ByteDance aims to challenge Alibaba
Zhang Yiming built ByteDance Ltd into the world's most valuable private company via a string of blockbuster apps like TikTok that challenged Facebook and other incumbents on their own turf. His latest target: Alibaba.
The 38-year-old AI coding genius, searching for ByteDance's next big act, has set his sights on China's $1.7 trillion e-commerce arena. The cofounder has hired thousands of staff and roped in big-name sponsors like Xiaomi Corp impresario Lei Jun to drive what he calls his next "major breakthrough" into global business--selling stuff to consumers via its addictive short videos and livestreams. That endeavor will test not just Zhang's magic touch with app creation and ByteDance's AI wizardry, but also investor reception ahead of one of the tech world's most hotly anticipated IPOs.
His startup is already starting to make waves in an industry long controlled by Jack Ma's
Alibaba Group Holding Ltd and JD.com Inc. It sold about $26 billion worth of make-up, clothing and other merchandise in 2020, achieving in its maiden year what Alibaba's Taobao took six years to accomplish. It's shooting for more than $185 billion by 2022. Douyin, TikTok's Chinese twin, is expected to contribute more than half of the firm's $40 billion domestic ad sales this year, driven in part by ecommerce.
"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 livestreaming, e-commerce, local life services and search. This has a lot room for imagination."
A burgeoning e-commerce business could help the firm surpass its $250 billion valuation when it goes public, countering concerns around Beijing's crackdown on the country's internet behemoths. Preparations are said to be underway for a listing that would be one of the world's most anticipated debuts. While ByteDance won't handle sales or merchandise itself, it hopes to sell more ads to merchants, boost traffic and take a cut of business.
The internet giant is a late entrant to China's social commerce scene, where influencers tout products to fans like a Gen-Z version of the Home Shopping Network. of
The format, pioneered by Alibaba as a marketing tool in 2016, developed a life of its own last year when Covid-19 spurred demand for at-home entertainment. Last year, Alibaba's Taobao Live generated over 400 billion yuan ($62 billion) of gross merchandise value.
ByteDance is counting on its artificial intelligence-driven, interestbased recommendations to help its e-commerce business catch up.
ByteDance's ambitions aren't limited to Alibaba. The firm has also started to let users book hotels and restaurants through Douyin, offering lifestyle services similar to superapps like Meituan and Tencent's WeChat.
Douyin's e-commerce foray in China may offer a road map for TikTok, which has begun testing the waters in online shopping through tie-ups with WalMart Inc and Canadian e-commerce firm Shopify Inc. In December, Zhang told global employees that e-commerce, when combined with live-streaming and short videos, offers an even bigger opportunity outside China.