What Is Temu? All You Need to Know

Data.ai shows that since its launch, it has become the No.1 app on the US App download list so far.

According to Sensor Tower, the United States is currently Temu’s largest market, accounting for 97% of the app’s 5.2 million global installations since its launch in August 2022. In addition to the U.S., Temu has also recently expanded to Africa, where it has reportedly performed well. As of March 22, Temu is available in the US, Canada, Australia and New Zealand.

Additionally, on April 25th Temu started being available in the following European countries: France, Germany, Italy, The Netherlands, Spain, and the United Kingdom.

Pinduoduo, the sister company of Temu, has become a dominant force in the domestic e-commerce market in China, but it remains to be seen whether it can replicate this success abroad. Some believe that the concept of bringing Chinese supply chains to overseas markets could be successful, but there are also many skeptics who have doubts about the Temu platform, which is similar to other “low-cost” marketplaces such as Wish and AliExpress.

Which consumers does Temu attract? Here are initial findings: These are primarily price-savvy shoppers who are used to marketplaces (especially Amazon) and gamification (through TikTok use). They tend to be young people from Generation Z.

An initial 2023 U.S. study by Coresight Research on the relationship between U.S. consumers and Temu also found:

Image credit: Coresight Research.

• Temu has stricter controls on merchants. There are a couple of ways in which Temu appears to have an advantage over AliExpress and Wish. First, the products on Temu are required to match the product listing closely, so what you see in the pictures is what you get. Second, merchants are not allowed to add exorbitant shipping fees to cheap products, which can help prevent consumers from feeling deceived and frustrated with the app.

• More customer friendly. Temu is available for both iPhone and iPad, and the payment process is very convenient. If you’re using an iPhone, Apple Pay is automatically supported, making it easy to place orders quickly.

• Reasonable delivery time. The time from order to receipt of goods is much faster. Currently the average product is delivered in 5-7 days, compared to sometimes a month on AliExpress or Wish.

• Different business models between merchants and the marketplace. One aspect of Temu’s business model that sets it apart from some other marketplaces is that it does not allow dropshipping, which is the practice of merchants purchasing from suppliers only after a consumer has placed an order. This approach to fulfillment may help prevent the long delivery times that contributed to Wish’s closure in some countries, as delivery times are not reliant on the relationship between the marketplace and merchants.

PDD Holdings has said that Temu will not blindly replicate what worked for its sister platform Pinduoduo in China in the markets it operates in, but would rather start from the needs of the customers. One of the reasons for Shein’s success, a Chinese online fast fashion retailer, is that it is focused on women’s apparel and lifestyle, whereas Amazon is at a disadvantage. In contrast, categories on Temu are not very much different from Amazon, AliExpress, or Wish.

Below you can find some of Temu’s challenges:

• Consumer’s doubts about a foreign marketplace. Amazon is by far the most established platform in the United States. Consumers tend to go to Amazon or a local marketplace when they are looking for a specific product with a certain brand and model, or when they need to purchase a large piece of furniture. Since Amazon offers products ranging in price from a few dollars (!) to thousands of dollars, some consumers may not be convinced by the low prices on Temu. AliExpress has sponsored a lot of events in recent years, which has turned off some consumers who view the company as a retail brand and find frequent marketing to be intrusive. In China, people may be more accustomed to and accepting of frequent marketing activities, but this may not be the case in other countries where there needs to be an acceptance process.

• Compliance issues. The West has robust laws and regulations in place to protect originality and consumer rights, which may impact Temu’s business. Additionally, some consumers may have difficulty accepting the presence of white-label merchants on the platform.

• The logistics infrastructure is still at an early stage. In the Chinese cross-border e-commerce market, the cost of goods is small while the cost of logistics and warehousing matters more. Temu chooses J&T Express as the third-party logistics provider which is cheaper and has grown rapidly in the past few years. However, J&T Express is still very young in the US market. Fanno, incubated by TikTok (ByteDance), has previously suffered from a lack of logistics infrastructure which affected the margins of both sellers and the marketplace itself.

Reviewing the above positive and hesitant opinions on Temu, we have to admit that Temu is still at a very early stage in the global market. The success of low-cost players like AliExpress and Shein has made us aware of the global downgrading of consumption. Temu should continue to learn from the lessons of other similar marketplaces and improve its sustainability to avoid just becoming a flash in the European and US markets.