Four years ago, when Taobao leveraged Douyin for traffic, neither side likely anticipated that their ally would quickly become a rival. On September 6, Uniqlo, which has long topped Taobao's Double 11 apparel sales, held its first livestream on Douyin, not just to clear inventory but also to showcase new products. Yilan Business observed that the next livestream time for Uniqlo can now be seen in the profile of the Uniqlo account. Clearly, Douyin has become Uniqlo's new battleground. In May this year, Adidas also brought new products to Douyin's "New Product Awards," achieving sales of 170 million yuan in just seven days. Earlier, domestic brands Yaya, Peacebird, and Bosideng had already made it into the top ten on Douyin's Double 11 apparel list last year, and more top apparel brands are leaving Taobao. 01 From Teammates to Rivals Douyin's foray into e-commerce began by driving traffic to Taobao. During this period, short-video commerce was the main form, with creators opening product showcases on their personal pages or adding shopping cart icons to video pages. Users could click to jump to Taobao to place orders, with transactions mainly occurring on third-party platforms. After a successful order, Douyin and Taobao shared a 6% service fee on the transaction amount, and the creator received a commission. Perhaps sensing the immense allure of e-commerce, Douyin began to make further attempts. In 2019, Douyin launched Douyin Stores. Similar to Taobao stores, individuals or businesses wanting to sell needed to upload business licenses, choose business categories, list products, and then promote them through short videos or livestreams to facilitate transactions. This made the entire shopping process stay within Douyin's ecosystem, without needing to jump to third-party platforms like Taobao. At this time, although Douyin's e-commerce GMV was only 10 billion yuan for the year, the intention to go solo was already evident. In 2020, Douyin e-commerce accelerated. The GMV completed through Douyin for the year reached 500 billion yuan, a 50-fold increase, with Douyin Stores contributing 100 billion yuan and over 300 billion yuan from jumps to third-party platforms like Taobao, Tmall, and JD.com. Douyin saw its potential for e-commerce, and Taobao felt the power of Douyin's traffic. All this accelerated the split between the two. On June 18, 2020, ByteDance established a first-level department for e-commerce, officially launching the "Douyin E-commerce" brand. At that time, rumors of an impending "split" between Douyin and Taobao intensified, but ByteDance stated it was just a normal business adjustment to meet users' shopping needs on Douyin. Subsequently, reports emerged that Douyin had signed a new annual cooperation agreement with Taobao and Tmall, covering both advertising and e-commerce, with a scale larger than last year, dispelling the "split" rumors. But in October of the same year, Douyin cut off product links from third-party platforms in livestreams, forcing purchases to occur within the platform, marking a complete split. In April 2021, after nearly three years of exploration, Douyin formally proposed the concept of "interest e-commerce," clarifying its business logic: discover, inspire, purchase. E-commerce became a first-level strategic department for Douyin. Douyin E-commerce President Wei Wenwen stated that Douyin's GMV in 2021 was 3.2 times that of the same period in 2020, selling over 10 billion products. Analysts estimated that Douyin's e-commerce GMV exceeded 800 billion yuan in 2021, with some more optimistic estimates above 900 billion yuan. Regardless of the figure, Douyin's e-commerce GMV is approaching one trillion yuan. Notably, it took JD.com 20 years, Taobao 14 years, and Pinduoduo less than 5 years to go from zero to one trillion in GMV, while Douyin e-commerce took only 3 years to approach one trillion. During these years, transactions shifted from third-party platforms to Douyin Stores, and Douyin e-commerce and Taobao transformed from teammates to rivals. 02 The Battle for Brands In the conflict between the two, the first thing contested is brands. Major e-commerce platforms are vying to attract brands, whether luxury, traditional big names, or new consumer brands. In this brand battle, Uniqlo and Adidas are just a microcosm; more and more brands are being drawn into the fray. As the No.1 e-commerce platform, Taobao's appeal to brands is undeniable. Data shows that over the past year, an average of over 400 overseas new brands joined Tmall Global each month. To date, over 29,000 overseas brands from 87 countries and regions have joined Tmall Global, covering over 5,800 categories, with over 80% entering China for the first time. In 2021, over 500 new brands in Taobao's