7 Things to Know About Temu, the Popular Shopping App
Are you one of the millions of people that have downloaded the eCommerce shopping app Temu (pronounced tee-moo and short for “Team Up, Price Down”)? The app launched in September of last year and since then it has been on a tear. With a range of products reminiscent of what you can find on Amazon but at lower prices consumers love the value for money the app offers. If you are curious about Temu and want to learn more then consider these seven facts about the popular shopping app.
1. Temu has been the most downloaded shopping app in the United States over the last few months since it launched in September. Temu sells a wide range of products from home goods to apparel to electronics and is owned by Chinese eCommerce giant Pinduoduo. While Temu might seem like an overnight success, Pinduoduo brought in $18.9 billion last year and has deep expertise in eCommerce and customer acquisition.
2. Temu pairs consumers directly with Chinese manufacturers and then sells merchandise at deeply discounted prices. Some items cost less than $1.00 like a pair of sunglasses for 89 cents or 50 hairbands for 78 cents. A core part of Temu’s value proposition is instead of buying a branded item let’s say an electric toothbrush from Phillips you can get an electric toothbrush directly from the manufacturer that produces Phillip’s toothbrushes but at a fraction of the cost.
"Temu might be exposing a white space in the market wherein brands have been producing at extreme low cost, and along the value chain there's been so much bloated cost passed on for margin," said Michael Felice, an associate partner at management consulting firm Kearney. "That said, American consumers might not even be ready to accept some of these price points ... There's always the question, 'is it too cheap to be good,'" said Felice. Temu also offers free shipping on most orders.
“It seems like they’re being subsidized to be a loss leader in order to gain market share, which is not unlike what Amazon did for a long time,” says Douglas Schmidt, a professor of computer science at Vanderbilt University.
3. Temu has already been downloaded 50 million times since it launched and it has had the top spot in the App Store in the United States several times. The State of Mobile report ranked Temu as the breakout shopping app of 2022.
4. Some of Temu’s competitors include Amazon, Etsy, eBay, Wish, Ali Express and in fashion, Shein. “Given the current challenging macroeconomic environment and the backing of parent PDD Holdings [Pinduoduo], Temu is well-positioned to continue its aggressive growth strategy among US consumers,” said Abe Yousef, senior analyst at app-tracker Sensor Tower. For suppliers, selling their goods on Temu is cheaper than selling on Amazon providing an incentive to build a business on the platform. “Shopping is shopping—everything comes from China,” says Humphrey Ho, a partner at Hylink Digital, an advertising agency. “This is just sourcing it directly from China.”
Source: Bloomberg
“This is an interesting example of the manufacturing base in China getting sufficiently sophisticated that it no longer feels like it needs to go through distributors. They’re selling directly to consumers. And there are a lot of people who are hurting economically and looking for a bargain,” says Schmidt. “This is obviously going to put pressure on producers of goods to further slash their cost basis and profit structure—which could have the consequence of further eroding domestic manufacturing in the U.S.”
5. Shipping is free for most products bought on Temu and goods take around seven to 15 days to be delivered to the United States since they are sent directly from warehouses in China. But often shipments arrive sooner than that.
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6. Temu’s successful marketing tactics include giving customers free products, discounts and cash rewards if they recommend the app to friends and flash deals with up to 90% off. Pinduoduo has put aside $1 billion to market Temu in 2023. "Temu aims to continue to experiment in marketing and offerings, which is possible thanks to its resource-rich parent company," said Deborah Weinswig, CEO of Coresight Research. Temu’s launch "comes at an opportune moment, as consumers search for value amid still-elevated inflation and a degree of economic uncertainty," said Weinswig.
7. Reports say that Temu is targeting $3 billion in GMV this year and $30 billion in GMV annually by 2027. That might sound like a stretch but Pinduoduo achieved $30 billion in GMV in two years.