TikTok Owner ByteDance Expands into E-commerce

(Source: Digital Marketing Institute)

TikTok’s parent company ByteDance announced the creation of its new Department of E-commerce Business on the eve of 618 Shopping Festival, LatePost reported Thursday.

The new department will be responsible for meeting users’ e-commerce needs on Douyin, the Chinese domestic version of TikTok.

Bob Kang, former head of the Department of Overseas Products, will oversee the new department. Kang was responsible for ByteDance’s international products, including the news app TopBuzz and Helo, a Weibo-like app for the Indian market.

The department drew most of its new members from ByteDance’s original commercial marketing team.

The Department of E-commerce Business’ role was scattered across several departments. The new division will serve as a first-level business department parallel to news app Toutiao, Douyin, Game, Zero (education and new business) and commercialization.

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ByteDance’s revenue mainly comes from advertisements, and the e-commerce business only exists as an auxiliary business unit. Its move to create an entire e-commerce business unit may be a sign that ByteDance plans to compete for a share of China’s massive e-commerce marketplace.

Douyin has played a minor role in the 618 Shopping Festival compared to e-commerce giants such as Alibaba and JD.com. Apart from regular sales, Douyin had no 618-related activities. A source close to the new e-commerce department told LatePost that capitalizing on 618 Shopping Festival’s gross merchandise value (GMV) was not ByteDance’s primary goal.

China Business Network reported the department’s target is the international market. Faced with strong domestic rivals such as Alibaba, Douyin may not have much of an advantage in Chinese e-commerce.

In addition, the relationship between ByteDance and Alibaba walks a line between cooperation and competition. In 2019, Douyin and Taobao, the world’s biggest e-commerce website owned by Alibaba, signed an annual framework agreement of 7 billion yuan, with 6 billion yuan for advertising and 1 billion yuan for e-commerce commissions. At that time, Douyin was positioned as a “traffic provider” who made profits from marketing and performance advertising (CTR).

The 2019 framework agreement ended in March. A new agreement worth reportedly 20 billion yuan is still being negotiated.

“It depends on whether we see Douyin as an opponent or a partner,” a Taobao employee told LatePost, “Douyin’s e-commerce business won’t be easy, and it’s not easy to fight with them either. Cooperation would be the best result.”

The initial goal of ByteDance’s e-commerce business is to reach a GMV of 200 billion yuan by the end of 2020.

According to the platform’s past data, livestreaming e-commerce performed better than short video sales. To reach its 200-billion-yuan target, the first stage of development must rely on livestreaming e-commerce, LatePost said.