Sources:
Not sponsored by Temu by the way. Let’s get that out of the way first lol.
As of recently, especially across digital channels such as Youtube or Social media. Temu has been growing their online presence slowly since late Q3 2022. A quick google trends search for ‘temu’ displays:
Since its inception, Temu steadily climbed Google's search rankings and expanded its presence across various digital platforms, including social media, videos, and websites. Interestingly, it's seemingly absent only on Linear TV (traditional TV) and perhaps Connected TV (like Roku). Its widespread reach led someone to write a blog on LinkedIn about blocking Temu ads, with numerous examples, as shown in the video below.
Temu doesn't directly harm consumers, but it does target them to spend on non-essential items. These products often lack durability due to limited governmental labor regulations, quality control, and standard operating procedures during production. While there are no legal consequences for Temu sending potentially harmful items, any harm caused by a product could damage their brand image.
Let's delve a bit deeper into Temu to gain a better understanding of this e-commerce giant.
What is Temu
Temu, established in September 2022, claims its origins in Boston, Massachusetts. It is under the ownership of PDD Holdings, a conglomerate with various subsidiaries. Although PDD Holdings claims its headquarters in Ireland, its roots trace back to Shanghai, China. Notably, PDD Holdings' primary subsidiary is Pinduoduo, but Temu seems poised to assume that position.
In the competitive landscape alongside Shein, Wish, and Alibaba, Temu distinguishes itself by integrating gamification into its platform. While these competitors mainly vie based on pricing, Temu incentivizes users through gamified elements, offering rewards for frequent shopping or providing incentives for purchases.
Here is some quick facts about Temu, from E-commerce DB:
Temu was founded in the USA in 2022 and is a subsidiary of PDD Holdings Inc., which is listed on Nasdaq and headquartered in Shanghai.
Temu operates as an online marketplace similar to AliExpress, Walmart, and Wish, focusing on offering affordable goods.
The company acts as an intermediary between sellers (primarily from China) and buyers without maintaining its own inventory.
Temu promotes social commerce and encouraging potential buyers to find more buyers to avail discounts (social referral programs).
The app employs gamification to engage customers and offers free shipping by circumventing customs duties.
Temu’s rise to the public came from its parent company PDD Holdings purchasing a plethora of Ad space across all channels. It started mostly with the Super Bowl Ad in 2023 that led Temu to be in the homes of millions of Americans, I guess I missed the Ad, since TV was the only device I had not seen it on. “Shop Like a Billionaire” is the Ad campaign name.
I am unsure of the amount of viewership it might had received during the Super Bowl but according to ECDB, the number of downloads after the Super Bowl Ad aired proved it went exceptionally well.
Although these are global downloads we can only assume that majority of it came from the U.S. as they were focused mostly on dominating the U.S. market. The Super Bowl alone did not cause the continual rise of downloads from February 2023 (Super Bowl LVII aired) into their peak of September 2023 but the other ad purchases that dominated our social feed, news feed, and search inquiries led to their rise in the App Store as the #1 Shopping app.
Their website visits is even more astonishing as you don’t need a mobile app to interact with them and can simply shop with a desktop or laptop.
PDD Holdings spared no expense with purchasing ads to gain visibility as they are the top consumer shopping app and e-commerce website. What sets them apart from their competition is a reliance on gamification and social commerce.
The experience makes them stay
Temu have created a shopping experience that offers entertainment, according to ECDB:
Temu aims to bridge this gap by introducing games into the shopping process. By playing games like Fishland, Coin Spin, Card Flip, and others, you can win rewards that ultimately lead to more time spent on the site and a dopamine rush from winning free items.
Time spent on Temu (22 minutes) is more than Shein (12 minutes) and Amazon (11 minutes) since gamifying their platform helps users to stay engage and receive a reward from their engagement. If a user wants to receive a discount for their purchase then playing a game can help give them that. This tactic can expand more when shared with their friends.
Temu has a referral program that gives you rewards if you share an invite to download the app. It incentivizes you with discounts on future purchases or a shared discount with the new user you got to sign up. Temu also has a unique (To the U.S. market) strategy almost similar to an affiliate program known as Group buying. Group buying is the process of consumers teaming up to purchase items online.
Community buying, a new way to shop
The community buying model was founded in China in 2014 but accelerated around 2019 across Asia as the pandemic led to a decline in sales across the world.
Ecommerce heavy weights across china such as Pinduoduo, Meituan, and Alibaba sought to carve a piece of the market share of this new sector of e-commerce with expansion into third tier cities in China. Growth in these cities could help them capture new customers by accelerating the new shopping model of group buying.
Temu seeks to exploit this shopping model of group buying into the western market. Will it work? Well we have to wait and see.
So why do we keep seeing Temu Ads
While I could extend this case study further, to keep things short, the primary reason for Temu's success is its significant growth. Backed by PDD Holdings' substantial cash reserves and access to logistic companies, Temu has swiftly entered the U.S. market. Heavy investment in advertisements and partnerships with influencers on TikTok and YouTube has flooded us with multiple ads, all part of their expansive growth strategy.
Their success isn't solely due to advertising and partnerships. Temu's strategy of offering competitively low prices combined with a gamified system rewarding discounts and incentives has kept customers engaged on their platform. This approach encourages increased shopping activity, further propelling Temu's growth. With a financially robust parent company willing to invest, the stage was set for rapid expansion.
I could have delved into controversies such as Temu's alleged use of forced labor from Uyghur Muslims or PDD Holdings' subsidiary allegedly harvesting biometric data from Temu users, raising data security concerns. However, I'll spare the readership from these details to focus on why this company has proliferated online. For a more nuanced perspective, perhaps that would require access behind a paywall.
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