Temu: The online shopping upstart that's become the most downloaded a…
archived 19 Feb 2023 17:35:59 UTC
Analysis by Michelle Toh, CNN
February 19, 2023
A screenshot from Temu's commercial unveiled during the Super Bowl on Sunday, February 12, encouraging consumers to "shop like a billionaire."
Hong Kong (CNN) — A new online shopping platform linked to one of China’s top retailers has quickly become the most downloaded app in the United States, surpassing Amazon and Walmart. Now it’s looking to capitalize from an appearance on America’s biggest stage.
Temu, a Boston-based online retailer that shares the same owner as Chinese social commerce giant Pinduoduo, made its Super Bowl debut on Sunday.
Temu, which runs an online superstore for virtually everything — from home goods to apparel to electronics — unveiled a commercial during the game that encouraged consumers to “shop like a billionaire.”
The pitch? You don’t have to be one.
“Through the largest stage possible, we want to share with our consumers that they can shop with a sense of freedom because of the price we offer,” a Temu spokesperson told CNN in a statement.
The 30-second spot shows the company’s proposition to users: Feel like you’re splurging by buying lots of stuff cheaply. A woman’s swimsuit on Temu costs just $6.50, while a pair of wireless earphones is priced at $8.50. An eyebrow trimmer costs 90 cents.
These surprisingly low prices — by Western standards, at least — have drawn comparisons to Shein, the Chinese fast fashion upstart that also offers a wide selection of inexpensive clothing and home goods, and has made significant inroads into markets including the United States.
Shein is considered one of Temu’s competitors, along with US-based discount retailer Wish and Alibaba’s AliExpress, according to Coresight Research.
Climbing the charts
Temu, pronounced “tee-moo,” was launched last year by PDD, its US-listed parent company formerly known as Pinduoduo. The company officially changed its name just this month.PDD’s subsidiary Pinduoduo is one of China’s most popular e-commerce platforms with approximately 900 million users. It made its name with a group-buying business model, allowing people to save money by enlisting friends to buy the same item in bulk.
On its website, Temu says it uses its parent company’s “vast and deep network … built over the years to offer a wide range of affordable quality products.”
Since its rollout in September, the application has been downloaded 24 million times, racking up more than 11 million monthly active users, according to Sensor Tower.
In the fourth quarter of last year, US app installations for Temu exceeded those for Amazon (AMZN), Walmart (WMT) and Target (TGT), according to Abe Yousef, a senior insights analyst at the analytics firm Sensor Tower.
“Temu soared to the top of both US app store charts in November, where the app still holds the top position now,” he told CNN, referring to iOS and Android mobile app stores.
Yousef said the company had been particularly successful at acquiring new users by offering extremely low prices and in-app flash deals, such as 89% off certain items.
The firm is already eyeing new territory. This month, Temu said on Twitter that it plans to expand to Canada.
‘Too cheap’?
Michael Felice, an associate partner at management consulting firm Kearney, said Temu stood out simply by selling products without high markups.“Temu might be exposing a white space in the market wherein brands have been producing at extreme low cost, and along the value chain there’s been so much bloated cost passed on for margin,” he told CNN.
“That said, American consumers might not even be ready to accept some of these price points … There’s always the question, ‘is it too cheap to be good?’”
Deborah Weinswig, CEO of Coresight Research, has cautioned that it may be too early to tell whether Temu will be able to maintain those extremely low prices, free shipping and other perks.
“Temu aims to continue to experiment in marketing and offerings, which is possible thanks to its resource-rich parent company,” she wrote in a report.
Its launch, she said, “comes at an opportune moment, as consumers search for value amid still-elevated inflation and a degree of economic uncertainty.”
