Temu’s GMV surged to 5 billion US dollars in a single quarter! How did Temu, which “cut” across the world, replicate the miracle?

01 Temu’s GMV surged to 5 billion US dollars in a single quarter

Temu’s sales volume has exceeded 5 billion US dollars in the third quarter of this year! Especially in September, the anniversary month of Temu’s launch, Temu’s single-day GMV even reached 80 million US dollars through the anniversary event!

At this rate, with the arrival of the two major overseas e-commerce carnival events - “Black Friday” and Christmas, Temu may be able to exceed the annual GMV target of 15 billion US dollars.

Temu’s overseas volume growth rate is faster than that of TikTok, which tore open the overseas market gap and rapidly increased its volume a few years ago.

02 Temu’s leading road

In September 2022, Temu officially entered the US market.

Although it was its first overseas station, Temu surpassed platforms such as Amazon, Shein, etc. in just over a month, and successfully topped the US App Store free shopping app list.

To date, Temu has been online for just one year and has quickly entered many countries around the world, including the United Kingdom, Switzerland, Sweden, Spain, Portugal, the Netherlands, France, Japan, Korea… As of the end of October, it has been launched in 47 countries worldwide.

As the saying goes, one trick is fresh, eat all over the sky.

Temu mainly relies on low-price strategies to quickly seize the sinking market of high-purchasing power countries and achieve rapid growth in market share.

Let the product price return to the “use value”, reduce the middleman’s profit margin, and benefit more consumers.

At the same time, the success of the low-price strategy is also inseparable from Temu’s “full-managed mode”.

Everyone knows that the more links in the supply chain, the higher the cost and the final price that reaches the consumer.

Temu’s full-managed mode is to shorten the supply chain as much as possible. Merchants only need to consider supply, and the remaining operations, logistics, after-sales and other links are all handled by the platform.

In addition to the low-price strategy, Temu’s marketing methods are also very generous.

Master the two-word mantra in the advertising marketing industry: spend money.

According to industry insiders, Temu spent 1 billion yuan on marketing costs in the US market alone in the first month of its launch.

And Temu does not regard ROI as the first consideration indicator for marketing, and it can be said that it is costless to brush advertisements and enhance its presence.

Social media, short video, long video platforms, Temu’s advertisements are everywhere, various soft and hard advertisements, activities attract a lot of young users.

In February of this year, Temu spent 14 million US dollars on the top-level event “Super Bowl” and broadcast a 60-second advertisement, letting 208 million Americans remember Temu’s slogan: “Shop like a billionaire”.

In addition to spending tens of millions of dollars to play this advertisement twice, Temu also gave out rewards and coupons worth 10 million US dollars through the “Happy Shake” scan code interactive activity.

This marketing achieved great success. Data Intelligence learned from relevant merchants that Temu’s platform traffic and order volume increased sharply in February and March, and merchants also needed to “grab storage capacity” to stock up normally.

At the same time, Bloomberg analyzed data from billions of bank card transactions and pointed out that Americans’ spending on Temu in May was nearly 20% higher than that on Shein in the same period.

Relevant data shows that in the past year, about 9% of Americans have shopped on Temu.

Subsequently, Temu continued to copy the US model and replicated it in nearly 50 countries and regions around the world, creating one Temu miracle after another.

03 Temu’s challenges

In June of this year, Temu, which should have been advancing rapidly in the European and American markets, suddenly entered Japan and South Korea one after another, turning its attention back to East Asia.

From the perspective of geographical location and cost, China and Japan and South Korea are separated by the sea, which can not only better control transportation costs, but also in the Chinese cultural circle, the three countries’ cultural habits and exchanges will be more smooth.

Temu’s sudden turn can explain: the various costs of overseas operations are too high.

Not to mention the various marketing advertisements, activities, discounts, subsidies and other costs, in European and American countries, the salaries of blue-collar workers such as couriers and other logistics-related workers are relatively high, and the cost of human logistics alone accounts for a large proportion.

Data personnel have calculated that Temu’s single order cost is as high as 32 US dollars, of which logistics costs account for 8-9 US dollars.

Relevant professionals said that Temu lost too much in the early stage due to excessive cost investment, dragging down Pinduoduo’s overall performance, and the secondary market is not optimistic about Temu’s valuation.

Aware of this problem, Temu began to re-examine the Asian market at its doorstep.

04 Temu has become the number one app download in South Korea

At the end of July, Temu officially entered Japan and South Korea one after another.

According to data provided by the global app market analysis service provider data.ai, during the period from September 25 to October 9, 2023, Temu successfully ranked first in South Korea with 399,000 downloads.

In just three months after entering the South Korean market, Temu has topped the South Korean app download list, which shows the rapid growth of its volume and market share.

Temu’s rapid expansion of its volume in the South Korean market once again proves with facts that no consumer will easily say no to cheaper products with the same function.

For those who understand the overseas e-commerce market, Temu, which is very clear about its market development plan and is willing to spend money, has successfully replicated the miracle in South Korea again, perhaps it is also expected.

05 Temu’s trade-offs and future

Perhaps Temu has already made trade-offs on marketing, cost control and other issues. In the early stage of the platform launch, growth and users are everything, and other issues can be improved and improved slowly.

We can see from the development history of Temu and Pinduoduo that the development paths of the two platforms are relatively consistent.

Relying on the viral violent marketing method to quickly seize market share, after the users get used to the tone of Pinduoduo, the platform’s reputation gradually improves. The financial report data of Pinduoduo’s rise all the way also proves that this method is feasible.

The population and market of a region are limited, and perhaps they have to be like Pinduoduo and Temu: in the beginning, they must first vigorously seize market share, which is more in line with the current fast-paced life platform.

When Temu went overseas at the beginning, the domestic market had high hopes for it. Even so, it still broke everyone’s imagination time and time again, staged an overseas version of “crazy sprint”, and always grew rapidly where everyone could not imagine.

Temu is going too fast, so fast that the market cannot predict its next development.

Since it cannot be predicted, let us keep a sense of expectation and surprise, and time will tell us the answer.