Pinduoduo, a Chinese e-commerce company, released their app Temu in August 2022, and since then it has risen to the top of the App Store’s U.S. downloads chart. Its goal is to sell cheap items that can be shipped to customers in the West in a week or less, which is similar to what AliExpress and Wish do.
Ads have been a major factor in Temu’s meteoric rise to the top of the shopping app industry. How well the app does over the next several years is an open question. Pinduoduo, the firm based in China that developed Temu, handled $383 billion in gross product volume in 2021 and had 868 million active customers in China.
America’s Favorite Shopping App
Temu, a Chinese C2M shopping platform, debuted in the United States in late August 2022 and within three months had become a major player in the international e-commerce sector. The fact that Temu gives users rewards for telling their friends and family about the app and getting them to download and use it is a big part of the app’s success in the market.
Data.ai reports that it has quickly risen to the top of the US App Store’s download charts after its release.
Sensor Tower reports that the United States is presently Temu’s biggest market, making up 97% of the app’s worldwide installs (since its release in August 2022). Temu has lately moved outside of the United States and is allegedly doing well in Africa. The Canadian and Spanish markets have been mentioned as potential future expansion targets.
Pinduoduo, Temu’s parent business, has become a major player in the Chinese e-commerce sector, but it is unclear whether or not it will be able to achieve the same level of success in other countries. While there is optimism about expanding Chinese supply chains into international markets, many are skeptical of the Temu platform since it is so similar to other “low-cost” marketplaces like Wish and AliExpress.
Benefits of Temu
- A greater number of checks and balances. In comparison to AliExpress and Wish, Temu looks to excel in a handful of key areas. First, on Temu, you’ll get exactly what you see in the product photographs and descriptions. Second, in order to keep customers from feeling duped and disappointed by the app, sellers cannot charge outrageous shipping costs, especially on low-priced items.
- Customer Friendly. Temu supports Apple’s iOS devices (iPhone and iPad) and has a simple in-app purchase system. Apple Pay is immediately supported, making it simple and fast to make orders from an iPhone.
- Reasonable Delivery Period. It takes a lot less time to get your things after placing a purchase. The current average delivery time for a good is 5-7 days; however, on AliExpress or Wish, it could take up to a month.
- Various business models are available for merchants and marketplaces. Unlike other marketplaces, Temu’s strategy does not call for sellers to make purchases from manufacturers until after a customer has placed an order. In other words, Temu will need local storage facilities. Since the speed of fulfillment is not dependent on the quality of the connection between the marketplace and the retailers, it has the potential to avert the kind of lengthy shipping delays that ultimately led to Wish’s demise in several regions.
Hurdles for Temu
Many people think Temu’s worldwide expansion will be severely stunted since the company is still handling its operations with a purely local Chinese attitude. When compared to Amazon, the Chinese online fast fashion retailer Shein has an edge due to its exclusive focus on women’s clothes and lifestyle. Whereas Amazon, AliExpress, and Wish all have distinctive product categories, Temu’s are mostly interchangeable.
Some of Temu’s challenges include the following:
- Fears about consumers venturing into an unfamiliar overseas market. By a wide margin, Amazon’s U.S. platform is the oldest and most well-known. When seeking a certain brand and model of goods or a huge piece of furniture, consumers often turn to online retailers like Amazon or their local marketplaces. Some customers may be unconvinced by the cheap costs on Temu given that Amazon provides items varying in price from a few dollars (!) to hundreds of dollars. Some customers who see AliExpress as a retail brand and find regular marketing to be invasive have been put off by the company’s decision to sponsor a number of events in recent years. The Chinese public may be more acclimated to and tolerant of constant advertising than consumers in other nations, but some of those consumers may require time to warm up to the idea.
- Issues with compliance rules. There are strict rules and regulations in place to safeguard intellectual property and consumer rights in the West, which might have an effect on Temu’s operations. There’s also the fact that certain customers could have trouble getting used to the idea of white-label retailers being a part of the platform in the first place. It’s worth mentioning that Temu’s parent firm, Pinduoduo, tried to expand internationally a few years ago but had to pull the plug owing to an influx of counterfeit goods.
- The logistical network is in its infancy. In China’s international online retail business, the price of items is relatively unimportant compared to the price of shipping and storage. Temu has decided to work with J&T Express, a 3PL that is both cost-effective and has experienced fast expansion in recent years. On the other hand, J&T Express has just recently entered the US market. Fanno, which was developed by TikTok (ByteDance), has been plagued by a lack of logistical infrastructure, which has had a negative impact on seller profits and the marketplace’s overall viability.
Despite the mixed reviews we’ve seen thus far, it’s clear that Temu is still in its infancy on the international market. The rise of low-priced competitors like AliExpress and Shein has brought attention to the trend of reduced consumption throughout the world. Temu should continue to learn from other markets that are similar to the European and American ones so that it doesn’t become a flash in the pan. This will help Temu be around for a long time.