FMCG sector achieved annual sales exceeding 10 million yuan, with most new brands choosing Tmall as their primary D2C platform and main operational field. Douyin e-commerce is also not to be outdone in attracting brands. Yilan Business observed that in apparel, Bosideng has been operating on Douyin for 717 days, Yaya for 636 days, Shisan Yu for 416 days, Li-Ning for 672 days, and Semir for 835 days. In beauty, brands like Sisley, Erno Laszlo, Elizabeth Arden, Olay, Anessa, and Tripollar have successfully joined Douyin e-commerce. Moreover, according to the "2021 Douyin Private Domain Operations White Paper," the total number of Douyin enterprise accounts has grown steadily. By the end of 2020, enterprise accounts exceeded 5 million, and by July 2021, the total was about 8 million. The industry with the most enterprise accounts is apparel and accessories, which also saw the fastest growth from June 2020 to June 2021, with growth exceeding 200%, and it also had the most active followers in June 2021. Currently, all top 20 apparel brands on Tmall's Double 11 and 618 rankings have also opened Douyin Stores, and have begun livestreaming sales this year. Both sides are using various means to attract new brands. To support brands, at the 2021 Douyin E-commerce Apparel New Trends Summit, Douyin E-commerce launched the "Leading Trends Plan," aiming to create 200 commercial brand benchmarks, 100 apparel Douyin brands, 200 apparel brands with sales exceeding 100 million yuan, and 10 super brands with sales exceeding 1 billion yuan. Additionally, starting in 2021, Douyin's traffic distribution system changed to a 136 gradient split, with 60% going to brands, 10% to top influencers (down from 50% last year), and 30% to vertical influencers. To encourage brands to offer more products, Douyin also revised its e-commerce livestream preview management rules in May this year, requiring creators to add at least 3 products/services per livestream preview, up from just 1. On the Tmall side, in September 2021, Tmall held a new brand strategy conference. Alibaba Group Vice President Chui Xue stated that the survival rate of new brands is one of Tmall's core strategies. At the same time, it announced the launch of a potential new brand incubation plan, investing 10 billion yuan over 5 years to incubate 2,000 potential new brands. On September 23, 2022, Tmall Global announced that for new merchants, it would reduce the deposit by 50% and waive the first 3 months of commission for official agency operations. For the upcoming Double 11, merchants can enjoy a 40% discount on fast settlement fees. In Yilan Business's view, there are two main reasons for the battle over brands: On one hand, more brands can meet more user needs. E-commerce platform traffic has entered a saturation period, and growth can no longer be driven by increasing user numbers. The direction for continued growth is to get each user to spend more, and undoubtedly, meeting more people's consumption needs, especially brand consumption, is the most effective way. On the other hand, brands bring their own traffic. Big brands have high visibility and recognition, making them a source of traffic themselves. The more big brands a platform has, the more loyal brand users it attracts. Of course, this competition has also brought new changes for brands and consumers. 03 Choices for Merchants and Consumers A speck of dust from the times becomes a mountain on each individual. As Douyin e-commerce rises to contend with Alibaba, brands and consumers have more choices. A veteran apparel industry practitioner told Yilan Business that on Douyin, a quality product, after reaching consumers and gaining recognition, will snowball into a lot of free organic traffic, being seen by more consumers, and the long tail of a hit product is also long. On Taobao, creating a hit product requires a long period of groundwork, with continuous optimization, finally reaching a peak, but it is relatively more stable. The two platforms are different channels, each targeting different audiences, so different styles need to be pushed for different platforms. Currently, both platforms must be managed, but regardless of the platform, a quality supply chain and product strength are prerequisites for a hit. An accessory industry practitioner told Yilan Business that due to the brand's nature, video display works better, as it can clearly show how to wear the product, so they mainly do livestream sales on Douyin; Taobao is mainly for receiving traffic, with brand promotion mostly handled on Taobao. A recently established daily necessities industry practitioner told Yilan Business that although Douyin has increased traffic to livestream rooms, the traffic mostly goes to top livestream rooms. They