Temu is a Chinese online shopping platform currently owned by the e-commerce giant Pinduoduo. The group buying platform sells a wide range of different products at bargain prices. The app was first launched in the US in September 2022, but became available in some European countries, such as the UK, Italy, and Germany, during 2023. Since its creation, Temu has quickly become a worldwide known platform, gaining so much popularity that, as of July 2023, it boasted more than 30 million downloads.
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Low-priced products contributed to the exponential growth of Temu
Since September 2022, Temu’s worldwide popularity escalated quickly: in just 8 months, in April 2023, the company reached more than USD 400 million in monthly Gross Merchandise Volume (GMV).
One of the main reasons for such a rapid success lies in its extremely low-priced products. The platform’s encourages netizens to make impulsive purchases of products on sale, not because they need them, but because they are cheap. To maintain low-priced items, the app received substantial initial marketing support from its parent company, Pinduoduo, currently absorbing the losses to facilitate its growth.
The increasing popularity of Temu does not worry e-commerce giants like Amazon… yet
In 2023, Chinese e-commerce platforms such as Temu and Shein are challenging an American giant like Amazon on its own soil: the US market. In April of the same year, the number of Amazon’s daily active users lowered from 54 million to 46 million. However, these losses are still too little to worry the Seattle-based company, which still has more than twice the users of the Chinese app. There are many noticeable differences among the three e-commerce platforms, especially concerning shopping experience, pricing, and shipping. As an example, Amazon excels in fast shipments and customer service and the consumers can choose among a wider variety of products, which normally have a better quality compared to competitors. However, having only Chinese suppliers, Temu’s products are remarkably cheaper.
Temu’s biggest competitors is another Chinese platform: AliExpress
As the e-commerce giant Temu continues its rapid global expansion, it poses a growing threat to a formidable competitor: Aliexpress. Founded by Alibaba in 2010 as a B2B platform, Aliexpress has evolved to facilitate not only business-to-business but also consumer-to-consumer transactions.
While both platforms are known for competitive pricing, Aliexpress charges a commission ranging from 5%-8% on each sale. In contrast, Temu operates commission-free, allowing businesses and merchants to offer products at even more competitive prices than their counterparts.
Moreover, Temu often provides free delivery options and boasts faster shipping on average, further enhancing its appeal to customers seeking cost-effective and efficient shopping experiences.
However, it’s important to note that Temu, being a relatively newer app, doesn’t match yet Aliexpress in terms of user volume. For instance, in August 2023, the Pinduoduo-owned app registered 267 million visits on their website, whereas Alibaba’s e-commerce platform had almost 800 million in the same period.
Aggressive advertising and “all-inclusive” marketing strategy are keys to Temu’s success
One of the key factors that contributed to Temu’s rapid increase in popularity is its effective marketing strategy. The platform’s approach involved running an extensive advertising campaign on platforms such as Facebook and Instagram. By February 2023, following its launch, there had been over 13,000 ads displayed on these platforms since September. To engage more people to buy products, the platform also promotes limited-time offers everyday which are set to disappear shortly after their launch; the goal is to encourage customers to catch them while they are still available. In the North American market, the company is expected to spend roughly USD 1.4 billion in social advertising throughout 2023, and plans on spending more than USD 4 billion USD in the upcoming year. So, it is not a surprise that netizens and consumers have noticed a rapid increase of the platform’s promotions everywhere on the internet.
Beyond its social media advertising, other tactics are being used by the Pinduoduo-owned company, such as the main tagline “shop like a billionaire”, which implies having such cheap products that the consumer would feel like a rich person by purchasing them at such low prices. Furthermore, some Chinese social media platforms such as TikTok are starting to emulate Temu’s tactics. Since May 2023, the app is attempting to enter the Middle East and the South-east Asian markets.
Temu’s consumer pool knows no boundaries: from retail to wholesale
Young people, especially millennials and Gen Z are the biggest shoppers on Temu. As an example, as of the last census in 2020, the US had more than 45 million Gen Zers and, according to a survey published by the marketing analysis platform Jungle Scout on a thousand interviewed, 96% has shopped online at least once a month in Q1 2023. The high percentage of internet and online shopping penetration combined with the extremely low-priced products resulted in a tempting opportunity for the company to engage more with the North American market. As of July 2023, the average time spent on Temu’s app is roughly 20 minutes per day. Both individual consumers and businesses can shop on the app because it has successfully built a robust B2B supply chain network, making it easier to sell products and manage their shipments.
Temu’s worldwide collaborations: from the Superbowl spot to the “influencer program”
In February 2023, Temu achieved widespread recognition among U.S. consumers, largely thanks to its pivotal collaboration with the NFL. This game-changing partnership featured a high-impact 30-second video titled ‘Shop Like a Billionaire,’ which aired during both the first and third quarters of the Super Bowl finale This was an extremely bold move for such a “young platform”, especially because a Superbowl ad can cost millions of USD. However, the tactic was completely worth the risk: in the next few days, the platform registered a +43% in downloads and a +23% of daily active users in the same evening of the Superbowl match.
Since August 2023, the Chinese e-commerce platform has launched an “influencer program” to encourage people to promote its products. The app rewards all the influencers who decide to actively support Temu by making unboxing of shipped items or by simply endorsing it. These prizes often consist in shipments of up to USD-300-worth free products, coupons meant to be redeemed by their followers and bonuses for particularly high-quality videos. As of September 2023, more than 10 thousand influencers have already signed this collaboration, the only requirement asked is to have more than 300 followers. The effects of this initiative are particularly visible on TikTok, where the hashtag #TEMU has more than 4.6 billion views as of September 2023.
Not all that glitters is gold: customers’ negative feedback
Though Temu offers a valid alternative to Amazon and Shein, it does have its share of imperfections. Some consumers have raised concerns and expressed their complaints about various aspects of the platform, including issues related to shipments. In particular, users in the UK have been complaining about the extremely long waiting time to get items delivered, which can last up to 20 days, whilst competitors like Amazon can send the order 3 or 4 days later with the standard free delivery. Other complaints concern products themselves: consumers have often pointed out that the quality of the items sold is extremely low and the products have a poor manufacture. The third and last complain about it regards its aggressive advertising strategy. Many social media users have voiced negative sentiments regarding Temu’s promotions, as they tend to inundate various online platforms. Additionally, instances have been reported where the advertised product doesn’t align with the actual item, turning this advertising approach into a double-edged sword.
Despite its short life, Temu can become a serious competitor for e-commerce platforms
- Temu’s low prices are tempting more and more consumer to join the “shopping like a billionaire” movement.
- There are some noticeable differences between e-commerce giants like Amazon and Temu concerning customer service, shopping experience, and cheaper prices.
- Despite Temu’s popularity increased in so little amount of time, it’s numbers are still not enough to worry other Chinese e-commerce giants like AliExpress.
- Industries and people from Gen Z represent the biggest consumer pools of the app.
- Social media advertising is a powerful feature of Temu. In 2023, the platform is expected to invest more than 1.4 billion USD in social media ads, while in 2024 this number will be almost tripled.
- In February 2023, Temu aired a promotional video during the Superbowl final, which granted the app a rise of 45% in downloads. The company has also launched a program for the influencers who want to support it, which includes the winning of many prizes.
- Customers have noticed some problems related to the platform, from the poor quality of the products to the extremely slow customer service. Aggressive advertising has also become an issue which most consumers are complaining about.
