Introduction: After joining, merchants gain an additional brand exposure opportunity with 800 million daily active users.
After the New Year, Douyin Supermarket officially launched. For FMCG manufacturers, the significance of joining and opportunities for co-creation have become key concerns. On February 6, in the 'FMCG Feng Talk' hosted by distributor growth mentor Li Feng, several guests shared their views on the topic 'Douyin Supermarket Officially Launches: How Should FMCG Manufacturers and Distributors Cooperate and Position Themselves?' This article only summarizes some of the viewpoints; for detailed interview content, follow the [Li Feng New Distribution] video account to watch the replay.
Actively Embrace the Opportunity
For FMCG manufacturers, if there is an opportunity to join Douyin Supermarket, they should actively do so. Why? Li Wei, head of Mengniu Modern Farming's Henan-Shanxi region, stated that with the rise of Generation Z as main consumers, rapid iteration of internet infrastructure, and per capita GDP exceeding $10,000, consumer demand and purchasing channels have undergone significant changes. Channels are now diversified, online, near-field, and fragmented. In 2022, e-commerce sales accounted for 27.2% of total retail sales of consumer goods. Although traffic has peaked, it continues to grow. E-commerce has become one of the core channels; in a competitive environment with limited growth, abandoning any channel gives competitors an advantage. Specifically for Douyin Supermarket, its scale could be very large.
Chen Weilong, an instant retail entrepreneur and community group buying expert, believes that Tmall's data can be used to estimate Douyin's data. What is Tmall Supermarket's scale? According to Alibaba's 2022 financial report, Tmall's scale does not exceed 50 billion yuan, estimated at around 40 billion yuan. Why? Because in the third quarter of last year, Alibaba disclosed self-operated business revenue of only 65 billion yuan, which includes Tmall Supermarket, Alibaba International, Hema, etc., so Tmall Supermarket accounts for about half. Tmall's GMV is approximately 4 trillion yuan, so Tmall Supermarket's revenue is about 1% of Tmall's GMV. It is rumored that Douyin e-commerce's scale is 1.4 trillion yuan, so by analogy with Tmall, Douyin Supermarket's scale should be around 14 billion yuan. Of course, Douyin e-commerce is still growing; assuming it reaches 4 trillion yuan in the next few years, Douyin Supermarket would correspond to 40 billion yuan, about half the scale of Yonghui. The above estimates are rough, helping us understand whether Douyin Supermarket is a trillion-yuan, hundred-billion-yuan, ten-billion-yuan, or billion-yuan business. It is conceivable that such a large business cake presents a great opportunity for manufacturers.
Wang Fang, CEO of Hangzhou Shenxi Network Technology Co., Ltd., stated that after joining, merchants gain an additional brand exposure opportunity with 800 million daily active users. Secondly, the platform offers different categories and playstyles, meaning more sales opportunities for merchants. Merchants also have more sales paths for product promotion and testing. Additionally, emerging brands gain brand and professional endorsement, which can help develop more toB distributors or opportunities to join other platforms.
Early Entry, Early Profit
Although the opportunity is good, some merchants already on Douyin may worry whether joining Douyin Supermarket will affect their own brand development. Wang Fang believes there is no need to worry; Douyin Supermarket and internal business should have co-creation opportunities. Since Douyin Supermarket is a representative of Douyin Mall's shelf model, it should be related to other internal businesses and can help increase exposure and interaction for self-operated brands. At the same time, brands can operate toC directly on the platform or directly connect with brands toB, offering diversified cooperation with the platform and closer ties with brands. Once the shelf user mindset and attributes of Douyin Supermarket are cultivated, the toC shelf shopping habits will also promote more frequent transactions. Additionally, during Douyin's annual promotional events, the shelf marketing atmosphere becomes more focused, with more playstyles and stronger shopping mindset, better linking content interest to shelf e-commerce purchases on the same platform, enhancing purchasing power for self-operated brands.
Which manufacturers are more suitable to enter Douyin Supermarket?
In Wang Fang's view, food and daily necessities have broad user bases and high conversion rates, making it easier to achieve high repurchase and high sell-through on Douyin Supermarket. Secondly, emerging brands with lower budgets can join Douyin Supermarket and participate in platform activities such as flash sales, limited purchases, and discounts, gaining resource exchanges and exposure. Additionally, large brands with ample supply can have distributors participate in various activities based on inventory depth to achieve optimal sell-through. Finally, functional and novel products can achieve better coverage on Douyin Supermarket due to high daily active users, with lower competition.
Chen Weilong added that from the current situation, Douyin Supermarket offers one-stop shopping and one-stop delivery; goods must be sent to the platform's consolidation and transfer warehouse, not directly to users, which involves intermediate transfer efficiency and cost issues. Therefore, distributors/brands closer to the distribution warehouse have an advantage because overall distribution costs are reduced, delivery speed is faster, and resource consumption is minimized. Of course, merchants can also solve distribution issues by building their own warehouses or using cloud warehouses, but this also means not all distributors nationwide, regardless of size, can carry out this business.
Actively Embrace Change
With the development of the internet, online supermarkets are becoming increasingly popular. As brand owners, they should actively respond to the changes of the times. Li Wei proposed that brand owners must first know what they want and the impact of entering online supermarkets on offline sales; only then can they consider how to do it. For brand owners, the goal is to grab market share and enhance brand power; the impact may be on pricing. Based on this, the response methods are divided into three points:
1. Divide and Conquer, Harmony in Diversity
- Differentiate products in packaging, specifications, and categories; operate online and offline products separately without mutual influence. Even online platforms can be divided into e-commerce Taobao version, JD version, and Douyin version.
- Unified national strategy, standardize prices and promotional activities.
- Distributors operating e-commerce or special channels must adhere to price agreements and can engage in combination sales to avoid low-price competition.
2. Empower Rather Than Internal Friction
Brand owners should guide and empower customers in omni-channel operations. Besides traditional offline channels, they should provide guidance and resource assistance for local private domains, fresh food instant retail platforms, local influencer带货, and other online channels. They should not resist online channels or stick to a single channel, nor should they directly sell well-performing offline products online at low prices to harvest traffic, causing internal friction. If the company has a long product line, it is best to avoid homogeneous product competition.
3. Online-Offline Integration
Brand owners should focus on deploying community group sales through offline community stores, fresh fruit stores, mom group leaders, express pickup points, campus agents (student part-time), and cooperation with local platform merchants. Achieve a combination of online and offline.
Li Wei stated that the world ultimately belongs to rational optimists; those who survive are not the strongest or the smartest, but those who adapt fastest to the environment.
Conclusion:
Whether brand owners or distributors, they must actively respond to internet development and environmental changes. Douyin Supermarket, logically, is an opportunity with visible prospects; early entry brings early profits.
Finally, we hope all manufacturers can carve out their own space in the future FMCG market.
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