By 2025, China’s e-commerce market will exceed 4 trillion dollars. The figure has even been included in its five-year development plan.
Chinese marketplaces are divided into domestic and cross-border. China’s cross-border e-commerce is valued at 60 billion USD and is one of the largest in the world. Cross-border e-commerce is the online trading of goods between businesses, consumers, and suppliers residing in different countries. This means that a person can buy a product from a seller who is located outside the borders of their country and uses a different currency. Many large marketplaces have an informal specialization and a specific target audience.
There are many Chinese marketplaces that offer a unique user experience and cater to specific demographics. However, there are a few e-commerce platforms that dominate the market in China. And today, one such platform is Temu.
What is Temu?
China’s youngest and fastest-growing e-commerce titan Pinduoduo made a bold foray into the U.S. retail market by launching the Temu online store. Within days, Temu’s app became the top downloaded app in the U.S., and deep discounts and a wide range of products attracted millions of consumers to the retailer. Nine months after its launch, Temu came close to the success of another Chinese marketplace, Shein, which quickly took over U.S. retail in 2020-2021, and began to harass local giant Amazon.
Temu is a Boston-based online store that was launched in 2022, a US-registered company formerly known as Pinduoduo headquartered in Shanghai. The company recently moved its headquarters to Dublin.
Temu has become the most popular app in the US and is now already live in Europe as well. Everything from home goods to clothing and electronics is available on Temu’s marketplace. According to research firm Sensor Tower, Temu has quickly become the most downloaded app in America since launching in September 2022 and continues to dominate app stores.
Launched not that long ago, the Temu shopping app offers users a personalized feed of recommended products and relatively inexpensive items, in addition to a searchable catalog. Users can also earn points and get better deals if they play certain games on the app or recommend the app to their friends on social media.
Despite Pinduoduo being an extremely popular Chinese e-commerce giant, the Temu app is not available in China. In recent months, as the company has gained popularity, it has also faced questions on several fronts, including how it can sell goods at such astonishingly low prices, how transparent it is to the public, and how much environmental waste its business creates.
Why is Temu so Popular?
Fans of the app say Temu is gaining momentum because it offers a wide range of products, including those from well-known brands, at very low prices; for example, Lenovo wireless headphones can be purchased for as little as 8.98 USD. Critics dismiss Temu’s current status as a result of the fact that Pingduoduo, Temu’s Chinese parent company, is willing to spend a lot of money on paid marketing to attract customers. But these cursory observations about pricing and marketing costs, while true, obscure two key insights about Temu’s U.S. launch.
First, Temu’s marketing strategy reflects a fundamental gap between how Chinese and U.S. consumer companies do business. While many consumer startups and venture capitalists in the U.S. don’t like to rely on spending to grow, in China, consumer companies – especially those focused on AI-driven recommendations and discovery – recognize that deploying a high marketing budget at launch is often the price they must pay to move forward. Such companies can’t wait to continually grow their user base because their algorithm recommendations won’t work on small sets of users.
Temu is currently actively pursuing a strategy to launch TikTok in the US. Like TikTok, it has a Chinese parent company with deep pockets willing to invest huge sums in its launch so that it can continue to grow outside of the Chinese market. And like TikTok (as well as the Chinese shopping app SHEIN), it also needs a large number of users for its recommendation algorithm to work and intelligently decide what to show you next.
Second, and more importantly, recommendation-based shopping – Temu’s core offering – is a new and fresh idea that hasn’t been explored much in the U.S. outside of e-commerce giant SHEIN. Just as TikTok provides an endless selection of videos to entertain you, Temu offers you an endless selection of things you might want to buy. To be able to make recommendations based on your browsing or past purchases, search-based shopping apps need to know which products are related and which people are likely to buy those products – information that only rings true if you have enough new purchase data, from enough customers and enough new products for the algorithm to work. If you only have, say, 1,000 or even 10,000 products in your store, that’s not enough to personalize the shopping experience (SHEIN, for example, adds about 6,000 new products every day).
With a tactful launch before the holidays, significant spending to promote the app and its low-cost products, and utilizing a discovery model, it’s no wonder Temu remains the most downloaded mobile app in the US. There is confidence that customer retention continues beyond the holidays – not just because the prices are good, but because its core differentiator – in-app product discovery – is new, powerful, and truly different from what is currently on the market.
What does Temu Sell?
On September 1, 2022, Pinduoduo’s Temu universal marketplace website and app launched in the United States. Temu’s assortment is represented by clothing and footwear, home and garden products, electronics, and household appliances. All products are shipped from China, mostly directly from the manufacturing facilities in the same way as Pinduoduo, but Temu does not have a group buying feature. Similar to Chinese fashion marketplace Shein, Temu relies on low prices (10 pairs of socks for $1.87, sneakers for $1.85, a fryer for $2.99), big discounts of 20% on all products since launch, and fast delivery from 1 to 3 weeks.
