Douyin to charge commission fees for life service merchants and expand its travel business

Douyin will start charging merchants commission fees on June 1, according to a recent announcement. The rate of commission fees will depend on the category of merchants, with wedding-related services being the highest(8%), and tourism being the lowest(2%).

For recently joined merchants, the platform offers a 60-day protection period, during which only transaction fees would be charged. In order to encourage merchants to carry out marketing activities, the platform will give 100% monthly rebate for small and micro-merchants who are in compliance for the first two months; for other merchants in compliance, a 50% monthly rebate will be given. For merchants in cities that have taken “static control measures” due to the epidemic for more than 10 days in a month, the platform will actively give a 100% rebate in the next month.

Since 2020, Douyin has accelerated its foray into local life services, launching functions such as dining and group buying, in an attempt to become a “super app” — offering a slew of services to meet users’ growing needs.

Previously, in order to attract massive amounts of merchants who might already be collaborating with other platforms such as Meituan, Douyin’s life service-related business has been adopting a “zero commission” policy, charging merchants only 0.6% for transactions fee, and 0% for the platform service fee.

Despite the recent announcement of Douyin adjusting the service fee rate signaling the end of Douyin’s zero commission era, Douyin still remains one of the favorable platforms for life services merchants. The platform offers traffic and subsidy support to merchants, for example, a restaurant coupon can go for 150 yuan on Douyin, while on other venues the same coupon would cost 160 yuan, according to Tech Planet.

Currently, the local life services market penetration rate is only 12.7%, per iiMedia Research, concentrated in the food and beverage sector. The market still has ample room for growth in terms of cultural activities and traveling, such as art exhibitions, shows, tour booking, etc. Douyin is planning to launch related businesses in tourism hotspots such as Kunming, according to Tech Planet.