Monday, August 15, 2022

ByteDance is on a Hiring Spree to Challenge E-Commerce King Alibaba Ahead of Mega IPO

- Advertisement -

Zhang Yiming, the founder of ByteDance Ltd., built the company into the world’s most valuable private company by challenging incumbents on their own turf. Just like TikTok challenged Facebook, Yiming’s latest target is Alibaba.

The 38-year-old AI coding genius who built a string of blockbuster apps is searching for ByteDance’s next big act. He has set his sights on China’s $1.7 trillion e-commerce arena. Yiming has roped in big-name sponsors like Xiaomi Corp. impresario Lei Jun and hired thousands of staff to drive what he calls his next “breakthrough” into a global business — selling stuff to consumers via its addictive short videos and live streams.

That endeavour will test not just ByteDance’s AI wizardry with app creation and Yiming’s magic touch but also investor reception ahead of one of the tech world’s most hotly anticipated Initial Public Offerings (IPOs).

His startup, which sold about $26 billion worth of make-up, clothing, and other merchandise in 2020, is already starting to make waves in an industry long controlled by Jack Ma’s Alibaba Group Holding Ltd. and Inc. It achieved an amount in its maiden year that Alibaba’s Taobao took six years to accomplish. Its aim for 2022 is for more than $185 billion. TikTok’s Chinese twin, Douyin, is expected to contribute more than half of the firm’s $40 billion domestic ad sales this year, driven in part by e-commerce.

“Short video platforms have so much traffic that they can basically do any business,” said Shawn Yang, managing director of Blue Lotus Capital Advisors. “Douyin is not only in ads, but also live-streaming, e-commerce, local life services, and search. This has a lot of room for imagination.”

A flourishing e-commerce business could help ByteDance go past its $250 billion valuations when it goes public. This would counter concerns around the Chinese government’s crackdown on the country’s internet behemoths. Preparations are said to be underway for one of the world’s most anticipated IPO debuts. While ByteDance won’t handle sales or merchandise itself, it hopes to sell more ads to merchants, boost traffic and take a cut off the business.

The internet giant is a late entrant to China’s social commerce scene, where influencers attempt to sell products to fans like a Gen-Z version of the Home Shopping Network. Alibaba pioneered the format as a marketing tool in 2016. Covid-19 spurred demand for at-home entertainment developed a life of its own last year as Alibaba’s Taobao Live generated over 400 billion yuan ($62 billion) of gross merchandise value and Kuaishou Technology’s social platforms hosted 381 billion yuan of transactions, more than double Douyin’s, according to a report by Bloomberg.

- Advertisement -

Lofty Ambitions

While Douyin’s GMV lagged rivals in 2020, it’s targeting significant growth

i9HVo3MkeqJjuBHl 6wNULD9QqJ59L 3C1Mhf9l7OOpuQunHB7Y0xdz5DmPtR00BMU5um wWV R MdVemmLmcKlGLxLJhsogAU240iRh82YR0KtshMo6S X0CMP11IqpIFi0dJ2
Source: Bloomberg
Note: Douyin’s 2021 and 2022 figures are based on targets from an internal memo

ByteDance, to help its e-commerce business catch up, is counting on its AI-driven, interest-based recommendations. Executives explained that the company intends to replicate its success by using AI algorithms to feed users content in online shopping. Douyin users won’t resist their impulse to buy as they will be scrolling through an endless stream of social content, now connected with physical goods, they said.

It’s “sort of similar to shopping on the street,” Bob Kang, Douyin’s 35-year-old e-commerce chief, told an audience of hundreds at the Guangzhou event. “As people get richer, they don’t go to shopping malls or boutique stores with specific things in mind; they just buy if they see something they like.”

Shoppable Content

More people in China are buying goods while watching live streams than ever

L2w81uhjpab6R qxQnpqCr 0lMQf 3P7oFsJ4FRTQL5YO4DiOh0JDvpUYPY2oV04N2cn7znTTyqrq2SF3SUL 8fG38uJZ PUawirwXWktoEK1ll2crtgAa9W4F8wvTIKyDcQBgy
Source: Bloomberg

Kang, a former engineer at Baidu Inc., a Chinese company specializing in internet-related services, was poached by ByteDance in 2017. He is a slew of fast-rising young lieutenants tasked by Yiming to break new ground for the company.