Literally, the Temu catalog of goods has everything you might want to buy online. All the possible categories offer thousands of offers so that any customer would have a wide choice and could find the perfect deal for them.
Why are prices on Temu so low?
Temu’s main economic model is not much different from other Chinese marketplaces. The most popular shopping platforms bypass traditional product distribution channels and work directly with Chinese manufacturers. It is because of this that Temu manages to offer its customers the lowest and most competitive prices.
For years now, e-commerce has continued to disrupt the traditional retail model by offering customized goods at the lowest prices using a new-generation manufacturing system.
But in terms of pricing, Temu is already unsung to beat most of its competitors. The fact is that they win due to their innovative approach to production, which optimizes the entire product cycle from the manufacturer to the customer. Due to this Temu managed to reduce the cost of production and delivery of goods to the end consumer by almost half. In short, Temu’s unique business model makes favorable pricing to the customer possible. Temu completely eliminates all intermediaries and markups that occur at every level of distribution, connecting buyers and sellers directly.
Who owns Temu?
Remy is a project of the famous in China company Pinduoduo. The main feature of Pinduoduo, which distinguishes it from other Chinese online retailers like Alibaba and JD, is its group shopping feature, which allows several users to pool their budgets to purchase several products at lower (wholesale) prices.
Pinduoduo’s target audience was and still is Chinese peasants, who are no strangers to “hoarding” and are happy to use it already online. According to the results of 2020, Pinduoduo – one of the youngest retail giants in China (founded in 2015) – for the first time overtook the permanent leader Alibaba in terms of the number of active users (788 vs. 779 million users) and took a confident position in the national market as the main social commerce platform.
After the removal of lockdowns and coronavirus restrictions at the end of 2022, Pinduoduo was one of the few Chinese e-commerce players to show notable growth. For instance, Pinduoduo’s revenue jumped 58.2% to 37.64 billion yuan in the first quarter of 2023. The retailer’s shares rose by 18.9%, and its market value rose to $94.8 billion. At the same time, Alibaba’s revenue from its core e-commerce business declined 3% in the same period, while JD’s revenue fell 4.3%.
One of the reasons for this growth of Pinduoduo was a more active promotional policy through which the platform stimulates consumption. However, a more important success factor was the business diversification achieved through the recent launch of a standalone online store in the US.
Is Temu Legit?
Temu is a fairly young player in the online merchant market. And, as we know, emerging markets are often viewed with suspicion, so it is not surprising that users are somewhat wary of new platforms.
However, in the case of Temu, users’ fears can easily be dispelled by the number of downloads. After all, after only spending a few weeks on the market, the Temu app has already received more downloads than other giants such as Amazon and Walmart.
Moreover, it should be remembered that the parent company behind the new app is PDD Holdings Inc., which has been present on the Chinese market for quite some time and has managed to earn a good reputation. It is this corporation that owns the Chinese online supermarket and retail site Pinduoduo.
In addition, Temu supports a variety of common payment methods. Google Pay, Apple Pay, PayPal, and most major credit cards, which only speak in favor of the platform. Thus, after comparing it to many other major online stores, Temu appears to be just as reliable and legitimate, if not more so. Plus you can always double-check it by reading thousands of positive Temu App Reviews on the internet.
Temu Reviews
Reviews and ratings have incredible powers of persuasion. When consumers choose a product, reviews are the first thing they look at after price. Approximately 9 out of 10 people listen to comments as a personal recommendation, and 7 out of 10 consumers form their attitude towards a brand based on other people’s opinions.
But here’s the problem: people are much more willing to share negative experiences than positive ones. This problem seems to be solved with the help of customized feedback and ratings. However, the consumer has already learned to distinguish what is for hire. And it is not enough for him just reviews and ratings. They must meet certain criteria.
The fact that the presence of reviews has a positive effect on conversion is a fact. It is a form of social approval of a product. If it has reviews, it is 3 times more likely to be purchased. And 73% of customers are not ready to buy anything at all until they read someone else’s opinion about a product.
But that’s only half the truth. It turns out that the influence of reviews on consumer opinion strongly depends on the price category of the product. Cost is not the only indicator that determines the level of risk. There are other aspects that make customers more careful in selecting items for purchase. For example, safety, health effects, consequences of use, duration of the product’s presence on the market, etc.
So what about the review of Temu customers on their experience?
As we have already noted several times before, Temu is still a newcomer to the online trading market, and accordingly, many processes on the platform are still in the stage of development and elaboration. So the opinions of buyers about the Temu service are, of course, divided. After all, even the most well-known players in this market can have failures with delivery or product quality.
