Online shopping platform Temu, a subsidiary of PDD Holdings, offers deep discounts on a wide range of goods.Chen Yihan/Four China Daily
Temu offers great deals on bulk consumer goods
During the recently ended holiday shopping season, Temu, an online shopping platform launched about five months ago, was the most downloaded shopping app in the US, not Amazon, eBay or Etsy.
According to App Intelligence, Temu has been installed more than 16 million times in the US since its September release, and has been the most downloaded app across all categories in the US for most of the time since November.
When you open Temu, the price seems too high. Examples include men’s quartz watches for $3.59, magnetic wireless chargers for $5.49, and eyeliner for just 71 cents.
By mid-November, Temu had an average daily gross merchandise value of $90 million, according to news website 36Kr. Temu plans to reach his $30 billion in total sales in five years. This is a feat that has taken Shein, a Chinese company that has created a successful business model by selling fast-fashion clothing at ultra-low prices, a decade to achieve.
Based in Boston, Temu is a subsidiary of PDD Holdings, the parent company of Chinese e-commerce giant Pinduoduo. As Pinduoduo’s first US store, Temu offers great discounts on a wide variety of products, most of which ship directly from our factories or warehouses in China.
PDD Holdings has been successful in selling heavily discounted products in China over the past few years, with a market cap of $122.65 billion in mid-January. He has gained more than 32% in three months following the success of Temu listing as his PDD on the Nasdaq exchange.
Temu is able to offer unbeatable low prices because it is “lucky to have the support of its parent company, PDD Holdings, and a global network of suppliers and logistics partners to provide high-quality products to U.S. consumers.” It helps us offer our products at the most competitive prices,” a Temu spokesperson told China Daily.
Temu is able to grow fast because it uses the same playbook that Pinduoduo is doing in China, selling these best-selling very low-cost items to attract attention They also do a lot of paid advertising and I think they have better quality control,” Rui Ma, a technology analyst and founder of Tech Buzz China, told China Daily. rice field.
Temu pays top dollar for marketing. According to Tech-Node, his advertising budget for September was 1 billion yuan ($147.6 million), and he reportedly allocated more than 7 billion yuan to promote the Temu brand this year.
Temu’s strategy has been particularly profitable during the recent holiday shopping season, when US customers faced unprecedented levels of inflation.
In the United States, inflation will peak at 9.1% in 2022, the highest level in 40 years. High prices are putting pressure on household budgets, impacting consumer confidence and pushing up the cost of living. A recent report by Morning Consult showed that 56% of US consumers are willing to shop less overall.
Data from Citigroup, Mastercard and Bank of America released in October showed that US consumers were cutting back on luxury and accessory purchases ahead of the holiday shopping season.
In a recent consumer community survey conducted by research firm Gartner, more than 30% of US consumers say they use digital price comparison and coupon tracking tools.
“Everyday Black Friday”
Temu’s “everyday is Black Friday” approach and strategy of offering free stuff and coupons to users who promote the app on social media seem to resonate with US consumers. This low for the first time in a while.
One of Temu’s best-selling products, a pair of Lenovo Wireless Bluetooth Earbuds is $7.59 with no shipping. Delivery within 10 days and free returns within 90 days. Nearly 300,000 pairs have been sold on Temu.
On Amazon, the same Lenovo Bluetooth Earbuds sell for $14.49, almost double the price of the Temu.
Sherri White paid less than $4 for the pod.
In a recent product review, White said, “I love it! The sound is clear and crisp. Exactly as shown on the website.” “I’ve bought a few similar to this make and model in the store, but they cost me $10 to $20. Even after Christmas, I’m thinking of buying a few more as gifts for family and friends.” increase.”
36Kr said Temu’s price was 10% to 20% of Amazon’s price during the Black Friday promotion that just passed. In addition to unbeatable prices, Tem also offers its customers free shipping and full refunds if they are not satisfied.
According to research firm YipitData, sales on the shopping platform were nearly four times higher in November than in October, peaking during Black Friday shopping and reaching $7 million in daily sales over the seven days. The Wall Street Journal reports.
Some customers believe Temu’s business model could pose new challenges for third-party marketplaces at US e-commerce leader Amazon and other Western online stores.
Bene Neumann purchased toys, shoes and bathroom rugs from Temu during the holiday shopping season. “I don’t think Amazon has so many good toys. I searched Amazon for toys like this,” he told China Daily.
By 2021, Chinese sellers will represent a significant percentage of all vendors on Amazon. China-based sellers will make up 75% of his new Amazon listings in January 2021, according to e-commerce research firm Marketplace Pulse.
Temu offers Chinese suppliers an alternative to Amazon as a route to US consumers. Temu’s business model is to cut out the middleman and instead of building a network of US warehouses, allow Chinese suppliers to sell directly to US consumers and ship directly from China.
The shopping platform has approximately 30,000 sellers selling between 300,000 and 400,000 items in 24 top categories as of October.
“Amazon has basically spent the last five to seven years educating the American public about products made in China, so I think Tem is coming to America at a very good time,” Ma said. “People are used to a certain quality and design, and it’s okay to buy lesser-known brands.”
“If you think about it, 10 years ago in America, it was kind of weird to buy online for a brand you couldn’t even pronounce. By bringing retailers online and educating the American public because people trusted Amazon to make their purchases, we realized our products were better.”
