Douyin livestreaming e-commerce is going to close the loop, Taobao and JD goods cannot be accessed from 9 October. If the brands would like to continue growing their revenue in Douyin, they have to consider opening a Douyin store (抖店).

One of the representatives of Douyin responded that, in order to protect the rights and interests of consumers, the platform would strengthen the management and take control of livestreaming marketing. The above policy is only for advertising products through livestreaming (直播帶貨), while short videos can still share links from third-party platforms as usual.

“If Douyin no longer letting us to share the links during livestreaming, what should I do with my 1M followers?”

“Am I the sacrificial lamb in the war of different e-commerce platforms?”

these are the questions popped up after Douyin announced that they would no longer support any external links in Douyin’s shopping carts during livestreaming.
livestreaming
(Image source: Caixin)

Actually, you can see the traces of Douyin upgrading its internal e-commerce system:

  • In early August, Douyin announced new regulations for Beauty and Personal Care products. All beauty products which do not belong to Douyin stores has to be sent through the Star Toutiao (巨量星圖) before listing on the livestreaming shopping cart, while links of Douyin store can be listed directly.
  • On 17 August, the Star Toutiao announced that, starting from 20 August, for all product links of third-party e-commerce platforms, they will charge a 20% service fee when advertising products through livestreaming, while product links of Douyin store only charge 5%.
  • Starting from 6 September, it has to go through the Star Toutaio platform to match livestreamers before sharing products from third-party platforms; From 9 October, third-party products will no longer allow to enter the shopping cart in livestreaming room.

It is obvious that Douyin tries to force businesses to enter Douyin stores by increasing service fees on external links and establish Douyin stores as the core of e-commerce within Douyin.

livestreaming
(Image source: Dou Shang Media)

Why does Douyin “close the loop” and create a new operating system?

What is the meaning of “closed-loop”?

“Closed-loop” is a model that provides “one-stop” service. There are orders to follow and be closely connected and integrated into one, repeating just like a cycle.

What are the impacts of closing the loop in Douyin?

  1. Douyin e-commerce can calculate the real GMV on the platform itself, at the same time can increase the corresponding service.
  2. Taobao and other e-commerce platforms that focus on transactions will quickly lose the external traffic supported by Douyin.
  3. Omni-channel companies need to operate their e-commerce businesses on Douyin and non-Douyin platforms. It could be a way out to survive in the war of platforms.

Will Douyin Store Become the Enemy of Taobao / Tmall?

Recently, ByteDance has slowed down their growth and setbacks in overseas markets, it is sure that it will vigorously promote e-commerce business. However, it is still too early to mention the negative impact on Taobao business and revenue.

It can also be seen from the commissions between advertising and e-commerce, Taobao is still dominant in Douyin advertising business. Alibaba is one of the largest partners of major social media platforms and keeps on investing in social media.

As a result, even Douyin successfully attract businesses to open Douyin stores, it doesn’t mean that they could complete their “closed-loop” plan in such an easy way.

Some brands have no choice but join the game to survive

(Image source: Geo Marketing by David Kaplan)

There is no doubt that, lots of brands highly rely on influencer marketing, livestream advertising in Douyin could be their main source of revenue, it is really hard to give up such a big pool of target audience and money.

“We have an influencer with around 20K followers, she had 200K sales revenue in just a single livestreaming advertising in March. As a start-up business, this is definitely an amazing record. However, if the external links are not allowed to share anymore, it will affect the revenue directly as well as the momentum of influencer marketing.”

“After the new announcement has been made in August, I believe that many businesses will open Douyin stores. In September, I will find more Douyin Stores to cooperate in livestreaming advertising.

As a result, they will open a Douyin store to keep on advertising their products with KOLs and willing to pay the 5% service charge to join the party.

Conclusion

The promotion of Douyin stores, Kuaishou stores, and WeChat stores indicates that closed-loop transactions will gradually become popular. It is inevitable that more chances are coming in the future.


E-commerce is a manifestation of the trend in the entire consumer market, and it has become the mainstream of purchasing. However, none of the e-commerce can control the entire market. What they can do is to respond to the competition and expand their business in different ways. There will be a continuous development of e-commerce platforms and trends, more forms of transaction and marketing will be shown in future competition and cooperation.

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