Click 'Read Original' for details. Author: Zhou Xiaoqi Source: Zinc Finance (ID: xincaijing) A basket full of tiger prawns, each the size of a palm, with a crisp crunch, San Sao puts a big prawn into her mouth. "Super large size, super delicious, eat with shell for calcium," San Sao says in the video. A food industry professional who bought this shrimp through a video link wrote an article titled "I Work in Food at a Fortune 500 Company, and I Was Scammed by Douyin's Grilled Shrimp Seller," which quickly went viral on social media. The shrimp the food industry professional received from the Douyin video link Image source: WeChat public account "About Wasting Time" What she received was a package of products with no production date, no quality certificate, and no manufacturer. The purchasing process described in the article was also strange: after placing the order, there was no order page, only an SMS reminder, and the product was cash on delivery. Since the order page was blank, she couldn't return it. After the incident escalated, San Sao emphasized during a Kuaishou live stream that someone had stolen her video and posted it on Douyin, and the link on Douyin was not for the shrimp she sold. Image source: San Sao's Kuaishou video Regarding the above incident, Douyin told Zinc Finance: Douyin has already taken down the problematic ad immediately. It has also suspended advertising for food and beverage categories, cleared out the violating advertiser, and activated a consumer rights protection mechanism to coordinate with the advertiser to resolve issues with users. In the future, it will further strengthen ad review. Currently, Douyin has blocked videos related to grilled shrimp. Douyin's aggressive push into e-commerce has exposed various problems: ad content review, order monitoring, after-sales service, etc., all need to be improved. On March 26, 2018, Douyin entered e-commerce by directing traffic to Taobao, and through an invitation system, opened shopping cart features for many million-follower accounts. This move excited short-video practitioners, meaning that on Douyin, they could not only gain traffic but also get closer to monetization. Wang Minmin, founder of Yeshixiaoge and CEO of Hangzhou Juli Culture Media Co., Ltd., told Zinc Finance, "This year is the year of Douyin's dividend explosion. If we don't keep up, we'll soon lose the opportunity." Douyin attracted a large number of gold diggers, and mutual imitation and homogenization quickly complicated the content ecosystem. The training business also boomed. The first World Douyin Merchant Conference held in March 2019 attracted 4,000 attendees. In January this year, Hu Yingbang, founder of Qingshanhui, held the first Douyin Merchant Festival with 2,000 people, and two months later held the second Global Douyin Merchant Alliance Conference. The overwhelming promotion of Douyin merchant gold mining, mixed-quality training, and recruiting people to earn referral fees all constitute this bustling market. Opportunity In March 2018, Yeshixiaoge posted its first video with revenue. As steam rose, Yeshixiaoge quickly threw instant noodles into the pot, then chopped vegetables, added eggs, turned off the heat, scooped them out, mixed in a few spoonfuls of pickled vegetable and beef sauce, and a large bowl of noodles quickly disappeared with slurping sounds. Video produced by Yeshixiaoge, image source: Douyin Under this Douyin video, Yeshixiaoge attached a Taobao shopping link for the first time. In the following days, sales of this pickled vegetable and beef sauce surged, reaching a peak of over 70,000 yuan in daily revenue. From joining at the end of 2017 to monetizing in 2018, it took only a few months. Fan Shengyang, content planning director of Yeshixiaoge, told Zinc Finance that during the May Day holiday in 2018, three videos from Yeshixiaoge saw explosive data growth, with one day gaining 100,000 followers. He vaguely felt that Douyin would bring even more traffic in the future. To cater to Douyin's strong center and fast-paced characteristics, Fan Shengyang had to sacrifice the atmosphere highlighted in the previous five-minute videos, focusing on only one key point within 15 seconds. Although Douyin videos are short, the conversion rate is extremely obvious. According to Wang Minmin, after the video was released, it brought sales of 10,000 bottles of beef sauce. At a price of 49 yuan per bottle, it could generate 490,000 yuan in revenue in one day. Yeshixiaoge's Taobao store Wang Minmin strongly felt that other platforms' product-selling capabilities were far inferior to Douyin's. "Besides Douyin's own high traffic, the shopping cart plays a very important role," Fan Shengyang said. "When users watch a video, they can directly click to buy, and this form brings a very high conversion rate." Douyin didn't stop its e-commerce push. Before Double 12 in 2018, Douyin successively opened shopping cart features for over 60,000 celebrity influencers and enterprise blue V accounts. On December 11, it fully opened the shopping cart feature to all users. According to official data from Douyin, on Double 12, over 7,000 Douyin accounts participated in selling, with over 