Saturday, March 2, 2024

How Temu Became The Number One Affordable Shopping App in Six Months Through NGM

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Over the last 30 years, e-commerce has revolutionized business, making it easier and more efficient for creators to reach end users without needing multiple layers of intermediaries and distributors. Companies like Amazon disrupted traditional brick-and-mortar stores, allowing people to easily buy anything online, from books to groceries.

The basic e-commerce model has been tweaked over the years, but the next great evolution is underway, led by newcomer Temu (pronounced tee-moo and short for “Team Up, Price Down”). The success of its approach has resulted in it being the most downloaded application in both the Apple and Android app stores in September 2022 – the same month it launched. It has since been downloaded over 24 million times.

The hype surrounding the company shot up further after it became one of the youngest companies to advertise during the Big Game. Temu’s debut commercial, “Shop Like a Billionaire”, aired during the football final that was watched by over 100 million people. This resulted in a 53% day-over-day spike in app downloads.

How did Temu take off so quickly?

Although Temu is a new player in the e-commerce space in the US, its parent company, PDD Holdings, is well-versed in the industry. PDD Holdings is a Nasdaq-listed multinational commerce group with a market cap of over US$100 billion and a decade of commercial success. It has offices in the US, Ireland, China, and Singapore.

Over the years, PDD Holdings has built up deep logistics capabilities, a globe-spanning network, and the benefits of economies of scale. It deals with over 200 million parcels a day and serves more than 900 million people worldwide. It completed 61 billion orders in 2021 alone.

The company also owns a portfolio of businesses and has already achieved considerable success with Pinduoduo, Temu’s sister company.

Temu was similarly able to leverage the vast resources of its parent company to immediately make its presence felt upon launching in the US. Based in the prestigious Back Bay area of Boston, Massachusetts, Temu was able to sell products across 29 major categories and over 250 sub-categories within weeks of starting up.

Although it is still relatively new, the backing of PDD Holdings means Temu can skip many of the development phases comparable startups had to go through.

A company spokesperson explains, “Many of the sellers in our global network have accrued years of experience and expertise in supplying products to global brands and consumers. They can produce quality prices at the most efficient costs as a result of the economies of scale and technological innovation they have built up over the years.”

Temu ushers in the next wave of e-commerce

Temu is built on the premise that the next era of e-commerce is not just about disintermediating or optimizing the manufacturing supply chain. Instead, it’s about seamlessly matching users’ individualized needs with resources from anywhere in the world and getting the product delivered wherever it is needed.

They do this by using several different approaches. For example, for medium to large-scale manufacturers, Temu’s Next-Gen Manufacturing programs lets them make more informed business decisions by using consumer insights to create products and designs that match demand. This means manufacturers can optimize production, design, inventory, and branding. Furthermore, there is a strict vetting process for all its third-party sellers meaning buyers know they can trust the companies on the platform.

In addition, the program allows consumers to find unique items. A spokesperson explains, “These in-trend products are developed with the benefit of real-time insights into consumer preferences, resulting in a closer match to what consumers want. Using this approach, PDD Holdings has helped merchants and manufacturers to incubate nearly 1,000 brands since 2015, enabling manufacturers to respond quickly to market shifts and tailor their products to consumer tastes.”

Smaller businesses benefit from increased efficiency, affordability, and reach. They can present their products in various forms, such as photos and videos, or describe tailor-made options through chatting with customers. This allows small businesses to reach a wider audience and increase sales, explaining why so many have flocked to the platform.

Temu is the real deal

Jacob Cooke, CEO of WPIC, an e-commerce consulting firm, said, “Temu is the real deal. It has rocketed in popularity and has become one of the most downloaded apps in the US, offering a range of product categories such as beauty, fashion, tools, pet supplies, and more. Temu is able to leverage PDD’s relationships with low-cost manufacturers” to offer wholesale prices to retail buyers.

Temu didn’t grow slowly over several years or decades, having to learn what worked and what didn’t and adapting accordingly. It started as a pure B2C e-commerce platform with the vast resources of PDD Holdings behind it, the knowledge of optimized processes and logistics, and improved insights into consumer demands.

Its ability to individualize products by directly linking customer demand with manufacturers and businesses has set it apart from the competition and resulted in overwhelmingly favorable reviews. By making manufacturing more targeted and responsive, while cutting out waste and extra costs, it can sell goods at near wholesale prices. Its rising popularity is only just beginning.

McClatchy newsroom and editorial staff were not involved in the creation of this content.

George Nellist is a public relations, marketing and strategic brand expert who has executed social media and strategic marketing campaigns for a variety of Fortune 500 companies and small businesses.

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