From Walmart’s “Save Money. Live Better” to Amazon’s “Spend Less. Smile More” to Costco’s vision statement on “unmatched savings,” one can tell from the slogans of top US retailers that Americans love deals and expect to get the most value out of shopping dollars.
Now the battle to attract these value-seeking consumers is intensified with a new e-commerce site called Temu, launched in September 2022 offering a wide range of merchandise at ultra-low prices.
“When I say cheap, I’m talking about the prices, not the items!”, Tammy Henry, a Temu user, recently commented on the review site Trustpilot, giving Temu a five-star rating, adding that he honestly can’t believe how cheap everything is.
Temu is owned by the Nasdaq-listed PDD Holdings, a multinational conglomerate that holds and operates a portfolio of businesses, including Pinduoduo, an agriculture-focused e-commerce platform. Listed in 2018, PDD has built a vast network of sourcing, logistics, and fulfillment capabilities and shares them with its various businesses worldwide.
PDD is known for pioneering “next-generation manufacturing,” channeling consumer insights to manufacturers to help shorten the product development cycle and create products that closely match market demand. In 2021, PDD handled 61 billion orders from more than 11 million suppliers, generating $14.7 billion in revenue and $2.2 billion in net income last year.
It remains to be seen whether offering quality products at competitively low prices is enough for Temu to gain a foothold in the US market. As a newcomer, Temu will have to build trust and recognition among consumers, no easy feat competing with dozens of established e-commerce sites and brick-and-mortar retailers.
With rising inflation putting pressure on household budgets, more consumers are expected to look for ways to stretch their dollars without compromising their lifestyles.
Temu has said that it can balance quality and price because of its access to the vast network of manufacturers and logistics partners built up over the years by its parent, PDD Holdings. The platform also said it plans to work closely with manufacturers to curate and create products that suit the tastes and needs of consumers.
As Temu put it, the goal is to give “retail buyers access to wholesale prices for the widest range of products anytime, anywhere, in any quantity,” without the drawbacks of minimum order sizes or other restrictions associated with wholesale clubs.
“Temu is the type of app you open when you feel like buying something, with nothing specific in mind. And it’s so cheap, you end up shopping,” said Connie Chan, a general partner with Andreesen Horowitz, the venture capital firm, on Twitter. At the same time, “the products are curated, the baseline quality meets a certain bar.”
Many direct-from-factory brands have signed up to the Temu platform to sell to American consumers. LovelyWholesale, an international e-commerce clothing brand, launched its store on Temu last week with more than 150 styles. The store received 38 shop reviews and a 4.7 rating out of 5 in the first three days.
“For the past 11 years, we have built a strong garment production line and have advantages in garment fabric. We hope our affordable and practical clothes can benefit more customers through the Temu platform,” the company said in a release.
For now, Temu is ramping up its product offerings and focusing on refining the customer experience. The site recently introduced an express shipment option free for orders above $99 and a $5 credit if deliveries run late.
Juozas Kaziukenas, the founder of Marketplace Pulse, which collects data on e-commerce marketplaces, noted that Temu is starting its US rollout by showcasing its network of more than 11 million suppliers to prospective customers. “The goal is likely loftier than that,” he wrote in a blog post.