its eCommerce sales target for the first half of 2024, according to Chinese media reports.
The platform recorded a gross merchandise value (GMV) of 1.4 trillion yuan (roughly US$193 billion), missing its goal of 1.5 trillion yuan (US$206 billion). This shortfall is attributed to weak consumer spending and heightened competition in China’s eCommerce market.
Douyin's eCommerce Growth Rate
Drops in Q2
Douyin's eCommerce growth rate slowed significantly in the second quarter, dropping to 30% from over 60% in January and February. This aligns with Goldman Sachs' June estimate, which predicted Douyin’s GMV growth rate to decline to 24% this year, a sharp fall from the 60% and 80% growth rates of the previous two years.
Despite the slowdown, Douyin's eCommerce sector reported a 43% increase in combined sales by individual influencers from July 2023 to July 2024, driven by the addition of 5.28 million eCommerce influencers last year. However, the platform remains private and does not disclose full financial results.
Price Wars in eCommerce:
Not Sustainable Anymore
The decline in Douyin’s GMV growth is largely due to a fierce price war in China’s eCommerce sector, amid sluggish domestic consumer spending. Retail order values on Douyin fell by about 40% to an average of 80 yuan (US$11), impacting overall sales.
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Douyin, which started its online shopping feature in 2018, is competing aggressively with major players like Alibaba’s Taobao and Tmall, JD.com, and Pinduoduo. Recently, Douyin has adjusted its recommendation algorithm to stop labeling products as “the cheapest online,” indicating that the price war might be stabilizing.
Sources: SCMP, ECDB
