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ByteDance sees a new $ 185 billion company leading up to the mega fair

(Bloomberg) – Zhang Yiming built ByteDance Ltd. became the world’s most valuable private company through a series of blockbuster apps like TikTok that challenged Facebook and other incumbents on their own premises. His latest target: Alibaba, the 38-year-old AI coding genius in search of ByteDance’s next big act, has set his sights on the $ 1.7 trillion e-commerce arena in China. The co-founder has hired thousands of staff and big names like Xiaomi Corp. hired impresario Lei Jun to drive what he calls his next “big break” in global business – selling stuff to consumers through his addictive short videos and live streams. . That endeavor will test not only Zhang’s magical touch with app creation and ByteDance’s AI wizardry, but also investor reception ahead of one of the world’s most highly 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 for about $ 26 billion worth of makeup, clothing and other merchandise in 2020, achieving what Alibaba’s Taobao took six years to achieve in its first year. The company will hit more than $ 185 billion by 2022. Douyin, TikTok’s Chinese twin, is expected to contribute more than half to the company’s $ 40 billion domestic ad sales this year, driven in part by e-commerce. “that they can do basically any business,” said Shawn Yang, CEO of Blue Lotus Capital Advisors. “Douyin is not only in advertising, but also in livestreaming, e-commerce, local life services, and search. This leaves a lot of scope for imagination. ”A fast-growing e-commerce company could help the company surpass its $ 250 billion value when it goes public, countering concerns about Beijing’s crackdown on the country’s internet giants. which would be one of the world’s most anticipated debuts. The startup is working with advisors on the offering, choosing between Hong Kong and the US as the location for the list, say people familiar with the matter. merchandise, it hopes to sell more ads to merchants, boost traffic and decrease sales. China’s social commerce scene, where influencers promoting products to fans, such as a Gen-Z version of the Home Shopping Network. The format, developed by Alibaba as a marketing tool in 2016, took on a life of its own last year when Covid-19 boosted the demand for home entertainment. Last year, Alibaba’s Taobao Live generated more than 400 billion yuan ($ 62 billion) in gross merchandise value, and Kuaishou Technology’s social platforms organized 381 billion yuan in transactions, more than double Douyin’s. ByteDance is counting on its AI-based, interest-based recommendations to help its ecommerce business catch up. At a rousing coming-out party for the one-year company last month, executives explained that the company plans to replicate its success using AI algorithms to empower users when shopping online. Scrolling through an endless stream of social content, now more than ever connected to physical goods, Douyin users won’t be able to resist their impulse to buy, they said. It is “comparable to shopping on the street,” Bob Kang, Douyin’s 35-year-old e-commerce head, told hundreds at the event in Guangzhou. “As people get richer, they don’t go to malls or boutiques with specific things in mind, they only buy when they see something they like.” Kang, a former engineer from Baidu Inc. poached by ByteDance in 2017, is one of many fast-rising young lieutenants tasked by Zhang to break new ground for the company. Previously, he was the technical leader of ByteDance’s Helo app, one of India’s most used social platforms for sharing content such as videos – until the South Asian nation shut down along with dozens of Chinese apps last June for national security reasons. Douyin, head of e-commerce, has banned live streamers from selling items on third-party sites and invited them to open their own in-app stores, pushing rivals like Alibaba and JD.com Inc. cannot take advantage of their traffic. He has expanded a team of customer support personnel from just a hundred to approximately 1,900 to combat counterfeits and is hiring more than 900 other roles to support the business. ByteDance also has an online matchmaking system that connects merchants with influencers and their agencies, and it has set up physical bases to house live streamers and merchandise, similar to what Alibaba does. has hosted live streams to promote its Mi TVs and smartphones. Luo Yonghao, a once high-flying entrepreneur who founded Apple Inc. challenged with its smartphone company is another major influencer, shifting more than $ 17 million in merchandise in its