How Retail App Temu Lures US Consumers With Thoughts-Bending Costs

The costs appear virtually too good to be true: Lenovo wi-fi earbuds for $3.70, an eyebrow pencil for 59 cents, two out of doors photo voltaic lamps for $6.39—all delivered at no cost. Welcome to Temu, which brings the rock-bottom costs and frenetic vitality of Chinese language ecommerce to US consumers.

Temu’s web site and cell app launched on September 1, the primary US storefront from Chinese language ecommerce large Pinduoduo. Amazon, eBay, and different Western on-line shops function loads of items from Chinese language suppliers. Temu’s cut price costs are an experiment in reducing out the intermediary, by permitting Chinese language distributors to promote their merchandise on to US customers, and transport instantly from China relatively than constructing out a community of US warehouses.

Temu appears to marry the “all the things retailer” choice of Amazon with the low costs and social parts which have made fast-fashion juggernaut Shein so profitable. Temu, like Shein, options intensive critiques and consumer photographs on its product pages, and it promotes collaborations with influencers. Up to now, the technique appears to be working. On October 24, lower than eight weeks after it launched, Temu was ranked at 39 on the checklist of most downloaded free iPhone apps within the US, and fifth amongst free purchasing apps, behind solely Amazon, Shein, Walmart, and Nike.

Temu appeared desolate when it first launched, but it surely now provides 1000’s of recent merchandise every day, the corporate claims. Rui Ma, an investor and analyst who based Tech Buzz China, a podcast and investor neighborhood, says the shop has developed at “China speed”—the type of fast-iteration and progress Chinese language corporations are recognized for, and that US corporations can wrestle to maintain up with. “I believe it is providing a fairly good buyer expertise,” she says. “I’ve ordered from there thrice already.” Her haul consists of home goods, and people dazzlingly low-cost Lenovo headphones, that are amongst Temu’s prime sellers.

Temu could also be artificially tempting proper now. It provides free transport with no minimal buy and widespread 30 % reductions, however Pinduoduo could possibly be subsidizing early clients in a bid to achieve phrase of mouth. “The query for traders can be, how worthwhile is that this?” Ma says.

Pinduoduo, one of many largest on-line purchasing websites in China, can afford to put money into a swing for US clients. The corporate, which didn’t reply to interview requests, listed on the Nasdaq inventory change in 2018 and reported almost $15 billion in income in 2021. In China, Pinduoduo permits corporations—together with farmers—to promote on to customers via a well-liked cell app very totally different from these supplied by US retailers. It consists of gaming and social elements, reminiscent of purchasing by way of livestream. A well-liked group shopping for function lets associates band collectively to get a product for an ultra-low worth. However the firm’s success in China is constructed on a logistics community of warehouses and supply companions.

Profitable the loyalty of US consumers who’ve many different, extra acquainted choices can be one in every of Temu’s biggest challenges, says retail advertising and marketing guide Cathy Hotka. Its low costs seem like profitable converts, however in addition they include a threat of blowback over poor high quality and inaccurate sizing, she says.