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Written by: EW | Zhang Mu (Beijing)
Reviewed by: EW | Yue Hong (Shanghai)
Supported by: East-West Consumer Group
New consumer brands are developing rapidly, but the industry competition is also fierce.
On one hand, many leading brands have emerged in the new consumer sector in recent years. Yuanqi Forest achieved over 10 billion in sales within four years, while Perfect Diary reached a valuation of over 10 billion in the same time frame. The cosmetics brand Huaxizi successfully expanded overseas in four years, becoming a leader in domestic makeup.
On the other hand, media outlets like The Economist report that 90% of manufacturers launched new products in the past year, with an average of one new product being created every three minutes, yet the failure rate for consumer startups is as high as 74%.
“Moving from 0 to 1 is just the beginning; the real challenge is from 1 to N, where new products evolve into new brands. This requires an upgraded growth model.” This was a common pain point discussed by ten representative new brand founders at the GDMS Global Digital Marketing Summit held in Shanghai on June 29 this year.
Recently, Douyin Engine released an integrated growth model for new brands—the “STEP Growth” model along with a corresponding playbook, providing targeted growth solutions for popular new consumer sectors such as food and beverage, domestic cosmetics, 3C small appliances, daily chemicals, and apparel.
The model aims to shift the traffic mindset to a content mindset, transforming short-term bursts into sustainable long-term development. By utilizing tool-based products, it creates an ecological empowerment environment for new brands and helps them achieve integrated growth through tiered goals.
Pain Points for New Brand Growth
“In the new consumer industry, there are both product issues and growth issues.” This is a viewpoint shared by a founder of a new consumer product.
This year, East-West Culture and East-West Consumer have interviewed many new consumer brands, including “Daily Box” in the plant-based milk sector, “Pet Happiness” in the pet food sector, “Shark Fit” in the health food sector, and “White Little T” in the apparel sector. Although these new brands are in different tracks, they share the following commonalities in their early rapid development:
1. Founders have strong product positioning abilities, either filling product gaps in the track or upgrading the product supply in the track;
2. Teams have strong supply chain integration capabilities;
3. They excel in marketing through platforms like Douyin, enabling new products to quickly gain traction;
However, in the intense market competition, new brands also face numerous challenges in achieving “long-termism”:
1. Traffic costs are rising, with significant losses incurred as users switch between multiple platforms, leading to low return on investment;
2. Communication between new brands and consumers tends to become channelized, resulting in fragmented consumers that cannot be scaled or segmented;
3. Some companies excel at traffic marketing to gain volume but struggle with content marketing for long-term development;
4. Having products without a brand, lacking category extension and innovation.
A venture capitalist in the new consumer sector mentioned to East-West Culture and East-West Consumer: “Achieving over 10 million GMV for new brands is not difficult; the challenge lies in surpassing 20 million or 30 million. This is a critical threshold; if you can’t cross it, it’s hard for the brand to survive. At the same time, investors also focus on gross margins, which generally do not exceed 50%, and repurchase rates below 25% will lead to sustained development issues for new brands.”
In the face of these challenges, the industry is also exploring solutions. It is widely believed that the “1.0 era relied on traffic to drive user growth, while the 2.0 era needs to shift to using content to drive tiered brand growth.” This requires new consumer brands to timely convert their growth engines and build marketing capabilities and systems in the content marketing era to achieve stable and sustainable growth.
Engine Logic Behind The STEP Growth Model
STEP is an acronym derived from the first letters of Surge (innovation), Touch (deepening mindset), Expand (breaking boundaries), and Persist (long-term management), representing the four stages of new brand development, each containing strategies and goals for that stage.
Understanding the STEP growth model can be approached from its goals, underlying logic, and internal ecological structure.
The goal of the STEP growth model was succinctly summarized by Chen Duye, Vice President of Marketing at Douyin Engine: “To help brands find strategies and paths that meet their development needs, improve operations, and achieve the vision of growth through steps.”
