The prices seem almost too good to be true: Lenovo wireless earbuds for $3.70, an eyebrow pencil for 59 cents, two solar-powered outdoor lights for $6.39 – all delivered for free. Welcome to Temu, which brings the rock bottom prices and frenetic energy of Chinese e-commerce to American shoppers.
Temu’s website and mobile app launched on September 1, the first US store of Chinese e-commerce giant Pinduoduo. Amazon, eBay and other western online stores offer numerous goods from Chinese suppliers. Temu’s spot prices are an experiment to cut out the middleman, by allowing Chinese sellers to sell their products directly to US consumers and ship directly from China instead of building a network of US warehouses.
Temu seems to be marrying Amazon’s “everything store” selection with the low prices and social elements that have made fast-fashion juggernaut Shein so successful. Temu, like Shein, has extensive reviews and user photos on its product pages and promotes collaborations with influencers. So far the strategy seems to be working. On October 24, less than eight weeks after launch, Temu was ranked 39th on the list of most downloaded free iPhone apps in the US, and fifth among free shopping apps, behind only Amazon, Shein, Walmart and Nike.
Thanks to Temu
Temu looked bleak when it first launched, but it now adds thousands of new products every day, the company claims. Rui Ma, an investor and analyst who founded Tech Buzz China, a podcast and investor community, says the store evolved on “Chinese speed:– the kind of rapid iteration and growth that Chinese companies are known for, and that American companies struggle to keep up with. “I think it provides a pretty good customer experience,” she says. “I’ve ordered there three times already.” Her loot includes household items and those eye-wateringly cheap Lenovo headphones, which are among the best-selling Temu.
Temu can now be artificially seductive. It offers free shipping with no minimum purchase and widespread discounts of 30 percent, but Pinduoduo could subsidize early customers in an effort to gain word of mouth. “The question for investors would be, how profitable is this?” says mom.
Pinduoduo, one of the largest online shopping sites in China, can afford to invest in a swing set for US customers. The company, which did not respond to interview requests, listed on the Nasdaq stock exchange in 2018 and reported nearly $15 billion in revenue in 2021. In China, Pinduoduo allows businesses, including farmers, to sell directly to consumers through a popular mobile app that is very different from those offered by US retailers. It includes gaming and social components such as live stream shopping. A popular group buy feature allows friends to team up to get a product at an ultra-low price. But the company’s success in China is based on a logistics network of warehouses and delivery partners.
Winning the loyalty of American shoppers who have many other, more well-known options will be one of Temu’s biggest challenges, says retail marketing consultant Cathy Hotka. The low prices seem to win converts, but they also carry the risk of poor quality and inaccurate sizing, she says.