Moreover, Temu became popular very quickly and in the first months of its existence was literally overloaded with orders, which could not help but affect the delivery time for some customers. Nevertheless, there are many more positive reviews of the platform, with thousands of users giving the new marketplace a five-star rating. Plus, it’s impossible not to be reminded that with Temu, you’re gaining significantly in price, which partially covers small possible delays in shipping.
Moreover, the Temu app has also received a 5-star rating from the BBB, a non-profit organization dedicated to consumer protection. And this is already a more reliable source of information and adequacy of evaluation.
Product Quality at Temu
A few years ago the phrase “Made in China” was perceived by buyers rather skeptically. But recently Chinese marketplaces have literally taken over the world, and the quality of products offered on them raises fewer and fewer questions, especially after reading the numerous reviews of satisfied customers.
Temu will not disappoint here, because the platform gets all its products from the PDD global distribution network, which includes some of the world’s best manufacturers with high-tech production technologies.
The product suppliers at Temu offer high-quality and durable goods made from safe components. Temu also consistently checks the quality of goods received from suppliers to ensure its customers have the most enjoyable experience possible. Temu is sensitive to ensuring that all agents and suppliers adhere to the same principles.
Temu: Pros and Cons
Let’s summarize the main pros and cons of ordering goods on the Temu platform so that you can make your own choice for or against this young, but already making-noise online trading application. So, let’s start with the pros.
- Assortment. On the Temu platform, you will be able to find a product that perfectly fits your budget and needs, because the company cooperates with tens of thousands of manufacturers and suppliers.
- Temu pays great attention to the needs of customers, offering a unique personalized approach. Thanks to personalized listings, the process of searching for goods in the app has become much easier.
- Availability of a large stock of goods on the platform, thanks to excellent demand forecasting. Which only reflects positively on the delivery time.
- Free standard shipping and free express shipping on orders exceeding 99 USD. In addition, Temu offers a compensation of 5 USD for every overdue order.
- Loyal return policy. Temu refunds orders to its customers within three months of purchase. The return policy includes free shipping.
- Constant discounts, promotions, and special offers. Thanks to the established system of delivery of goods directly from the supplier to the customer, Temu has made it possible to sell at the lowest prices. In addition, the app has a separate section Discounts, where you can choose the goods at the most favorable offers regardless of the ongoing promotions on the platform at the moment.
- Interface usability. The Temu app is very well thought out and designed, which is reflected in its ease of use for the buyer. The interface is as simple as possible and the process of searching and ordering goods is easy to understand.
As for the minuses, we have identified them solely based on Temu App Reviews of users found on the vastness of the Internet. So, the most frequent complaints about the new marketplace include such claims as:
- Long response time of Temu’s support team.
- Some users have experienced overdue orders. While the standard delivery time listed on the site is one to two weeks, there have been instances where customers have been waiting for their order even for a month.
- There were also negative reviews on the quality of the packaging of orders. But, it is worth noting that this is a problem faced by most online marketplaces.
So, based on all of the above, we can quite safely tell you that shopping on the Temu platform is as safe and secure as possible. Especially considering the purchase protection program provided by the platform, as well as a loyal system of returns and compensation for delayed delivery.
Conclusion
The westernization of Temu is not limited to the US in its entry into overseas markets. Since September, Temu has launched in Canada, Australia, New Zealand, the UK, Germany, the Netherlands, Italy, France, Spain, Austria and Mexico. Temu currently has 50 million registered users and 20 million active shoppers worldwide (the main percentage in the US). It is known that in European markets Temu is trying to cooperate with local manufacturers by offering them free and fast access to the marketplace. Another important step in Temu’s westernization was the unexpected move of Pinduoduo’s headquarters from China to Dublin, Ireland. According to experts, this indicates Pinduoduo’s new priorities and refocus on the Western market, although the company continues to strengthen its position in China. At the same time, Temu’s main office remains in Boston, USA, as North America still brings the main sales to the marketplace.
Temu is responsible for all business operations, marketing, warehousing, and after-sales service – the seller is only required to deliver the goods to the marketplace’s domestic warehouse in the People’s Republic of China. Temu’s low prices coincide perfectly with Americans’ more frugal behavior after the pandemic, reflected in increased discounter traffic (we wrote about this in a recent article).
An aggressive advertising campaign is another key to Temu’s popularity. In addition to social media advertising, Temu was able to make its way to the U.S.’s premier Super Bowl ad celebration in 2023 and garner more than 377 million views on YouTube. Last September alone, in its first month of operation, Temu’s advertising budget totaled $147.6 million, with more than $1 billion set aside for 2023.
Apparently, Amazon has begun to take seriously the expansion of Chinese retailers in the US market. For example, in the spring of 2023, Amazon began turning to the atypical practice of offering a 20% discount on a wide range of products. Many sellers hosted on Amazon believe that in this way the company is responding to the Temu glut. And all of this is happening against the backdrop of slowing online sales of major national players.
