ByteDance-owned Douyin e-commerce is testing a new budget retail offering, selling selected products under RMB 9.9 ($1.38) to attract buyers, Chinese media outlet TechPlanet reported on Tuesday.
Why it matters: The new budget section signals Douyin’s ambition in getting a larger share of lower-tier markets. A heated area that is also being pursued by other major e-commerce giants like Alibaba’s Taobao and JD, while Pinduoduo, known for its extremely low pricing, is currently the leader of this segment.
Details: The new budget section is accessible via a button on the home page of the mall channel in Douyin’s lite version app (our translation) to some users. The report said that the firm’s e-commerce platform has invested heavily in the project.
- According to a statement released by Douyin recently, this special deals channel aims to provide a consumption scenario that meets users’ high cost-effectiveness needs along with improving user retention.
- Douyin requires participating merchants to have an order volume of no less than 1,500 in the past 30 days.
- The channel is divided into various zones, all items are priced under RMB 9.9 zone, with a zone priced even under RMB 4.9. The channel covers categories from household, clothing, shoes and bags, food and beverage, to digital accessories. Some products can be purchased for merely RMB 1.9 (less than half a cent), including shipping.
Context: As the market in first- and second-tier cities gets increasingly saturated, lower-tier markets have become a growth area for e-commerce platforms to tap into potential consumer power, but making the transition is not easy.
- Alibaba’s budget shopping platform Taobao Deals is the company’s main force in this market, and it reached 300 million annual buyers in March. However, the app is facing difficulties in trying to increase its market share as Alibaba is unlikely to commit the same scale of resources to the platform’s growth as it has in the past.
- JD’s Jingxi also focused its business on lower-tier cities, but Richard Liu, the firm’s chairman and CEO, acknowledged Jingxi’s failure in July of this year, and the business group was broken up after only about two years of operation. Chinese media outlet 36Kr previously reported that two of JD’s executives advocated abandoning the lower-tier markets to focus on intra-city retail, while Liu still wanted to continue.