While only less than half a year old, Temu has already consistently topped the list on both App Store and Google Play as the most downloaded free app. More Americans are exploring the highly discounted items on the site. Is it a serious threat to Amazon and other marketplaces or will the hype die down as quickly as it came?
What Is Temu?
Temu is a Boston-based B2C marketplace that was launched in September 2022. It is owned by PDD Holdings, Inc., a Nasdaq-listed company that also owns the Chinese e-commerce platform Pinduoduo.
Temu offers items in 29 main categories and 250 subcategories that range from office supplies to musical instruments. It currently operates in the United States and Canada, but its vendors are mostly based in China.
Related Reading: How Is Temu Different From Amazon and Wish?
Why Did Temu Become So Popular?
Just four months after its launch, Temu has become the most downloaded free app in the United States. Many factors contributed to this, including its ad in the recently concluded Super Bowl that had over 113 million viewers.
Temu’s “Shop like a billionaire” tagline entices customers with heavily discounted items and methods of lowering the prices even more. For example, customers can participate in games (its Shake&Win sweepstakes campaign had a total of $10 million in prizes).
People can also share referral codes that can earn them cash. The goal is of course to attract more customers into the platform, which is similar to the purpose of the Amazon Associates Program. Temu rewards customers with a $20 cash bonus for every two people who use their referral link to download the app and create a new account. Because of these perks, a “code for code” trend has started on TikTok.
The marketplace also gained popularity from celebrity endorsers such as Jason Derulo.
@jasonderulo check it out! @shoptemu #shakeandcheer #temu100 #shoplikeabillionaire ♬ original sound – Jason Derulo
Overall, Temu’s very low prices and marketing campaigns have attracted more Americans to the platform. According to a Temu spokesperson interviewed by Time, the low prices are because of the “deep network of merchants, logistic partners, and [Pinduoduo’s] established ecosystem built over the years.”
Does Temu Have the Potential to Go Bigger Than Amazon?
It’s too early to make a conclusion because the new marketplace is only a few months old. However, it is moving in the right direction in terms of marketing and getting more customers to download the app.
After the initial hype from the discounts, coupons, and cash bonuses, customers will ultimately stay for the overall quality of its products and services. Like Amazon, Temu is not free from fake reviews and low-quality products. In fact, there are already complaints received by the Better Business Bureau, and some customers have shared stories about not receiving their orders or not receiving them on time. But then again, this is not uncommon even for Amazon, who faced a lawsuit regarding alleged false advertising in terms of shipping time.
Amazon still has the advantage of faster shipping and having a wider array of products (original items from big brands are sold on Amazon).
In addition, PDD Holdings already earned a bad reputation in 2019 when the US Trade Representative’s Office added Pinduoduo to its list of notorious markets because of counterfeiting and piracy.
At present, Temu is seen as more similar to Shein and Wish, but there’s no telling how far the company can go in the future, especially if it solves its shipping and counterfeit problems.
What If Temu Becomes Successful in the Long Run?
Temu’s success has the potential to create enough pressure for sellers from other online platforms to lower their prices in order to compete. It’s going to be a race to the bottom, and sellers will have to find ways of differentiating their products to justify higher prices.