Secondly, the underlying logic of STEP primarily relies on the Douyin ecosystem, with its four stages of growth goals aligning with the typical growth path of new consumer brands—efficiently converting traffic into transactions, achieving results; accumulating content assets through influencer matrixing and influencer advertising; using content + IP marketing to rapidly break into new demographics and establish the brand; and utilizing advertising + content matrix to achieve synergistic growth.
Overall, the STEP model has the following characteristics:
1. In terms of content, it emphasizes content marketing, believing that the essence of good advertising is good content, and values the accumulation and reuse of brand content assets;
2. In terms of channels, it emphasizes building private traffic (territory) for enterprises, while also leveraging influencers to break into new audiences and actively participate in key marketing activities at the platform IP level, upgrading brand marketing capabilities at critical moments;
3. In terms of model growth, it emphasizes brand IP, valuing sales scale growth while also focusing on repurchase rates, solidifying the foundation for long-term development.
To achieve these goals, Douyin Engine also provides a wealth of marketing tools to specifically address the needs of enterprises using the STEP growth model. These include:
1. Douyin Qianchuan (Integrated Intelligent Marketing Platform) — New brands can transform content into advertising through Douyin Qianchuan and convert paid traffic.
2. Douyin Star Map (Marketing Platform Based on Influencer Ecosystem) — Used to match the needs between influencers and enterprises. Currently, over 870,000 advertisers are on Douyin Star Map, creating commercial opportunities that are aggregated.
3. Douyin Cloud Map (Asset Operation Platform Based on O-5A Population) — Monitors advertising effectiveness and adjusts strategies accordingly.
4. Douyin — An integrated content marketing platform that stimulates users’ latent demands through content, allowing them to access quality products.
In this way, the ecological structure of the STEP growth model gradually becomes clear. It consists of three organic parts: “stage goals—strategy implementation—empowerment tools.” It creates an ecological empowerment environment through tool-based products and achieves integrated brand growth through tiered development across four stages.
The following long images illustrate each step of the STEP growth model.
Douyin Engine as the Incubator for “Dou Brand”
Currently, the food and beverage, beauty, 3C small appliances, daily chemicals, and apparel sectors are the five industries where new consumer brands are most frequently born and actively financed. Each industry faces different challenges, and the focus of new consumer brands using the STEP growth model also varies. In this regard, Douyin Engine has launched STEP and its playbook to provide targeted recommendations for each industry.
1. The food and beverage industry can effectively utilize short videos/live streaming
Public data shows that the food and beverage sector accounts for the highest proportion of new consumer market brands, reaching 21%.
In marketing, the food and beverage industry’s product characteristics of being “tasty, visually appealing, and drinkable” align well with the visual advantages of short videos and live streaming. Douyin Engine recommends that brands in this area focus on marketing through short videos and live streaming.
According to reports, in the second half of 2020, the view counts for food and beverage-related content saw a nearly threefold increase. In 2020, the marketing budget for food and beverage brands allocated 9% to short video/live streaming, a 36.4% increase compared to 2019, with short video/live streaming marketing expenses accounting for nearly 30% of overall online marketing expenses.
Case Study: Founded in 2014, Lian Coffee established itself on Douyin to create a long-term operational base, launching three matrix brand accounts—”Lian Coffee,” “Lian Coffee CoffeeBox,” and “Lian Coffee Flagship Store”—utilizing attractive dual hosts for daily broadcasts and celebrity endorsements to continuously reach and expand target users.
Monitoring shows that user engagement with the company’s matrix increased by 100%, order conversion rates rose by 30%, and both GMV and ROI improved. During this year’s 618 shopping festival, the number of viewers exceeded 100,000+, achieving a single-session GMV target of 1.1 million. It has become the top GMV brand in the Douyin coffee category and the first in the Douyin coffee industry to achieve a million sales in a single live session.
2. The beauty industry must find the “right people”
Public data indicates that the beauty industry is the second-largest sector for new consumer brands, accounting for 19% of all new consumer brands in 2020.
