BEIJING • Mr Zhang Yiming built ByteDance into the world's most valuable private company via a string of blockbuster apps like TikTok that challenged Facebook and other incumbents on their own turf.

His latest target: Alibaba.

The 38-year-old artificial intelligence (AI) coding genius, searching for ByteDance's next big act, has set his sights on China's US$1.7 trillion (S$2.3 trillion) e-commerce arena.

The co-founder has hired thousands of staff and roped in big-name sponsors like Xiaomi impresario Lei Jun to spearhead what he calls his next "major breakthrough" into global business - selling stuff to consumers via its addictive short videos and live streams.

That endeavour will test not just Mr Zhang's magic touch with app creation and ByteDance's AI wizardry, but also investor reception ahead of one of the tech world's most hotly anticipated initial public offerings.

His start-up is already starting to make waves in an industry long controlled by Mr Jack Ma's Alibaba Group Holding and JD.com. It sold about US$26 billion worth of cosmetics, clothing and other merchandise last year, achieving in its maiden year what Alibaba's Taobao took six years to do.

It is shooting for more than US$185 billion by next year. Douyin, TikTok's Chinese twin, is expected to contribute more than half the firm's US$40 billion domestic advertising sales this year, driven in part by e-commerce.

"Short video platforms have so much traffic that they can basically do any business," said Mr Shawn Yang, managing director of Blue Lotus Capital Advisers.

"Douyin is not only in ads, but also live streaming, e-commerce, local life services and search. This has a lot of room for imagination."

A burgeoning e-commerce business could help the firm surpass its US$250 billion valuation when it goes public, countering concerns around Beijing's crackdown on the country's Internet giants.

Preparations are said to be under way for a listing that would be one of the world's most anticipated.

While ByteDance will not handle sales or merchandise itself, it hopes to generate more advertisements, boost traffic and take a cut of the transactions.

The Internet behemoth is a late entrant to China's social commerce scene, where influencers tout products to fans like a Gen Z version of the Home Shopping Network. The format, pioneered by Alibaba as a marketing tool in 2016, developed a life of its own last year when Covid-19 spurred demand for at-home entertainment.

Last year, Alibaba's Taobao Live generated more than 400 billion yuan (S$82 billion) of gross merchandise value, while Kuaishou Technology's social platforms hosted 381 billion yuan of deals, more than double Douyin's.

ByteDance is counting on its AI-driven, interest-based recommendations to help its e-commerce foray catch up. In a splashy coming-out party for the one-year-old business last month, executives explained that the company intends to replicate its success with using AI algorithms to feed users content linked to online shopping.

By scrolling an endless stream of social content, now connected with physical goods more than ever, Douyin users will not be able to resist the impulse to buy, they said.

It is "sort of similar to shopping on the street", Mr Bob Kang, Douyin's 35-year-old e-commerce chief, told an audience of hundreds at the Guangzhou event.

"As people get richer, they don't go to shopping malls or boutique stores with specific things in mind, they just buy if they see something they like."

Mr Kang, a former engineer from Internet company Baidu who was poached by ByteDance in 2017, is one of a slew of fast-rising young lieutenants tasked by Mr Zhang to break new ground for the company.

Since Mr Kang took over as e-commerce head, Douyin has banned live streamers from selling items listed on third-party sites and invited them to open their own in-app stores, preventing rivals like Alibaba and JD.com from profiting off its traffic.

ByteDance also has an online matchmaking system that helps connect merchants with influencers and their agencies, and it has set up physical bases to house live streamers and merchandise, similar to what Alibaba does.

The initiative gained traction from celebrity endorsers like Mr Lei, the Xiaomi founder who has hosted live streams promoting his Mi TVs and smartphones.

Smaller merchants are following their lead, like Ms Zhou Huang, who set up a Douyin store for her jewellery business in October.

"It's challenging for brand new merchants like me to attract customers on Taobao," said Ms Huang, whose Douyin store broke even after three months. "Sometimes, people come to our store not for shopping, but for entertainment. But once we have enough visitors, we can make a sale."

For now, the biggest and most immediate boost from ByteDance's expansion into e-commerce is in advertising revenue, which still accounts for the bulk of its earnings.

"It's more about getting greater share of advertising spending from brands that would otherwise be spending money on platforms like Alibaba," said Mr Michael Norris, a senior analyst with Shanghai-based market research firm AgencyChina. "This is where the threat to Alibaba comes from."

BLOOMBERG