What Is Temu? All You Need to Know

As a cross-border e-commerce marketplace developed by Pinduoduo, a Chinese C2M shopping platform, Temu was launched in the U.S. in late August 2022 and quickly gained widespread attention within three months. Temu’s popularity can largely be attributed to advertising but also to its strategy of offering free items to users who promote the app on their social networks and get their friends and family to sign up.

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. It is rumored that the company plans to enter the Canadian and Spanish markets next.

Pinduoduo, the parent 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.

• 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 require merchants to purchase from suppliers until after a consumer has placed an order. This means that Temu needs to have local warehousing. 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.

Many believe that Temu is still managing its overseas business with a domestic Chinese mindset and will therefore have very limited growth overseas. 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. It’s worth noting that Pinduoduo, Temu’s parent company, previously attempted to launch overseas a few years ago, but ultimately closed its business due to concerns about counterfeit products.

• 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.