Douyin Engine believes that the rise of this sector is largely driven by the 18-25 age group, which is the key consumer demographic. In marketing, it is crucial for products to find the “right people,” thus Douyin Cloud Map’s data capabilities are highly recommended to help enterprises identify influencers across various fields and connect with target audiences.
Case Study: The emerging domestic skincare brand PMPM leverages Douyin as its traffic base, integrating brand self-broadcasting through its account while also focusing on selecting suitable influencers through Douyin Star Map to spark interest across different consumer segments. From January to May this year, PMPM achieved a stair-step leap in monthly sales from zero to the million level, and in May, it entered the top 30 brands on Douyin.
3. 3C small appliances can effectively utilize key marketing nodes
Public data shows that China’s small appliance market has exceeded 400 billion. In 2020, the volume of videos related to 3C appliances on Douyin saw over 100% growth in both publication and view counts.
“Affordable and practical” is a common label for many new brands in this field. However, consumers still pay attention to various promotional activities during major marketing nodes. Douyin Engine recommends that brands in this sector focus on deepening consumer engagement and breaking into new demographics during major promotional events.
Case Study: iQOO, a new sub-brand of vivo, capitalized on the “stay-at-home economy” trend by combining “live streaming launch events + celebrity and influencer interactions” to create an integrated marketing event that featured cloud live streaming, hardcore cloud experiences for new products, and cloud interactions with celebrities and influencers.
During major marketing events, iQOO garnered over 1.73 million total views, generating an astonishing 6.1 million reservations and causing its official Douyin account to gain 70,000 followers in just five hours, with over 100 million reads within 24 hours. Through three live sessions featuring celebrities and influencers, they attracted 1.16 million viewers, creating significant influence and reach.
4. Daily chemicals should seize category and concept opportunities
Daily chemical products are commonly used items. Public data shows that in 2020, the daily chemical user base was enormous, with interest users exceeding 150 million, indicating substantial potential for future expansion. On Douyin, daily chemical-related content achieved over 800 million daily views and over 15 million daily interactions in 2020.
Douyin Engine believes that this sector has always emphasized product strength. For new brands, it is essential to focus on the first stage of business volume growth by comprehensively introducing product efficacy through long-term live broadcasts, enhancing functional awareness of products, and driving continuous store conversion. Additionally, utilizing influencer live streaming and brand advertising during key marketing events can significantly boost sales and expand brand influence.
Case Study: Canban, founded in 2018, has led the trend of oral care in China by selling over 10 million bottles of its probiotic mouthwash online. It emphasizes combining unique product strength with multi-tier influencer marketing. Celebrity endorsements have driven brand exposure to 100 million, and during IP events, mouthwash sales reached 76,000 bottles, a 141.5% increase compared to the previous week.
5. Apparel brands should leverage live streaming and maintain stable conversion rates
In the first half of 2020, Douyin found that the number of live-streamed apparel products and the frequency of live streams ranked first. The apparel live-streaming industry has formed a relatively complete industrial chain, with increasingly close relationships among supply, channel, operation, and demand sides, driving continuous growth in the apparel sector.
Douyin Engine believes that live streaming is the most effective means to quickly attract attention and interaction in this sector. By creating multi-layered content, it can easily foster a sharing atmosphere around fashion, thus brands should focus on building integrated accounts for sustainable development.
Case Study: The new consumer brand HCGN Hu Cheng Gu Niang belongs to the category of national style apparel. It enhances product features through a live-streaming atmosphere based on folk music. Daily GMV grew from over 100,000 in August 2020 to over 1 million in January 2021, with total annual GMV from live streaming increasing more than fivefold compared to 2019. By June 2021, the brand’s followers had grown from 90,000 to over 1.5 million, with GMV contribution rates consistently above 95%.
Currently, over 2,000 new consumer brands have partnered with Douyin Engine. The latter’s goal is to “help 100 emerging brands achieve sales exceeding 100 million.” Douyin Engine is expected to play a greater role as an incubator in this process.
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