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This Chinese app is overtaking Amazon in many countries. Here's how
Shanghai-based Temu has experienced a meteoric rise since its inception.
Temu is a company that focuses on offering a wide range of everyday products, such as clothing, toys, and household essentials, at exceptionally affordable prices. This online marketplace was introduced to the market by PDD Holdings, a Shanghai-based company, in the latter part of the previous year, with its initial launch targeting customers in the United States.
Since its inception, Temu experienced a meteoric rise. In just a few months, the total value of products sold on their platform surged from $3 million in September of the previous year to an astounding $400 million by April. As of the publication of this article, Temu achieved the status of being the most popular free iPhone app in several countries, including the United States, United Kingdom, Australia, and Germany.
What is the secret to Temu's success?
According to a report in ‘The Conversation’, the success of the company can be attributed to some reasons such as:
- Value
While "made in China" has traditionally been associated with inexpensive products of potentially lower quality, Temu is changing this perception among its consumers. Increasingly, people are starting to see Temu as a platform that offers affordable items without necessarily sacrificing quality.
Temu attributes its ability to provide items at affordable prices to its practice of bypassing intermediaries in the supply chain. Manufacturers are responsible for supplying product details and the physical products, while Temu takes charge of all other aspects, encompassing customs processing and international shipping. By eliminating unnecessary middlemen, Temu can deliver cost-effective deals to its customers.
2. Effective marketing strategy
Unlike conventional e-commerce platforms that primarily emphasize practical benefits like cost savings, Temu takes a distinctive approach by catering to consumers' emotional desires. It enhances the shopping experience by infusing the concept of "shopping like a billionaire," which also harmonizes with its value-oriented strategy, reports The Conversation.
Temu made its entrance into the market during a period when consumers were grappling with rising global inflation. In the initial month following its launch in the United States, Temu allocated a substantial $200 million for advertising and outlined an ambitious $2 billion budget for the entire year.
3. Sales promotion tactics
- Gamified experiences: Gamified advertising relies on two fundamental components: challenge and reward. Engaging with Temu's spinning wheel represents a minor challenge, but the substantial discount it offers serves as a significant reward.
- Loyalty program: Temu offers consumers the option to subscribe to its marketing emails, granting them access to additional promotional content, including exclusive email-only promotions.
- Limited-time deals: A frequently employed promotional strategy involves crafting the perception of scarcity by presenting supposedly "exclusive" offers that are time-limited and won't be available again.
Defending against manipulation
The primary advantage that Temu offers to consumers centers on its commitment to providing value. While it may still feature lower-quality items, this is a common occurrence on most e-commerce platforms. Additionally, Temu's business model is structured to highlight top-selling products, which effectively filters out lower-quality items from the catalogue, the report in 'The Conversation says. Furthermore, the inclusion of a 90-day free return policy acts as a safeguard for customers in case they are dissatisfied with their purchases.