encountered some pitfalls on Douyin this year and have temporarily stopped using it, while their Taobao store is operating normally. They may consider private domain more in the future. Overall, for brands with strength, stabilizing Taobao to receive traffic and seeking growth on Douyin, both platforms are equally important in the short term, but it must be said that the era of Taobao dominance has passed. For consumers, Douyin has become one of the important sources of fashion information. Compared to photo-edited images and unverifiable comment section photos, fashion bloggers' video outfit sharing seems more captivating and influences apparel purchase decisions. The "2022 Douyin E-commerce Apparel Autumn/Winter Trends Report" shows that 42.6% of users said they are "planted" and generate purchase intent after watching "fashion bloggers' outfit sharing." However, many consumers still told Yilan Business that they won't buy clothes on Douyin, with Taobao remaining their main shopping platform. They dislike short videos, finding them troublesome, but two people mentioned that their elders buy on Douyin. This partially confirms Alibaba's latest financial report data: among annual active consumers who spend over 10,000 yuan on Taobao and Tmall, about 98% remained active in the past 12 months, indicating Taobao's apparel consumer base is still large. 04 Conclusion Overall, Douyin e-commerce is indeed eroding Taobao's core business. On one hand, Douyin's massive traffic can indeed provide merchants with more exposure. The entry of top apparel brand Uniqlo also signals that more apparel merchants opening stores and livestreaming on Douyin will inevitably squeeze Taobao's transaction volume. On the other hand, clothing worn in livestreams is more intuitive for consumers. As a category where the real effect is only visible when tried on, seeing a host try on clothes provides a more accurate effect than edited images. For consumers watching videos on Douyin, they are more willing to see models try on clothes and place orders directly. In the first half of this year, several apparel industry executives told 36Kr that Douyin's livestream apparel market has approached the overall scale of Taobao's apparel market. Alibaba's recent Q1 FY2023 financial report showed that due to the negative impact of the COVID-19 pandemic, payment GMV for important categories like apparel and consumer electronics declined this quarter. Meanwhile, according to public data, with increased summer clothing demand, Douyin's estimated sales in June were nearly 20 billion yuan, up 80.2% month-over-month. Additionally, awkwardly, as the originator of livestream commerce, starting from the end of last year, the top three Taobao livestreamers faced consecutive incidents, causing a sharp decline in discussion and user dependence. During the 2021 618 promotion, the top 4 livestreamers across all platforms were all from Taobao Live. This year's 618 top 5 livestreamers were all from Douyin and Kuaishou. For a long time, Taobao Live entered a phase of "no top livestreamers," and although Li Jiaqi has returned, Taobao Live alone cannot turn the tide. However, it must be admitted that the gap between Douyin e-commerce and Taobao remains significant. In FY2022, Alibaba's domestic retail total reached 7.976 trillion yuan. Additionally, in the 12 months ending June 30, 2022, over 123 million consumers spent over 10,000 yuan annually on Taobao and Tmall, with a cross-year activity rate of about 98%. Although losing strong growth momentum, Taobao's core business remains solid. According to unofficial data, Douyin e-commerce's overall GMV in 2021 may have been over 800 billion yuan. Despite rapid growth, it still lags behind Taobao. On the other hand, Taobao remains the main battlefield for major brands. Tmall official data shows that this year, 250,000 brands participated in the 618 promotion, 2.5 times last year. A total of 13 million products participated, with 1.4 million new products debuting on Tmall 618. For consumers, most who don't like watching livestreams will also choose Taobao as their first shopping destination. Moreover, as a content e-commerce platform, Douyin's rich content genes are the main attraction for consumers. When Douyin increases its e-commerce business, it will inevitably affect its content, reducing its appeal to consumers. Additionally, many consumers shop only when they have a need, and selecting products through livestreams or short videos adds complexity. For these people, Taobao remains the first choice. Although Alibaba's position in domestic e-commerce remains hard to shake in the short term, dangerous signals have indeed arrived. The war between Taobao and Douyin e-commerce has reached a critical stage. -END-