Temu Allows Low-Income Group To "Shop Like Billionaires"
A video of Russell Peter, an Indo-Canadian stand-up comedian, humorously expounding the Indian penchant for inexpensive products went viral on social media. The video features a Chinese merchant selling a cheap replica of Louis Vuitton to an Indian friend.
Temu, a viral Chinese shopping site, has been literally following the aforesaid strategy as their business model. Temu offers tempting products at the cheapest rate and harnesses heavy discount coupons and catchy slogans to woo skeptical customers.
They make online shopping funny. The first thing that garners the user”s attention on Temu is their slogan, which is “shop like a billionaire.” Here “like” aligns with Temu”s character of being a discount shopping site that only sells inexpensive products covered by marketing techniques.
Then comes a captivating puzzling game or a spinning wheel, which allow the users to earn discount coupons to take part in the shopping extravaganza of product variety and lower cost. This further enhances their excitement, as Whizy Kim in her Vox article said, It”s a “dizzying circus of dirt-cheap things. A pair of wireless over-the-ear headphones for $6.80. An earbud-cleaning set (for getting into the tiny crevices) for just 98 cents. A 14-piece food chopper for $15.49. A set of hair clips in the shape of Danish biscuits for $2.49. ”
Moreover, Temu harnesses an opaque mix of user behaviour, and with this, they send personalised recommendations on social media, forcing the users to spend more time with them. As they state in the advertisement, Temu”s stand on providing discounted products has created a buzz among customers, which in turn has helped its growth. According to Chinese media, Temu loses about $30 for every order placed due to their unwavering commitment to providing discounts. However, being a third-party market, they can pressurise the sellers to cut the price, and in turn, sellers will benefit from the impeccable marketing procedures adopted by Temu, allowing them to offer their products at the right place at the right time.
Company officials attribute their ability to discount to their streamlined supply chain. “Our goal is to democratize the global supply chain, ensuring equal access to the world’s most cost-effective products for everyone,” a Temu spokesperson told Vox.
Temu is a subsidiary undertaking of Chinese e-commerce giant PDD Holdings, which also owns Pinduoduo, a popular Chinese online shopping site.
US Market Scenario
“Every day is like Black Friday on our platform,” the Vox article quoted a Temu spokesperson as saying. Temu has been a household name in the US lower income groups, as about 40 percent of their sales between September 2022 and August 2023 came from households making less than $40,000 a year, according to an analysis by market research firm YipitData. Only Walmart surpassed Temu among the low-income group in terms of sales, and that too with a small margin.
In addition to that, most searches for Temu are derived from comparably impoverished states such as Mississippi, West Virginia, Arkansas, Kentucky, and Alabama and almost a third of the participants in the US shop less at Walmart and Amazon due to the influence of Temu.
However, this Chinese online e-commerce has not become a threat to Dollar General, a popular discount convenience store chain in the U.S. According to Rui Ma, a tech analyst at Tech Buzz China, Temu has not been successful in matching Dollar General”s discounted products.
Within a year since founding, Temu has gained a monthly gross merchandise volume (GMV)—the total value of the goods it sells—of $1 billion, according to Business of Apps, which is significant given that Shein, which launched in 2008, had an annual revenue of about $610 million in 2016.
