Will TikTok’s online supermarket in China be successful?

Douyin, Bytedance’s Chinese version of TikTok, quietly launched an online supermarket service as part of its e-commerce offerings during the Lunar New Year break in China:

“Douyin supermarket” is discreet – there is no direct way to access the homepage of the app.  Users need to search for “Douyin supermarket” in the search box to reach the above page.

The main page is simple and clear -promotions for users as well as main product categories, including grains & oil, alcohol & beverages, personal care products, and other consumer goods – but no fresh produce.

Most of the consumer products are priced quite low, signifying a desire to capture more of the consumers’ wallet share.  With a massive user base and screen time, Douyin has been trying hard to monetize in recent years, identifying e-commerce as a key method. Its GMV has surged though still well behind established platforms in China including Taobao and JD.com:

The supermarket service is another way for Douyin to monetize its massive traffic. Needless to say that the grocery market offers a high repurchase rate, and a big market size – though it is a notoriously hard sector for e-commerce platforms to penetrate in a profitable way. 

As we have repeatedly mentioned in our Food Delivery Platforms coverage, the key to win is volume, density and operational efficiency – the same applies to groceries. In China, certain players have been able to turn profitable in certain cities where the volume and density allow them to optimize – but we see much more casualties (such as Miss Fresh). 

Douyin is a late mover, as other Internet giants like Alibaba, JD.com and Meituan have already launched their supermarkets. 

Take Tmall Supermarket as an example, consumers can make orders and receive products within half a day; at the same time, Meituan has already built fairly impressive on demand delivery of groceries in key cities using a 3P model.  

In comparison, Douyin Supermarket, which is largely operating in Shenzhen and surrounding areas as of now, will need to build a lot of operations to capture efficiency. 

Some argue that consumers still see Douyin as a short video app, therefore monetizing through an online supermarket might be a long way to go. However, the real question is probably still going back to Leadership, People, Organisation and Product (POP-Leadership), as we have highlighted in the book  “Seeing the Unseen: Behind Chinese tech giants’ global venturing”.