CASS Report: Domestic Brands Rise on Interest E-Commerce Platforms On May 10, the Institute of Sociology and the Center for National Conditions and Big Data Research of the Chinese Academy of Social Sciences, together with Douyin E-commerce and Jushu Suanshu, released the "2022 Domestic Goods Market Development Report: New Media, New Consumption, and New Culture" in Beijing. The New Distribution team obtained the full report and provided interpretation and analysis.

The report shows that the rapid development of domestic consumption, driven by online platforms, is promoting the rise of domestic brands. Especially with the efficient connection of new media platforms such as short videos, both the demand and supply sides of the market are exerting force, allowing domestic brands to quickly grow and "break out" on platforms like Douyin E-commerce.

As of December 2021, China had 934 million short video users and 703 million live streaming users. According to Douyin E-commerce product data, from April 2021 to March 2022, the number of domestic brand products on the platform increased by 508% year-on-year; in the bestseller list, domestic brands accounted for 92% of the items, and domestic products accounted for 93%.

In this regard, Yang Dian, deputy director of the Institute of Sociology at the Chinese Academy of Social Sciences, believes that compared with foreign products and services, many domestic products are more "considerate" to Chinese consumers. New consumer groups come with new consumption characteristics; they not only value cost-effectiveness but also pay more attention to the "symbolic value" and "cultural connotation" of goods and services. This is the real reason why domestic goods can rise and explode on the demand side.

Every brand manager knows that building a brand is no easy task, and gaining the trust vote of consumers with their money is even harder. On Douyin E-commerce, there are both leading brands, revived old brands, and emerging innovative consumer brands, all of which have won the votes of their target users with money.

How have the consumer market and brand growth paths changed today? How should we interpret this phenomenon on interest e-commerce platforms? Does it hide new opportunities of the times?

On Interest E-Commerce Platforms, The Growth Path of Domestic Brands

1. Changes and evolution of Chinese brand growth methods over the past 30 years. In 1990, Philip Kotler's "Marketing Management" (5th edition) was published in China, and brands gradually became the primary criterion for consumer shopping choices. Over 30 years of market development and brand practice, brand growth methods have continued to improve and change.

Before 2009, brand sales mainly relied on offline channels. In 2010, e-commerce exploded, and the internet entered the mainstream. In the internet era, a brand-building method of "multimedia + internet search" emerged, and sales evolved into a dual-channel model of "offline + online."

After in-depth research, we found that in the mobile internet era, the rise of interest e-commerce, represented by short videos and live streaming, represents a new brand growth method: a brand-building approach that integrates consumer "cognition, transaction, and relationship" into one.

"Cognition is transaction, transaction is relationship" is a brand development concept proposed by renowned expert Dr. Shi Wei in the new era, integrating brand, transaction, and consumer relationship.

Under the new brand development concept, brand and consumer are interactive parties, not active and passive. Dr. Shi Wei's "cognition-transaction-relationship" integration concept is not from a single brand or consumer perspective, but more clearly and essentially defines the basic logic of brand development: brand development is a series of actions in which brand owners build "cognition-transaction-relationship" with consumers.

2. How to understand the value and significance of interest e-commerce for brand growth? First, the rise of domestic goods should be interpreted in a broader historical context. Why are young consumers increasingly willing to believe in and even like domestic brands? China's growing strength, national confidence, and cultural confidence are increasing.

At the same time, technological development, industrial upgrading, and market regulation norms have also made consumers more confident in domestic brands.

The rise of short videos and live streaming has enriched the forms of information dissemination. From text, images, and sound, people are obviously more receptive to dynamic images and sounds.

In the past, information transmission was often one-way, forced, and not timely, while short videos and live streaming are real-time interactive and user-interest-driven. In comparison, it is clear which users prefer.

Today's users are more willing to give respect and trust to content creators. In the hearts of fans, content creators have more affinity and trust than celebrity endorsements. Brand awareness transmission has also gradually shifted from single advertising to more vivid and authentic content promotion.

Against these two important backgrounds, we can deeply understand the underlying logic of the "cognition-transaction-relationship" integrated brand growth method.

The rise of interest e-commerce is centered on consumer demand, i.e., interest, using high-quality content and trust created by KOLs (key opinion leaders) to build "cognition" and "relationship," and using e-commerce as a tool to complete "transactions."

Compared with the past, the biggest change on interest e-commerce platforms is that "cognition-transaction-relationship" is completed at the same time and in the same space, without separation, truly trinity.

Therefore, we say that the interest e-commerce model that truly conforms to the trinity of "cognition-transaction-relationship" has become a unique growth method for Chinese brands, especially suitable for the growth of small and medium-sized brands.

Wang Jing, deputy director of the Social Policy Research Office of the Institute of Sociology at the Chinese Academy of Social Sciences, believes that new platforms like Douyin E-commerce, by satisfying and cultivating consumers' niche needs for domestic brands, form a large market, allowing goods and services to achieve economies of scale and scope, with a significant long-tail effect.

For small and medium-sized brands or new brands, solving consumer cognition at low cost is the most difficult. The model of Douyin E-commerce, centered on consumer "interest," determines that small and medium-sized brands will receive more care and support.

Each Beauty, Every Domestic Brand Can Meet Admirers on Interest E-Commerce Undoubtedly, the world is diverse. On the one hand, we have strong cohesion and unity in mainstream values; on the other hand, we have infinite individual preferences in personalization, ashamed of conformity.

In the past, no matter the method of information dissemination, it was difficult to let everyone with different preferences find what they love, but interest e-commerce has achieved this. Almost every brand, whether large or small, long-established or new, can find users who appreciate them on interest e-commerce.

Liu Neng, professor at the Department of Sociology at Peking University, also agrees. He said that the rise of domestic goods is, on the one hand, a victory of modern manufacturing upgrading, including R&D investment, consumer insight, high-precision production lines, and brand building; on the other hand, platforms like Douyin E-commerce have also played a key role, enabling more efficient matching between consumers and consumer goods or services, and more efficient stimulation of consumption motivation and willingness.

From Douyin E-commerce data, from April 2021 to March 2022, in the TOP20 lists of 4 key industries, there were 71 domestic brands in total, accounting for about 90%. Especially in the food and beverage category, all TOP20 were domestic brands.

It is particularly rare that in the TOP20 list of the food and beverage category, there are industry giants like Yili, young brands like Adopt a Cow, online brands like Three Squirrels, and offline-genesis brands like Bestore.

The revival of time-honored brands, the further expansion of mature brands, and the emergence and awareness of new brands—no matter which type of domestic brand, it seems to find its unique position on interest e-commerce and carry out "cognition-transaction-relationship" integrated promotion actions with its user group.

In the report, we found the case of Bee & Flower. As an old domestic brand, Bee & Flower was once popular, but by 2021 it had declined in the fashion trend. In 2021, on the Douyin E-commerce platform, Bee & Flower built a retro live streaming room and used host costumes to evoke users' memories of the past, highlighting the charm of the old domestic brand through the years. At the same time, interacting with users in the live room about personal hair quality and hair care knowledge accumulated a large number of fans.

By November 2021, Bee & Flower's brand search volume increased 58 times month-on-month, flagship store fans grew by 800,000, and enterprise account orders increased by 330%. Since then, the Bee & Flower brand has recovered.

Editor's note: The road to brand growth has never been simple. From big advertising and big media, to internet advertising and search advertising, to the trinity of "cognition-transaction-relationship" in interest e-commerce, these three brand growth methods are never mutually exclusive but rather integrated and pluralistic.

"Each beauty, beauty of others; beauty shared, world harmony." The essence of interest e-commerce is shared beauty and common prosperity, allowing every kind of beauty to match with those who appreciate it. This is also the greatest guarantee for innovators. Only in this way can our brands escape low-level involution competition, truly focus on consumers, and with the joint efforts of brand owners, platform operators, and content creators, achieve more and better Chinese brands.

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