Douyin’s e-commerce operations will consolidate under unified management to boost collaboration across merchant tiers.

Douyin E-commerce has reportedly undergone internal restructuring, according to 36Kr. Industry operations, previously divided between the A and B groups, will now be unified under Zhao Rui, the former head of the B group. Zhao will report directly to Wei Wenwen, president of Douyin E-commerce. Douyin confirmed this adjustment to 36Kr but clarified that the two groups will not be merged.

“Over the past two years, many small and medium merchants under the B group have grown significantly, making the previous management framework less applicable. Unified management by Zhao Rui will enable better collaboration. Additionally, some smaller categories may be consolidated,” a source close to Douyin E-commerce told 36Kr. Another insider close to Zhao said he has “exceptional execution capabilities.”

The division between the A and B groups originated from mid-2022 adjustments. Branded merchants were placed in the A group, led by Mu Qing, then head of Douyin E-commerce operations, while small and medium merchants, white-label merchants, and industry cluster merchants fell under the B group, led by Zhao, who had transitioned from ByteDance’s commercialization department. The A group primarily focused on gross merchandise value (GMV), while the B group prioritized order volume.

In March this year, Mu was reassigned to TikTok E-commerce, leaving the A group temporarily managed by president Wei.

The formation of the B group underscored Douyin E-commerce’s emphasis on white-label merchants, which were introduced to diversify product offerings and enhance price competitiveness through low-cost strategies. This focus aligned with Douyin’s efforts to expand its shelf-based e-commerce business in 2023. Over the past year, the number of small and medium merchants on the platform increased by 83% year-on-year. During this year’s Singles’ Day shopping festival, first-time participation by small and medium merchants grew by 33% compared to the previous year, with daily average sales increasing by 45% month-on-month.

According to LatePost, Douyin established an independent strategy team for the B group, led by Huang Yuanjian, the former head of TikTok’s e-commerce business in Brazil. Additionally, Douyin adjusted its traffic allocation strategy to prioritize order volume.

Entering 2024, Douyin E-commerce made its low-price strategy a top priority, with pricing power as its central focus. Small and white-label merchants have become key drivers of the platform, further elevating the significance of the B group. According to sources familiar with Douyin, the platform has been closely analyzing Pinduoduo’s success and has actively sought to replicate its approach to merchant onboarding and advertising engagement.

However, this emphasis on small and white-label merchants has reduced traffic for branded merchants. Moreover, the GMV growth and advertising budgets driven by low-price strategies have not matched the levels brought by branded merchants. As a result, Douyin E-commerce’s GMV growth slowed significantly—from over 50% in Q1 to below 30% in Q2, and less than 20% by September.

One major challenge is that low-priced white-label goods fail to generate sustainable GMV growth for the platform. Simultaneously, branded merchants have begun shifting inventory to competing platforms, further compounding the issue.

In response, Douyin has attempted to retain inventory ownership during major sales events. During this year’s Singles’ Day, the platform launched campaigns earlier than usual to counteract inventory loss. Sales growth rebounded to approximately 25%, surpassing expectations. Notably, Douyin eliminated presales for the event, redirecting subsidies directly to consumers instead of merchants.

In Q3, Douyin moved away from absolute price-driven promotions, restoring normal product pricing and reallocating resources to support both branded and large non-branded merchants. Looking ahead to 2024, sources anticipate that Douyin will increase traffic support for branded merchants to secure higher GMV contributions. Performance metrics for branded merchants are also expected to shift from focusing on both GMV and order volume to exclusively emphasizing GMV.

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