1 million participants, facilitating over 1.2 million transactions on Taobao and Tmall, and the top 50 accounts achieved 100 million yuan in GMV. Image source: WeChat public account "Douyin Ad Assistant" The phrase "Two Micro and One Douyin" (WeChat, Weibo, Douyin) gradually spread. "The development speed is astonishing; we didn't expect Douyin to reach such a large scale," Fan Shengyang admitted. As a rapidly rising sharing platform, Douyin attracted more people who wanted to make money from its original short-video platform. Influx On September 29, 2018, Yang Yang received an official message from Douyin inviting her to open the shopping cart feature. The next day after filling in the information, she found her Douyin account had the shopping cart feature, allowing her to insert product links and earn commissions in the form of Taobao affiliate. During the National Day holiday, Yang Yang updated three videos and earned 300 to 400 yuan in commissions each day. The unlimited business opportunities brought by Douyin had already made various people eager to try, and Dong Yao was one of them. Initially, she sold goods on Weibo, then moved to WeChat, and now she spends most of her energy on Douyin. Products recommended by Douyin Shopping Assistant Since opening Douyin in 2018, Dong Yao has accumulated 270,000 followers and sells her own tea and ham. "After making a few videos of picking tea leaves, people in the comments proactively asked about the price of tea, and the conversion came quickly," Dong Yao said. Besides directly selling products on Douyin, many people also attract users to complete transactions offline. Lu Zhan, founder of a restaurant brand, promoted his store through Douyin short videos. Lu Zhan filmed several episodes of entrepreneurial stories with soft placement and found the effect was obvious. Whenever a video with over 10,000 likes appeared, orders at their offline branches would also increase slightly, and many people came to visit their stores in person. All kinds of people have discovered that Douyin is a traffic pool that can tap into huge funds. Douyin also lived up to expectations. On November 8, 2018, at the World Internet Conference in Wuzhen, Zhang Fuping, vice president of ByteDance, revealed that as of October, Douyin's domestic daily active users exceeded 200 million, and monthly active users exceeded 400 million. In January of that year, Douyin's daily active users had just surpassed 30 million. Yang Yang also relied on her accumulation in the fashion industry to easily gain over 300,000 followers, and her recommendation conversion rate became higher and higher. "My best record was the week before Double 12, when I had two consecutive viral videos, directly driving sales of 500,000 yuan," Yang Yang said. However, just as Yang Yang was happily earning extra income, her peers "attacked" her. According to Yang Yang's recollection, in November 2018, she found someone maliciously commenting on her videos. "For a whole week, every time I posted a video, I would receive over 100 inexplicable comments, and it was obvious they were paid for; many accounts were reset or newly registered." Not only was she attacked maliciously, but Yang Yang also found her videos were too easily copied by others—titles, copy, stores, everything was exactly the same. What made her angriest was that the copied videos could also become popular, taking away a large portion of her commission income. At this time, as more and more people flooded into Douyin, homogenization became serious. As long as one video idea became popular, there would inevitably be a period of imitation videos. The first batch of people who discovered business opportunities began to face fierce competition, as WeChat business people, e-commerce practitioners, and speculators all came. Chaos "Now content creators are all focusing on e-commerce, and e-commerce practitioners are also expanding into content." Since the beginning of the year, Fan Shengyang has noticed that the boundary between content and e-commerce is blurring. E-commerce practitioner Ye Mang felt this deeply. He found that everyone doing e-commerce was studying Douyin. "Now the cost of traditional e-commerce is getting higher and higher, with the cost of acquiring a new user reaching hundreds of yuan." Forced by the situation, Ye Mang's company also opened an enterprise Douyin account and posted short videos from time to time, but due to a lack of professional content creation experience, the company's Douyin account never improved. He tried to find some Douyin influencers to help sell products, and also began to pay attention to Douyin merchant training. It was a sea of people. Ye Mang had never seen such a lively conference. There were many WeChat business teams, dozens of people wearing little red hats, holding little red flags, wearing the same clothes, sitting together. They wandered around for half an hour, couldn't find a seat, and finally had to stand at the back of the venue. Photo taken at the Douyin Merchant Conference, image source: interviewee This was the real scene of the first Douyin Merchant Conference on March 23, 2019. This grand Douyin merchant conference also caught