👉The original blog is posted on FoxData.
Temu, the cross-border program of China's shopping platform Pinduoduo, has been growing rapidly. It topped the US AppStore's app charts and shopping charts within two months of its launch in the US in September 2022, and has dominated the charts for more than 300 consecutive days since then. So far, Temu has taken root in more than 100 countries on four continents, and Temu has almost killed half of the global e-commerce market. In the third quarter of this year, Temu's sales have exceeded 5 billion dollars, especially in September, the first anniversary of its launch, the single-day GMV even reached 80 million dollars. Having just experienced "Black Friday" and "Cyber Monday", Temu may be able to exceed the annual GMV target of $15 billion. According to FoxData, during Black Friday and Cyber Monday, Temu was No. 1 in the U.S. AppStore app list and shopping list, and even in most of the countries around the world. Temu is expanding so rapidly that one can't help but wondering . So why is Temu growing so fast?
Temu, the cross-border program of China's shopping platform Pinduoduo, has been growing rapidly. It topped the US AppStore's app charts and shopping charts within two months of its launch in the US in September 2022, and has dominated the charts for more than 300 consecutive days since then. So far, Temu has taken root in more than 100 countries on four continents, and Temu has almost killed half of the global e-commerce market. In the third quarter of this year, Temu's sales have exceeded 5 billion dollars, especially in September, the first anniversary of its launch, the single-day GMV even reached 80 million dollars. Having just experienced "Black Friday" and "Cyber Monday", Temu may be able to exceed the annual GMV target of $15 billion. According to FoxData, during Black Friday and Cyber Monday, Temu was No. 1 in the U.S. AppStore app list and shopping list, and even in most of the countries around the world. Temu is expanding so rapidly that one can't help but wondering . So why is Temu growing so fast?
Temu's low-cost model
Temu's rapid expansion is based on low costs. Its price is lowered by the merchants. In fact, a more accurate term should be "manufacturers," because Temu's real target customers on the business side are not individual sellers at all, but factories. Temu's model is a kind of self-management model: Temu is responsible for commodity pricing, marketing, customer acquisition, and fulfillment, and the merchants, as suppliers, only need to prepare the goods for the warehouse, which forms a "supply chain-platform-overseas consumers" transaction chain. The more links in the supply chain, the higher the cost, and Temu's approach is to shorten the supply chain as much as possible and direct supply from the source.For example, on the general e-commerce platform, it is the seller to opens a store, looking for factories to get goods on the shelves, and then the platform is responsible for delivery. But Temu skipped the individual seller, directly with the factory. Factories do not have to do anything except supply, because Temu shelves, marketing, logistics, after-sales package deal. Even the price of goods is not set by merchants, but by Temu. Temu has a strict price review mechanism. If a merchant's offer for a commodity on Temu is higher than the price of a similar commodity on the domestic wholesale e-commerce company 1688, the platform will let the seller make a new offer. Therefore, even if the selling price is very low, Temu can still earn the price difference, which is the core business logic of Temu.
Relying on the business logic of low prices, Temu is rapidly eating up the market. Some sellers compare Temu with Amazon and find that the price of the same product on Temu is only half the price of Amazon, which is to a certain extent a downgrade blow to Amazon sellers. An institutional survey shows that 99% of small and medium-sized Amazon sellers plan to open stores to sell on other e-commerce platforms in 2023. Some sellers said that under the impact of Temu, Amazon sales began to decline, and there was even a weekly decline of 30%-50% in sales.
Paid Advertising
In less than a month after Temu's launch in the U.S., the number of downloads went straight to the top of the App stoore and Google App Store charts because of its digital marketing strategy, including ASA, Paid Search Ads, Paid Socail Ads. According to industry insiders, Temu spent 1 billion RMB on marketing in the U.S. market in the first month of its launch. And this 1 billion RMB is just the first step of a small test, Temu's marketing budget this year is as much as 7 billion RMB, equivalent to 1 billion dollars. This number is still relatively reliable, because Tiktok in 2018 alone smashed $1 billion a year in advertising and marketing in the United States, which led to its rapid rise to become the highest monthly download and install app in the U.S. that year, with 80 million downloads.
Multi-channel distribution
Use money where it is needed most. Temu chose the platforms with the highest traffic from all channels to place ads.- Social Media Channels
- Short video channels
- Long video channels
- Offline Channel
It is clear that Temu's success cannot be separated from its precise strategy, bold financial commitment and rapid iteration in the industry. The combination of multiple factors has propelled Temu as a powerful force to embark on its globalization journey. Want to be the next Temu? Focus on Paid Advertising!
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