Table of Contents
Introduction
Temu, a new online shopping platform that offers a wide range of products at incredibly low prices, has become the most downloaded app in the US, surpassing e-commerce giants like Amazon and Walmart. But how did Temu achieve this feat in such a short time? What is its business model and how is it different from its competitors? What are the challenges and opportunities that Temu faces in the US market? This article will explore these questions and more.
The Beginning of Temu
Temu is a subsidiary of Pinduoduo, one of China’s most popular e-commerce platforms with approximately 900 million users. Pinduoduo, which means “together, more savings, more fun” in Chinese, made its name with a group-buying business model, allowing people to save money by enlisting friends to buy the same item in bulk. Pinduoduo also leverages consumer insights to assist suppliers and manufacturers in optimizing product design, production, sales and marketing, and logistics. This enables Pinduoduo to offer a vast array of affordable quality products that precisely meet customer needs.
Temu, which means “special” in Chinese, was launched in September 2022 as Pinduoduo’s global expansion strategy. Temu is headquartered in Boston, Massachusetts, and operates as an online marketplace similar to AliExpress, Walmart, and Wish, focusing on offering affordable goods. The company acts as an intermediary between sellers (primarily from China) and buyers without maintaining its own inventory. Temu also promotes social commerce, encouraging potential buyers to find more buyers to avail discounts.
The Rise of Temu in the US
Temu entered the US market with a bang, launching a massive advertising campaign across social media platforms like Facebook, Instagram, TikTok, and YouTube. Temu also offered incentives for users to invite their friends and family to join the app, such as free products, credits, and coupons. Temu’s ads featured a catchy slogan: “Shop like a billionaire”, implying that anyone can afford to buy anything they want on Temu.
Temu’s strategy worked. Within weeks of its launch, Temu became the most downloaded shopping app on the iOS App Store. By November 2022, it climbed to the top of the overall App Store charts, above apps like TikTok, Google, and Instagram. According to Apptopia, by March 2023, within six months since its launch, over 50 million consumers had installed the Temu app. Over 40% of Temu downloads have come from the US, making it the app’s largest market.
Temu’s popularity can be attributed to several factors. First, Temu offers a wide range of products in over 200 different categories, from fashion and beauty to pet and office supplies. Thousands of items are added each day, giving users endless choices and variety. Second, Temu offers extremely low prices on its products, thanks to its direct connection with Chinese factories and warehouses. Users can find items up to 90% off retail prices on Temu. For example, a pair of wireless earphones costs $8.50 on Temu, while a similar product costs $159 on Apple’s website. Third, Temu provides a fun and engaging shopping experience for users. Users can play games like Fishland and Farmland to earn credits and rewards. Users can also browse personalized recommendations based on their preferences and behavior. Users can also share their purchases and reviews with other users on the app.
The Current Situation of Temu in the US
Temu’s meteoric growth has not gone unnoticed by its competitors and regulators. Temu has been involved in a legal battle with rival Shein, another Chinese fast fashion upstart that also offers a wide selection of inexpensive clothing and home goods. The two companies have sued each other in US courts over alleged anti-trust activity. Shein accused Temu of misleading consumers to think they were the same brand, then Temu accused Shein of using “exclusionary practices” such as making its suppliers sign exclusivity contracts which Temu said hindered its commercial growth. The two companies have denied the allegations against them.
Temu has also faced scrutiny from US lawmakers and agencies over its compliance with US laws and regulations. The U.S.-China Economic and Security Review Commission has accused Temu of posing possible data risks for consumers due to its reliance on user data to curate and deliver products. The commission also raised concerns about product quality and intellectual property rights violations on Temu’s platform. Furthermore, the commission warned of an “extremely high risk” that products sold on Temu have been made with forced labor from China’s Xinjiang region, where Uyghurs and other ethnic minorities have been subjected to human rights abuses. The commission urged US consumers to exercise caution when using Temu.
Temu has also received criticism from some consumers and media outlets over its customer service and delivery issues. Temu has been subject to more than 235 complaints in the last year with the Better Business Bureau, earning a 2.1 out of 5 stars customer rating. The bulk of these complaints regard the poor quality of the item received, the long shipping times and related problems, and misleading product ads. Some consumers have also reported unauthorized charges and difficulty in getting refunds from Temu. Temu has responded to some of these complaints by apologizing and offering compensation or solutions.
The Future Prospects of Temu in the US
Despite the challenges and controversies, Temu shows no signs of slowing down its growth in the US market. Temu has continued to invest in marketing and advertising to acquire more users and increase its brand awareness. Temu has also expanded its product categories and features to cater to different customer segments and needs. For example, Temu has launched a pet supplies category, a live streaming feature, and a loyalty program.
Temu’s future prospects in the US market depend on several factors. First, Temu needs to maintain its competitive edge over its rivals by offering more value and variety to its customers. Temu needs to ensure that its products are of good quality and meet customer expectations. Temu also needs to improve its customer service and delivery systems to enhance customer satisfaction and retention. Second, Temu needs to comply with US laws and regulations and address the concerns of US authorities and consumers. Temu needs to demonstrate that it respects human rights, intellectual property rights, data privacy, and consumer protection. Temu also needs to cooperate with US regulators and agencies to resolve any disputes or investigations. Third, Temu needs to adapt to the changing market conditions and consumer preferences in the US. Temu needs to monitor the trends and demands of US consumers and offer products and services that meet their needs and wants. Temu also needs to be aware of the potential risks and opportunities that may arise from external factors such as inflation, supply chain disruptions, trade tensions, or social movements.
Temu has proven itself to be a formidable player in the US e-commerce market, surpassing Amazon and Walmart as the most downloaded app in the US. Temu has achieved this feat by offering a wide range of products at incredibly low prices, coupled with a fun and engaging shopping experience for users. However, Temu also faces significant challenges and uncertainties in the US market, such as legal battles, regulatory scrutiny, customer complaints, and market competition. Temu’s success or failure in the US market will depend on how well it can overcome these challenges and seize the opportunities that lie ahead.
