Temu became one of the youngest brands to air a TV commercial during the annual broadcast of the National Football League’s championship game on February 12, when its 30-second “Shop Like a Billionaire” ad aired twice during Super Bowl Sunday. It features a young female shopper adding an US$8.99 dress to her online cart, while a background voice says: “I feel so rich! Oh, yeah, I feel like a billionaire!”
In contrast with “Shein’s strategy to chase bleeding-edge fashion armed with user behavioural data and obsessive supplier management, Temu’s offering is closer to a digital discount retailer of white-label goods”, said a January 18 report by investment research firm Sanford C Bernstein.
“Top sellers on Temu are generally priced lower than on rival platforms,” the Bernstein report said. “For merchants this means lower gross margins, but Temu is responsible for logistics, marketing and operations in the US – meaning merchant overhead costs are low and operating margins are competitive.”
Next-generation Chinese e-commerce apps, led by Temu, Shein and ByteDance-owned TikTok Shop, emerged last year as an online retail force in the US and other large consumer markets around the world on the back of their highly competitive pricing strategy, which has challenged more established global shopping platforms such as Amazon.
Since its launch last year, Temu has become one of the most downloaded apps in the market. It was ranked first in the free iPhone app category on Apple’s US App Store in the past 30 days, according to research firm Sensor Tower.
Parent PDD’s focus on market expansion in North America also reflects its confidence in Temu’s subsidies-heavy business model.
PDD’s “international business is currently in a very early stage”, said Liu Jun, the company’s vice-president of finance, during a conference call with analysts last November after reporting the firm’s third-quarter financial results. The “current impact on our financial numbers is small”, Liu said.
