How can Douyin generate a new growth curve for the luxury industry?

PARTNER CONTENT

It wasn’t long ago that the luxury industry was seen as an industry distant from live broadcasting and short-form videos. Before e-commerce became an essential channel, many believed that exclusive and expensive luxury products were inherently incompatible with the accessibility of the internet. Secondly, unlike everyday consumer goods, luxury products tend to be more curated in their brand image in order to appeal to high-intent customers.

The old perspective has been shattered by the rise of interest-based e-commerce. Nowadays, luxury brands have moved to Douyin to conduct various types of marketing with positive outcomes. For example, with accurate insights about the target audience and products, German fashion brand Hugo Boss obtained a high repurchase rate of 65% and a 400% rise in memberships through the platform. Meanwhile, after launching the “Bamboo Rhapsody” challenge for their classic Bamboo 1947 collection, Gucci received a total exposure of 85 million impressions on Douyin, with the official account receiving over 100,000 new followers during the engagement cycle, for a total online exposure of more than 100 million impressions.

So, what draws luxury brands to Douyin, and how can they use it to break boundaries and enter a new growth phase?

New opportunities for luxury brands on Douyin

The growing prominence of the Chinese market has been widely acknowledged in the luxury industry, and consumption has continued to increase rapidly during the last three years. According to the 2023 Douyin Luxury Goods Industry White Paper released jointly by Ocean Engine, Douyin E-commerce, Trending Insight, and Deloitte China, China’s luxury market is expected to account for 25% of the global market in 2023, increasing to 40% in 2030, making it the largest single market for luxury.

Douyin has evolved into a critical platform for consumers to obtain information and discover products. The paper shows that more than 70% of luxury customers use the platform; Douyin has a core audience of 40 million luxury product consumers, 70 million potential customers, and over 150 million interested individuals who are younger, from diverse social circles, and have higher purchasing power.

As a comprehensive content and e-commerce platform with a robust commercial ecosystem and high-quality original content, Douyin is becoming the primary “battleground” for Chinese luxury consumers due to its large potential audience. According to internal data, the monthly average traffic of short videos and live broadcasts relating to luxury products on Douyin surpassed 30 billion and the average number of trending videos per month surpassed 1 million in 2022, with over 400 billion views.

As a trendsetting industry, the luxury sector must constantly refresh the user experience with new information. The content should also focus more on the emotional connection that consumers have with them.

The emergence of AI-powered technology has lowered the bar for content production, and an image can inspire limitless creative concepts. In the meantime, through PICO, Douyin has initiated the commercial cooperation of VR immersive video, supporting brand account launch, content promotion, and customised special effects.

Brand advertisements entice viewers with novel and interactive effects, many of which have become fast favourites in the Douyin community. Ocean Engine will also introduce new effects in the second half of the year, and continue providing the luxury industry with benefits like priority treatment and creative collaboration.

Influencers are an important link for engaging with young users on Douyin. Brands may engage users with relevant interests such as painting, lifestyle, sports, and art through influencers and consequently broaden their touchpoints. Douyin’s exclusivity rate for mega-and-mid-tier influencers is as high as 86%, laying a solid foundation for trending topics, supporting luxury brands in producing big online events, and enhancing brand power.

Principle 3: Engage your audience with specific interests

In addition to creating brand personality and high-quality content, luxury marketing must engage consumers with an exceptional user experience. The key to achieving success during economic uncertainty is to engage a larger audience and attract more talent. In an era when everyone is able to voice their opinions, interest has become a key motivator for people to try new brands and products. In this regard, Douyin connects the content ecosystem with the audience’s interests as the foundation and launches the DOU Content Lab, which combines the characteristics of the luxury industry and engages the audience with interests in art, sports, movies, literature, etc., in order to unleash the infinite possibilities of content experimentation.

Douyin is home to over 769,000 art creators, with a wide audience base. The online exhibition of Cai Guo-qiang received over 100,000 views within one week and simultaneously trended on Douyin and Toutiao, while the combined live broadcast of Shuhei Aoyama and Ideal Earth received over 500,000 views. Another successful cultural venture is the annual Douyin Movie Night film festival, a collaboration between Douyin Film and the movie industry which provides viewers with a variety of perspectives on Chinese film narratives.

The platform’s wealth of fashion and art content, coupled with its ability to continuously upgrade products, has created ever-increasing new opportunities for collaboration, enabling luxury brands to partner with leaders of various industries and renowned artists, and bringing more quality and diversified experiences to luxury consumers.

This year, Jaeger-LeCoultre hosted the Reverso Stories exhibition in Taikoo Li, Chengdu, from 26 May 26 to 5 June. In conjunction with the Ocean Engine DOU exhibition, the brand co-created content to increase the event’s exposure in advance, and collaborated with fashion and art influencers driving brand awareness among Douyin users and attendance at the exhibition.

Principle 4: Employ holistic strategies

Luxury brands in e-commerce must achieve holistic consistency in their operations, making concerted efforts in the three sectors of marketing, content, and commerce to continuously develop business and achieve full customer coverage.

In content, luxury brands can convey the brand story to consumers through short videos and live broadcasts; in commerce, brands can meet various consumer needs all-around by enhancing product discovery. In marketing, luxury brands can merge internal and external resources, breaking down traditional silos. At Dior’s Fall/Winter 2023 ready-to-wear show in Shenzhen, the luxury house streamed its entire show on Douyin and gave strong exposure to 18 groups of participating celebrities; then, through the FeedsLive during the show, post-show promotion, and topic operation, Dior grew its brand awareness and followers, with a cumulative increase of over 20,000 followers and a peak of 100,000 real-time online viewers. 

Going back to the original question, why have luxury brands flocked to Douyin and, in some cases, even made it their primary business location? How can they breach its boundaries and produce an entirely new growth curve?

At the 2023 Douyin Luxury Industry Summit, representatives from platforms, media, and luxury brands discussed the ecosystem’s long-term contribution to the development of luxury brand power.

Judith Sun, managing director of Hugo Boss Greater China, recognised the significance of the Douyin within the luxury industry. In her view, Douyin distinguishes itself from other e-commerce platforms in the sphere of luxury e-commerce through its exceptional value. To Sun, it is not only a platform with distinctive branding and sales impacts, but also a bridge that connects brands, consumers, and conversions in close proximity.

Sun also shared Hugo Boss’ experience in turning limited co-branded products into top-selling items on Douyin. The brand first uploaded short videos of new items on its corporate account, then conducted testing and planning for the entire series of new products by evaluating interactive data and direct inquiries during livestreaming. The click rate and conversion rate during livestreaming were used to estimate the demand for new items; in the meantime, the entire channel allocated inventory to meet the initial wave of demand for the new products.

Furthermore, the operation developed customised scripts and product displays for limited co-branded products in order to pique customers’ attention and encourage transactions at regular prices. In terms of accurate recommendation and placement, Hugo Boss employed paid placement in addition to generic traffic to reach out to potential customers on Yuntu and Compass, to ignite the brand loyalty of both inactive and active customers, and to boost repurchases.

In conclusion, for luxury brands, it’s no longer a question of whether to market themselves on Douyin, but rather how to do so. The only way to drive growth is to continually improve the user experience, select traffic-driving channels, and regularly optimise marketing strategies. It is anticipated that in 2023, more luxury brands will inspire experiences on Douyin and make the transition to innovation.