first-ever live stream on the platform. like Zhou Huang, who set up a Douyin store for her jewelry business in October, bypassing conventional platforms like Alibaba’s Taobao. Rather than paying high platform administrator fees for traffic, she has garnered a fan base of about 20,000 by creating videos that offer best practices, such as how to choose the right size when buying a bracelet online. “It’s a challenge for brand new sellers like me to attract customers on Taobao,” said Huang, whose shop in Douyin broke down after just three months. “Sometimes people come to our store not to shop, but for entertainment. But Once we have enough visitors, we can sell. ”ByteDance lends a hand. In Foshan, Huang and 200 other jewelry retailers are guided on everything from store registration and marketing to creating quality videos. 24-hour technical assistance is available Available: Huang says ByteDance engineers will come to the rescue immediately if its live stream channel goes down. Huang is one of approximately 1 million creators who generated ecommerce sales on Douyin in January to the platform’s more than 600 million daily users The platform – which brings in merchants’ commission fees as a new revenue stream – aims to have more than a thousand brands joining this year at Suning.com Co. when setting up shops on Douyin, and that number could be increased fivefold. by 2022, the company predicted in an internal memo. GMV could grow to as much as 600 billion yuan this year before doubling to 1.2 trillion yuan by 2022. Read More: Leaked ByteDance Memo Shows Blockbuster Revenue Projections ByteDance’s ambitions aren’t limited to Alibaba. The company has also started to let users book hotels and restaurants through Douyin, offering lifestyle services similar to super apps like Meituan and Tencent’s WeChat. Douyin’s e-commerce foray in China may provide a roadmap for TikTok , which has begun testing the waters in online shopping through partnership with WalMart Inc. and the Canadian e-commerce company Shopify Inc. In December, Zhang told global employees that e-commerce, combined with live streaming and short videos, represents an even greater opportunity outside of China, according to attendees who asked not to be identified. The company has also quietly built a team of engineers in Singapore to grow TikTok’s burgeoning e-commerce business. ByteDance’s push towards online shopping comes as the other companies are facing headwinds. To grow video games, ByteDance has bought development studios, but it could take years to release blockbuster hits like Tencent Holdings Ltd.’s Honor of Kings, and China has previously knocked down the industry in fits and starts. In online tutoring, regulators have sought to curb excessive marketing, and competition is fierce against a slew of big-wallet startups, such as the Alibaba-backed Zuoyebang. In April, Zhang’s firm was one of 34 companies ordered by the antitrust watchdog to internally to investigate and correct excesses. And while the payment service has only just gotten off the ground, ByteDance and his colleagues were faced with extensive restrictions on their high-growth financial operations after a meeting with regulators, including the central bank, last month. The TikTok owner is penetrating e-commerce in China, the largest online marketplace in the world. Alibaba has rivals JD.com and Pinduoduo Inc. Reportedly held back over the past decade by practices such as forcing traders into exclusive deals. Regulators have since imposed a record $ 2.8 billion fine on Jack Ma’s flagship company and made banning “ pick one of two ” one of the main goals of their antitrust campaign, creating space for newcomers like ByteDance. The most direct impetus to ByteDance’s expansion into e-commerce is in ad revenue, which still makes up the bulk of its revenue. As the number of sellers on Douyin increases, so does their marketing spend within the platform. The company expects ecommerce to be able to surpass gaming to make the largest contribution to ad sales. At rival Kuaishou, traders contributed about 20%, the company said in March. “It’s more about getting a higher share of ad spend from brands that would otherwise spend money on platforms like Alibaba,” said Michael Norris, a senior analyst at Shanghai-based market research firm AgencyChina. “This is where the threat to Alibaba comes from. (Adds details on the possible placement of the listing in the fifth paragraph.) Visit us for more articles like this at bloomberg.com Subscribe now to get notified. remain the most trusted business news source. © 2021 Bloomberg LP

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