Temu, a Chinese e-commerce platform offering small items at incredibly low prices, has been on the top downloads list in the App Store for about five months. Seven years ago, Temu's sister company launched in China, and in less than six years, it became the largest e-commerce platform in China (by user base). Now, they're looking to replicate that success in other countries. They're doing it with the same strategy that has already proven to work in China: promoting through social networks, offering free items, and money rewards to attract users.
A16Z's observations suggest that this marketing strategy represents the different business logics that have formed over the long-term development of consumer brands in China and the US. Compared to American retailers, Chinese new retail platforms are more flexible in their marketing strategies. American retailers are less active in social media marketing, mainly because the local consumer market is not as dynamic as China's.
Most importantly, Temu sells items at low prices. Adobe Analytics reports that, due to sustained high inflation and various uncertainties over the past two years, more and more American consumers have started to reduce unnecessary spending and tend to choose relatively cheap substitutes when shopping. As a result, the market share of low-priced goods in the US is much higher than that of high-priced goods, which creates room for Temu's growth.
people who want to save money on their shopping will love the big price difference that Temu offers compared to Amazon.
But why are the prices so low on Temu? Why Amazon can't do that?
cross-border e-commerce starts with the supply chain and proceeds with logistics.
On the supply chain side, what makes Temu different from Amazon is that almost all of their operations, including warehouse and labor costs for packaging, are based in China. Most of their suppliers are the same as their sister companies in China, and many of them source directly from manufacturers. The only costs incurred outside of China are for marketing and sales, which can save a lot of money due to China's relatively low labor costs and manufacturing capabilities.
Amazon, on the other hand, places a high emphasis on product quality and customer satisfaction.
On the logistics side, Temu mainly sells small items, but they are shipped in large quantities, similar to the way products are shipped for export. Sellers first send their goods to Guangzhou warehouse, and then the platform delivers them uniformly, similar to SHEIN.
Furthermore, most of Temu's suppliers are from China, and the items sold on Temu can also be purchased from platforms in China. I compared the prices, and some items sold on Temu are only 20% more expensive than in China, making them quite cheap in higher-income countries like America and Canada. This means that you can buy Chinese-made products at a similar price, which can save you money.
In addition, unlike other platforms, Temu's early promotion method is to give promotion costs directly to users rather than advertising. For example, "1 Cent Items With Free Shipping" and "30% off for new users". Users can get free items by inviting friends or getting subsid ies for using Temu, which helps Temu grow rapidly. Even in the early stages, you can earn some income by inviting new users to use Temu. Temu is still in a high-growth phase, with a large number of potential users.
However, many Chinese warehouses have suspended receiving goods due to their rapid business growth and surge in order volume. This move has caused many complaints from sellers and consumers, indicating that Temu's logistics development has not kept up with its expansion speed.
It's important to note that many of the products they offer aren't well-known brands, and the quality control and production processes may not be as strict or refined as other more expensive brands. This means that some of the products you buy on Temu might not be the best quality. So, it's not recommended to buy certain items from Temu, like electronic products. They might be prone to damage or have unstable connections. That being said, it's still possible to find good quality products on Temu if you're careful and do your research.
However, for products where quality is less of a concern, these items that are not easily damaged, you can buy phone cases, hangers, small decorations, and even toilet paper on Temu, which can be more cost-effective. Temu is a great platform to save money on shopping.
Have you had any experiences shopping on Temu? Let me know in the comments below! Thank you for watching!
Aichadgrh
commented
5 months ago
Temu, a Chinese e-commerce platform offering small items at incredibly low prices, has been on the top downloads list in the App Store for about five months. Seven years ago, Temu's sister company launched in China, and in less than six years, it became the largest e-commerce platform in China (by user base). Now, they're looking to replicate that success in other countries. They're doing it with the same strategy that has already proven to work in China: promoting through social networks, offering free items, and money rewards to attract users.
A16Z's observations suggest that this marketing strategy represents the different business logics that have formed over the long-term development of consumer brands in China and the US. Compared to American retailers, Chinese new retail platforms are more flexible in their marketing strategies. American retailers are less active in social media marketing, mainly because the local consumer market is not as dynamic as China's.
Most importantly, Temu sells items at low prices. Adobe Analytics reports that, due to sustained high inflation and various uncertainties over the past two years, more and more American consumers have started to reduce unnecessary spending and tend to choose relatively cheap substitutes when shopping. As a result, the market share of low-priced goods in the US is much higher than that of high-priced goods, which creates room for Temu's growth.
people who want to save money on their shopping will love the big price difference that Temu offers compared to Amazon.
But why are the prices so low on Temu? Why Amazon can't do that?
cross-border e-commerce starts with the supply chain and proceeds with logistics.
On the supply chain side, what makes Temu different from Amazon is that almost all of their operations, including warehouse and labor costs for packaging, are based in China. Most of their suppliers are the same as their sister companies in China, and many of them source directly from manufacturers. The only costs incurred outside of China are for marketing and sales, which can save a lot of money due to China's relatively low labor costs and manufacturing capabilities.
Amazon, on the other hand, places a high emphasis on product quality and customer satisfaction.
On the logistics side, Temu mainly sells small items, but they are shipped in large quantities, similar to the way products are shipped for export. Sellers first send their goods to Guangzhou warehouse, and then the platform delivers them uniformly, similar to SHEIN.
Furthermore, most of Temu's suppliers are from China, and the items sold on Temu can also be purchased from platforms in China. I compared the prices, and some items sold on Temu are only 20% more expensive than in China, making them quite cheap in higher-income countries like America and Canada. This means that you can buy Chinese-made products at a similar price, which can save you money.
In addition, unlike other platforms, Temu's early promotion method is to give promotion costs directly to users rather than advertising. For example, "1 Cent Items With Free Shipping" and "30% off for new users". Users can get free items by inviting friends or getting subsid ies for using Temu, which helps Temu grow rapidly. Even in the early stages, you can earn some income by inviting new users to use Temu. Temu is still in a high-growth phase, with a large number of potential users.
However, many Chinese warehouses have suspended receiving goods due to their rapid business growth and surge in order volume. This move has caused many complaints from sellers and consumers, indicating that Temu's logistics development has not kept up with its expansion speed.
It's important to note that many of the products they offer aren't well-known brands, and the quality control and production processes may not be as strict or refined as other more expensive brands. This means that some of the products you buy on Temu might not be the best quality. So, it's not recommended to buy certain items from Temu, like electronic products. They might be prone to damage or have unstable connections. That being said, it's still possible to find good quality products on Temu if you're careful and do your research.
However, for products where quality is less of a concern, these items that are not easily damaged, you can buy phone cases, hangers, small decorations, and even toilet paper on Temu, which can be more cost-effective. Temu is a great platform to save money on shopping.
Have you had any experiences shopping on Temu? Let me know in the comments below! Thank you for watching!