Since Kang took over as e-commerce head, he prevented rivals like Alibaba and Inc. from profiting off its traffic by banning live-streamers from selling items listed on third-party sites and invited them to open their own in-app stores in Douyin. He grew a team of customer support staff from just one hundred to about 1,900 to fight counterfeits and is hiring for more than 900 other positions to support the business. Like what Alibaba does, ByteDance also has an online matchmaking system that helps connect merchants with influencers and their agencies.

The initiative gained traction from celebrity endorsers like Lei, the Xiaomi founder, and Luo Yonghao, a once high-flying entrepreneur who had sought to challenge Apple Inc. with his smartphone business. Smaller merchants follow their lead, like Zhou Huang, who bypassed conventional platforms like Alibaba’s Taobao and set up a Douyin storefront for her jewellery business in October. Instead of stumping up hefty fees to platform operators for traffic, she’s managed to amass a fan base of about 20,000 by creating videos that offer practical tips like how to choose the right size when buying a bracelet online.

“It’s challenging for brand new merchants like me to attract customers on Taobao,” says Huang, whose Douyin store broke even after just three months. “Sometimes, people come to our store, not for shopping, but entertainment. But once we have enough visitors, we can make a sale.”

ByteDance is offering top-notch customer service. In Foshan, Huang and 200 other jewellery sellers are taught how to register a store, market it, and shoot quality videos. Around-the-clock technical assistance is available: Huang says that ByteDance technicians immediately come to the rescue whenever her Livestream channel goes down.

kdxFDGM2JwbyG6TFenXu9lCUp9R20 Lu88QhAuBuMn6DRuGrhc7z
Zhou Huang’s Douyin storefront for her small jewelry business.
Photographer: Yan Cong/Bloomberg

As of January, about 1 million creators have generated e-commerce sales on Douyin. The platform has 600 million-plus daily users. The platform — which brings in commission fees from merchants as a new revenue stream — aims to have more than a thousand brands this year join the likes of Co. in setting up stores on Douyin. That number could increase fivefold by 2022, the company predicted in an internal memo. Gross merchandise volume may grow to as much as 600 billion yuan this year before doubling to 1.2 trillion yuan in 2022.

ByteDance has also started to let users book hotels and restaurants through Douyin, offering lifestyle services similar to super-apps like Meituan and Tencent’s WeChat.

Douyin’s e-commerce Foray in China May Offer a Roadmap for TikTok

TikTok has begun testing the waters in online shopping through tie-ups with Canadian e-commerce firm Shopify and Walmart. Back in December, according to Bloomberg’s sources, Yiming told global employees that e-commerce, when combined with live-streaming and short videos, offers an even bigger opportunity outside China. The company has also been quietly building a team of engineers in Singapore to grow TikTok’s nascent e-commerce operations.

To grow video gaming, ByteDance has been buying development studios. In online tutoring, regulators have sought to rein in excess marketing, and competition is fierce against a slew of deep-pocketed startups like Alibaba-backed Zuoyebang.

Alibaba has held off rivals and Pinduoduo Inc. over the past decade from taking over China’s e-commerce market by allegedly through practices like forcing merchants into exclusive arrangements. Regulators have since levied a record $2.8 billion fine on Jack Ma’s flagship firm and made eradicating “pick one from two” one of the main goals of its antitrust campaign, creating room for up-and-comers like ByteDance.

For now, the biggest and most immediate boost from ByteDance’s expansion into e-commerce is in advertising revenue, which still accounts for the bulk of its earnings. 

“It’s more about getting a greater share of advertising spending from brands that would otherwise be spending money on platforms like Alibaba,” said Michael Norris, a senior analyst with Shanghai-based market research firm AgencyChina. “This is where the threat to Alibaba comes from.


- Advertisement -


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Related Articles

Bitdefender WW

More To Consider

Stay Connected

Ajio [CPS] IN

Hot Topics


Latest Articles


Bigrock [CPS] IN


Adblocker detected! Please consider reading this notice.

We've detected that you are using AdBlock Plus or some other adblocking software which is preventing the page from fully loading.

We don't have any banner, Flash, animation, obnoxious sound, or popup ad. We do not implement these annoying types of ads!

We need money to operate the site, and almost all of it comes from our online advertising.

Please add to your ad blocking whitelist or disable your adblocking software.

%d bloggers like this: