Douyin, China’s fastest-growing social media app, presents something of a conundrum for global beauty brands.

The app is TikTok’s precursor; launched in 2016 in China, its parent company, ByteDance rolled out TikTok to the rest of the world a year later, and as such, its interface is broadly similar to TikTok. It has an algorithmically-determined “For You” page, shoppable live streams and no shortage of viral stars. In 2024, it had 750 million users who spend around 72 minutes on the app per session — a 140 percent increase from the previous year. Beauty has become its breakout category; Goldman Sachs estimates that this year, over a third of Chinese e-commerce beauty transactions will take place on Douyin or its rival, Kuaishou.

The success of Douyin has caught the eye of beauty companies looking to bolster their China presence. Proctor & Gamble, which generates around 7 percent of its global sales in the country, told investors at an event last summer that it was doubling down on Douyin, building brand “houses” on the app, widening its net of influencers and hosting live streams featuring mass labels like skincare line Olay and hair care brand Pantene. Estée Lauder Companies’ new chief executive Stéphane de La Faverie also called Douyin out as a conduit for growth in its second-quarter earnings, saying the company did not move fast enough with the app in previous years. (Since 2022, ELC’s ailing Chinese business has been the primary engine for its sales and stock price slide.)

But despite its rapid growth and the opportunity for even more rapid-fire sales, many beauty brands are losing money on Douyin.

“The economic equation that Douyin offers is not favourable,” said Jacques Roizen, Shanghai-based managing director of consulting firm Digital Luxury Group, citing a high cost of traffic on the app. Local brands, which are quicker to respond to trends and create market-appropriate content with fewer resources, are also leaving their international counterparts in the dust.

“Some [international] brands got to a certain scale in China just by being there first, by spending the most money and… being able to muscle out the competition,” said Adam Knight, co-founder of social commerce platform Yaso, which specialises in Douyin. “But these businesses are huge machines. They’re not quick to react.”

Roizen estimates that performance marketing and customer acquisition cost twice as much on Douyin compared to established legacy platforms like Tmall and JD.com.

With so many engaged, beauty-interested users, Douyin is a tempting El Dorado for any beauty company. But its focus on speed, local nuance and agility is emblematic of the shift the Chinese market is undergoing, as consumers increasingly seek out value for money, home-grown products and formulas they see as made specifically for their needs, rather than imported to fill a white space.

Succeeding in this environment will mean a mindset shift — and a change in expectations, as opting out is not an option: “You cannot have a China retail strategy without Douyin,” said Knight.

Tmall’s Loss is Douyin’s Gain

Leading into the 2020s, China was an unparalleled engine of growth for many international brands. It was the “land of big numbers” as Knight put it, with a seemingly ever-growing middle and upper class, and prestige names in beauty and fashion were able to keep growing sales even if they lost overall market share to new competitors arriving in the market.

The recent economic slowdown has highlighted the fragility of this strategy, as avenues such as travel retail or overseas spending have been curtailed by post-pandemic changes in habit or discretionary shopping. Underpinning this, said Knight, is also the emergence of social media and social commerce platforms like Douyin and the likes of Xiaohongshu (known as Redbook in English) and Pinduoduo, which are more akin to Meta’s Instagram. Since the Chinese government began regulating Alibaba and Taobao, the respective parent companies of Tmall and JD.com, in 2022, new challenger apps have sprung up to establish themselves — and cater to an increasingly engaged Gen-Z consumer.

As Douyin and its competitors have grown, they’ve further underscored the losses that many global brands are feeling: Not only were big international players losing market share, they were unable to quickly adapt to and understand the nuances of new platforms like Douyin, which require deft knowledge of the market and quick strategic thinking.

But brands must resist the temptation to latch onto Douyin and chase sales at any cost, warned Roizen, who said doing so is a losing game.

“The brands that are killing it are the ones earning traffic, the Chinese brands,” he said. Brands can either earn eyeballs or buy them, and both options are costly. Roizen said dozens of videos are needed each week to garner attention, and homegrown brands often beat international entrants at the volume of their marketing. “You have to do all this in the hopes of being viral so that you can get enough to gain an audience when you do a live stream,” he said.

“It’s not a financial equation issue,” he added. “It’s a consistency, brand standards and internal control issue.”

How to Win on Douyin

Scrolling through live shopping streams on Douyin is a riot of colour, sound and energy. Viewers send off comments in a chat box, banners and vouchers for special offers appear in the blink of an eye and presenters maintain high-energy personas to capture user attention for as long as they can.

“It’s very much like…. ‘Here is the deal of your life,’” said Roizen of the shopping experience — more about impulse purchases with low value than prestige shopping. Gifts with purchase are also commonly on offer.

As such, not only is it hard to maintain margins, it’s also difficult to maintain a strong brand identity. In October 2023, a YSL Beauté campaign backfired when the L’Oréal-produced line partnered with a creator known as Traffic Yellow. Commentators called the crossover “vulgar” — Traffic Yellow’s signature motifs include funny facial expressions and disheveled hair, with local press reporting that comments included that the products looked like “cheap free shipping items.”

Yaso’s Knight maintains that it’s still possible to grow on Douyin, even for prestige international brands. “You can still get two or three times year-on-year growth with the right mindset and approach,” he said.

Instead of trying to compete with nimble, local and affordable brands for traffic, Knight advised focusing on Douyin’s roots as a content platform. “It’s a place for tutorials, brand education and user-generated content,” said Knight.

Brands are better off optimising for the unique customer journey — either by providing education about products or changing the content focus to offer more tutorials, for example — rather than pursuing aggressive sales growth on the app as the market cools somewhat.

“When the market is growing, it’s about speed. When that stops, it becomes about optimization,” said Roizen. Tmall is still a key opportunity for prestige beauty brands, he said, and one that many under-utilise.

“Target, retarget, retarget. Build up organic growth where possible, and ultimately create an engine that is greater than the sum of its parts,” said Knight.

Above all, strategies around Douyin (or indeed, any social commerce platforms) need to let brands stay in the driver’s seat, controlling which discounts or promotional activity they want to participate in and dialling up or down investments and resources as needed.

Changing focus from revenue to profitability might be painful in the short term — and may require investors to accept a rebasing of expectations around growth — but experts promise it will pay off in the long run.

“I dare say we’re in a market now where most brand executives will be prioritizing sales above almost anything else,” said Knight.

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