the attention of Douyin's official side. On the day of the conference, the official Toutiao account "Toutiao Zhejiang" issued a statement saying it had never authorized any Douyin merchant-related activities and warned the public not to be deceived. The mantis stalks the cicada, unaware of the oriole behind. Everyone wanted to become the next Li Jiaqi and harvest Douyin traffic, but they didn't expect to be harvested first. Fang Yi is a fruit farmer in Hunan who grows and sells her own fruit. "I originally sold my own fruit on WeChat. Later, when I saw many people selling fruit on Douyin, I wanted to try it too." But she didn't know how to produce videos. Running a good Douyin account is not that simple. Most people don't know how to shoot or embed ads, which became an opportunity for many training providers. According to Zinc Finance's investigation at an offline Douyin merchant training session, among the more than 100 participants, almost no one had video production skills, and they were just at the initial stage of understanding Douyin. Douyin merchant training site, photo by Zinc Finance They held the mentality of getting rich overnight and willingly spent money on Douyin merchant training. "Just start, and maybe one video will go viral." In March this year, Fang Yi found Chen Guangfeng, founder of Douyin Merchant Commune, through a WeChat public account. After paying a membership fee of 399 yuan, Chen Guangfeng sent her a link and told her to click and watch the video to learn. "The so-called learning video only talked about some of Douyin's rules and basic ways to gain followers. This content can be found anywhere online," Fang Yi felt the money was not worth it. According to Zinc Finance's investigation, Chen Guangfeng officially transitioned to Douyin training at the end of 2018 and has already harvested a large number of Douyin merchants. Currently, the 399 yuan online course of Douyin Merchant Commune has about 3,000 registered participants, and the 1,980 yuan offline practical course has 300 people registered. At the same time, Douyin Merchant Commune also irregularly offers 9.9 yuan experience courses, which have been held 9 times so far, with about 500 people each time. Image source: Douyin Merchant Commune employee's WeChat Moments From this, it can be estimated that Douyin Merchant Commune has already generated revenue of over 1.8 million yuan. To recruit students, Douyin Merchant Commune also encourages existing members to bring in more people to pay for learning Douyin merchant operation skills through a multi-level referral cashback system. Douyin's huge cake not only attracted training providers, but also many technology vendors who wanted a piece of the action. "A Douyin merchant technology company invited me to their company to discuss cooperation," Lu Zhan said. However, the so-called cooperation was to get Lu Zhan to buy their Douyin group control system. Through the software, one could control hundreds of phones at once, automatically achieving functions like liking, commenting, and reposting. "We do Douyin to spread our brand; liking and fake followers are completely useless," Lu Zhan clearly expressed disinterest, but the other party resorted to threats and inducements. "We have plenty of accounts. Believe it or not, we can use 100 accounts to imitate you, or even directly copy your videos. When one of my accounts becomes popular, you'll be the copycat," the other party said. To gain traffic, many Douyin merchants take risks. A supplier of Douyin group control systems told Zinc Finance that they have been providing such services since Douyin's inception and have accumulated over 3,000 paying users. They also emphasized that so far, no customer has had their Douyin account demoted, banned, or reset. Douyin group control system, image source: Internet According to this company's price list, the fee is based on the number of controlled phones. One control (controlling one phone) costs 680 yuan. For example, buying 30 controls means controlling 30 phones, with an initial fee of 20,400 yuan, and an annual fee of 200 yuan per control thereafter. "Some Douyin merchants want to become popular quickly, and third-party service providers need to make money while the wind is blowing. It's a case of 'one is willing to sell, the other is willing to buy,'" said Zhuang Shuai, an e-commerce industry analyst. "But this phenomenon won't last long. First, there aren't that many leeks; some leeks have been cut too many times and have developed the ability to discern. Second, Douyin will also strengthen regulations and eliminate violations." Dilemma Just opening Douyin, Yang Yang took a glance and immediately recognized it as a product-selling video. After quickly swiping past, the second video was also a product-selling video, and even the third and fourth videos still had traces of selling. "It's really not an exaggeration; it feels like everyone has started selling goods." Now, it's not so easy to make money on Douyin. Fan Shengyang emphasized that creativity is key to becoming a viral video. To avoid similarity, the team follows a large number of food creators' accounts. Once they find their creative ideas are