In less than eight weeks from launch in the US, Chinese eCommerce app TEMU tops the charts. Who’s behind it? What’s the opportunity or threat for US brands? And how can it sustain these dirt-cheap prices?
Owned by tech giant, Pinduoduo, TEMU is the latest Chinese pure-player to make a play for a share of the US market - and it’s cooking up a storm. Hot on the heels of apparel specialist Shein and Alibaba’s AliExpress, TEMU’s strategy is built on cheap prices, and we mean really cheap: a quick scroll through the Best Sellers found a selection of home-ware, kitchenware, apparel essentials and beauty products for less than a dollar. There are more expensive products too including the usual suspects in the appliances category - air fryers and vacuums - however…
there is a distinct lack of global brands.
Supported by Pinduoduo’s enormous success in China (it boasts more than 730 million shoppers a month - almost double the population of North America), TEMU can afford to take a punt on entering the US market, however, reputation is something TEMU will have to build when it comes to bringing US or global brands on board: AliExpress was exposed for selling fake goods and Shein, although more successful, is constantly under fire from the environmentally-conscious who reject the concept of cheap and disposable clothes.
So what’s all the fuss about?
TEMU gives Chinese brands an affordable and viable means to access the massive US market, avoiding the expense, complexities and controls of the likes of Amazon or Walmart. While there appears to be neither threat nor opportunity to US CPG brands, TEMU is making an aggressive play to steal share from Amazon: a 70% Black Friday pre-event sale, free shipping, free returns and 30% off promotions (how does that even apply to a washcloth priced at a dime?) are quite a draw!
And what’s the catch?
TEMU has so far sustained its ridiculously cheap prices because goods are stored in Pinduoduo’s warehouses in China. The estimated delivery time for US shoppers is between 7-15 days. (“Wait, so that’s still in time for Christmas!”, the bargain hunters cry.)
How will this unfold?
What additional tactics will TEMU use to lure shoppers into purchasing more expensive goods? Could it introduce Pinduoduo’s ground-breaking concept of group purchasing, allowing groups of friends to club together on social channels to buy more expensive stuff? Will it introduce live-streaming?
What threat if any will it pose to Amazon, Walmart and others come Black Friday 2022 when shoppers might be tempted to go economy class on both price and delivery!
Only time will tell.