THE BIG STORY

In Indonesia, a rising niche in ecommerce: e-fulfilment

Image credit: Timmy Loen

While the ecommerce marketplaces offer these services in-house, a rising crop of third-party players are coming up.

THE HOT TAKE

Why ByteDance shut down its Shein clone

Image credit: Gearrice

Here’s what happened:

• Dmonstudio, the fast-fashion platform reportedly launched by TikTok to take on industry titan Shein, ceased operations abruptly on February 11.
• While both Dmonstudio and ByteDance have not commented on the sudden closure, industry observers suggest that weak user adoption and supply chain inefficiencies were to blame.
• Rather than sounding the death knell for ByteDance’s ecommerce ambitions, Dmonstudio’s closure hints at a maturing strategy that’s still taking shape.

Here’s our take:

When news of Dmonstudio’s launch first broke, it had all the signs of an epic showdown in the making.

Reportedly helmed by Kang Zeyu, ByteDance’s head of ecommerce, Dmonstudio was billed as an “S-level” project with the potential to topple Shein’s dominance in fast fashion. According to Pandaily, ByteDance-backed firm poached nearly 100 people from Shein to kick-start its operations.

However, this clash of titans never came to be. Dmonstudio fizzled out after just 101 days in operation and abruptly shut shop on February 11.

What went wrong? Both ByteDance and Dmonstudio are still keeping mum, but industry observers Tech in Asia spoke with suggested that weak user adoption was to blame. Data from Chinese ecommerce information platform Ebrun indicates that Dmonstudio saw only 8,000 daily visitors and 16,400 daily web page views before it closed its doors.

There’s also another reason for ByteDance’s “rapid retreat.” While the tech titan could easily emulate Shein’s online user experience and rapidly build a founding team by dangling generous salary packages, it will likely struggle with replicating the supply chain that makes Shein a fast-fashion powerhouse.

It’s plausible that ByteDance could acquire logistics players if it can’t stomach the do-it-yourself approach. The company recently invested in iMile Delivery LLC, a Dubai-based logistics chain startup.

Even then, building a network of warehouses and in-housing logistics also goes against the grain of ByteDance’s ecommerce pursuits. To date, the company has only dabbled in platform- and app-driven plays.

Dubbing it a “retreat while the going’s still good,” Jingzhe Research’s Bai Lu claims that ByteDance had figured out how to bring in steady traffic but not how to rapidly scale up supply chain systems. He adds that it “makes sense” for ByteDance to abandon Dmonstudio and focus on other asset-light ecommerce pursuits like Douyin Box and the newly launched Fanno ecommerce app instead.

If that’s the case, why did Dmonstudio emulate Shein in the first place? Did it take cues from fast fashion’s greatest just to hit a brick wall it knew it would come up against?

Maybe that’s the point. Rather than being a Shein killer, Dmonstudio is simply ByteDance’s latest experiment as the tech giant looks to refine its ecommerce strategy:

• In 2014, ByteDance launched “daily special promotions” on its news app Toutiao to lukewarm response.
• In 2016, it buddied up with Chinese ecommerce major JD.com to drive conversion traffic to the latter.
• In 2017, Toutiao launched Fang Xing Gou, a short-lived ecommerce platform that operated within the Toutiao app.
• In 2018, ByteDance tested the ecommerce waters with ZhiDian, an independent ecommerce app that sold high-quality consumer goods at affordable prices.
• In 2019, ByteDance-owned Douyin introduced ecommerce mini-applications and made the product window feature available to all users.
• In mid-December last year, Douyin Box, a Dewu-Xiaohongshu hybrid, was launched on Android and iOS. It allows users to shop, recommend, and search for products on Douyin.

Another sign that Dmonstudio was intended as just a brief experiment for ByteDance: Company insiders revealed that job offers were still being sent out under the company’s name even after it shut down, according to Jingzhe Research’s Bai Lu.

ByteDance is feeling its way across the ecommerce river, and Dmonstudio marks just another step that will help the Chinese tech behemoth define its ecommerce strategy.

-- Tian Wen

NEWS YOU SHOULD KNOW

Check out Tech in Asia’s coverage of Asia’s ecommerce scene here.
 

1️⃣ Tencent-owned WeChat and Alibaba’s AliExpress have been placed under the US government’s “notorious markets” list for copyright privacy. both Chinese firms made the list for “facilitating substantial trademark counterfeiting,” according to a US Trade Representative.
 

2️⃣ Shein, a Chinese fast-fashion retailer, has shifted its parent firm to Singapore. The company plans to grow its team in the city-state 4x by the end of this year.
 

3️⃣ Appboxo, a Singapore-based app development platform, has raised US$7 million in a Series A funding round. Founded in 2019, the firm was part of Antler’s third Singapore cohort and currently supports 250 small and medium businesses.
 

4️⃣ Dealshare, an India-based social commerce firm, has raised US$45 million in a Series E funding round. The firm plans to use the funds to drive its overseas expansion and diversify its product range.

FYI

Ecommerce Aggregators Survey: 87% of Amazon’s largest third-party sellers plan to sell their business to Amazon aggregators in 2022

Despite supply chain woes and Covid-19 regulations, most of Amazon third-party sellers are still confident about their long-term prospects. Their top priority, however, is to cash out by selling to Amazon aggregators, whose ranks have swelled to more than 150 worldwide.

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