the same as other accounts, they will overturn their original ideas and rethink other content to avoid plagiarism disputes. To have better content, Wang Minmin overhauled his team and expanded a large number of content creators, which suddenly increased costs. Wang Minmin had to borrow over 3 million yuan from his family to keep the company running. "After all, we've already invested over 10 million yuan; we can't give up now." What worries him more is that since doing e-commerce, Yeshixiaoge inevitably faces doubts from fans. In almost every product-selling video, there are always fans commenting: "Yeshixiaoge is too commercialized now; I don't want to watch promotional videos; if you post more of these, I'll unfollow..." Comments on Yeshixiaoge's Douyin video "We thought of this a long time ago, but we have no choice; the team has to survive," Fan Shengyang said helplessly. "Especially since Yeshixiaoge started with content as the foundation, not selling goods as the main tone. After transitioning to e-commerce, we can't highlight products too much because fans come to watch the guy." Fan Shengyang said. Yang Yang also feels money is harder to earn now. With the same content, previously 100,000 likes could lead to 50,000 orders, but now it only leads to about 2,000 orders. If there's no viral video for a week, not only can she not guarantee income, but she also loses a lot of followers. For this reason, Yang Yang has purchased dou+ (video heating tool) multiple times to get more traffic, but she found that users brought by dou+ don't have much purchase intention; they just increase likes. "Likes are meaningless to me; I need to improve conversion rates to get income," Yang Yang said. Douyin's official side has begun implementing a "content optimization action." On April 14, 2019, Douyin's official account E-commerce Assistant issued a notice encouraging original content that provides value to users, such as real-person appearances or real-person oral explanations. Low-quality videos with obvious monetization purposes will no longer be recommended. Image source: Douyin account: E-commerce Assistant "The content is original and fits some fans' preferences, but Douyin has absolute control. If it chooses not to recommend image carousel videos, I can't do anything," Yang Yang felt a bit helpless. "If you want to rely on Douyin to make money, you have to respect their rules." Douyin provided an improvement plan. Starting April 15, the E-commerce Assistant account successively released content upgrade guides for men's wear, women's wear, novelty items, beauty, etc., and stated that if content upgrades are completed by the end of May, they can regain recommendations and earn income. To follow Douyin's rules, Yang Yang has prepared to appear in person to get more recommendations. Adaptation has become the only choice for many bloggers. Regulation On May 30, 2019, the author of "I Work in Food at a Fortune 500 Company, and I Was Scammed by Douyin's Grilled Shrimp Seller" published an article saying the shrimp had been refunded, but the process was tortuous and no compensation was received. Douyin, which is eager to build an e-commerce ecosystem, currently not only cooperates with Taobao but also attracts a large number of second-category e-commerce merchants to grab traffic. Second-category e-commerce is a model that relies on traffic ads for single-product sales, with transaction methods including online payment and cash on delivery. Due to the complex sources of products and the lack of an e-commerce platform as support, second-category e-commerce requires stricter control mechanisms. Image source: Internet "For the products sold, corresponding certificates should be issued, and the platform can also connect to the industrial and commercial system. If the certificates are fake, the industrial and commercial bureau can investigate the corresponding company," Zhuang Shuai, an e-commerce industry analyst, gave regulatory suggestions. Compared to Douyin, which has just entered e-commerce, Taobao, the veteran e-commerce platform, has continuously improved its system during its growth, such as establishing a merchant breach of contract deposit system. Merchants entering Taobao Mall must pay a breach deposit based on the brand they operate or represent; implementing a "joint liability system" for managers at all levels, where once a problem is found, the direct supervisor must bear corresponding responsibility; and consumers who buy counterfeit goods receive "one compensation for three fakes" compensation, etc. Regarding the rapidly growing Douyin merchant ecosystem, Douyin replied to Zinc Finance today: Currently, Douyin has established review mechanisms, spot-check mechanisms, and punishment mechanisms to check merchants and products. At the same time, the platform has increased efforts to crack down on "video theft." If stolen videos are found, the products will be immediately taken down and merchants will be punished. For now, Douyin is taking measures, but there is still a long way to go to build a complete e-commerce ecosystem. (At the request of the interviewees, Yang Yang, Dong Yao, Lu Zhan, Ye Mang, and Fang Yi are pseudonyms.)