Have a glance at the homepage of Temu, a new US-oriented e-commerce site, and it’s hard not to be floored by the bargains – $10 for a fleece zipper hoodie, $2 for 10 pairs of socks, $13 for a sleek black iOS fitness watch.
Launched by Shanghai-based internet giant Pinduoduo on September 1, Temu offers a wide range of product categories, including clothing, home goods, personal care, industrial tools, and more. After less than two months since it went live, the platform is already consistently placing among the top five shopping sites in terms of mobile App Store downloads, according to data by Sensor Tower.
As most US consumers may not be aware, Pinduoduo is one of China’s leading e-commerce platforms, claiming an astonishing 751 million monthly active users earlier this year. In 2018, it completed a blockbuster US public listing.
Established in 2015, the company started out as an online trading platform for China’s agricultural sector, allowing farmers to sell fruit and vegetables directly to consumers. After building up a solid foundation in the country’s rural areas, it expanded into various other categories, setting up a vast and highly efficient network of merchants that allowed it to undercut competition within a burgeoning mobile e-commerce sector.
The fast-moving firm is now eyeing further business opportunities abroad, hoping to re-enact the success it achieved in China. Having just recently set up shop in the US, Pinduoduo has not yet released public information on Temu’s initial performance.
“Overseas business is one of the opportunities we see where many peers in the industry achieve good results, so we believe it’s a direction worth trying out,” said Chen Lei, Pinduoduo‘s chairman and CEO, during an earnings call in late August.
Joanna Williams, Co-Founder and CEO of Moore Collective and an expert in global retail and supply chains, told Pandaily that a new wave of companies like Pinduoduo, specializing in efficient consumer-to-manufacturer (C2M) models, are likely to take hold in the US market, due to their ability to “cut out all of the middlemen.”
The most prominent example is Shein, a Chinese firm that has surged to become the hottest fast fashion site in the US this year. While Shein focuses on developing its own lines of trendy apparel at accessible prices, Temu facilitates sales across a broad array of categories, directly linking consumers and manufacturers.
Despite their differing business models, the underlying growth strategies are closely related.
According to Williams, the firms have adopted “a two-pronged approach: supply chain, automation, digitization, and AI on one side – and that all equals speed and consumer accuracy – and on the other side you’ve got media and entertainment, which is the TikTok part of it.”
A key part of this blueprint has been enlisting the help of social media channels to drive trends and direct consumers to the platform. US companies had been slowly pursuing this path for years, but Shein took it to the next level, securing effective partnerships with KOLs to generate online shopping frenzies.
Although Temu represents more than just a fast fashion brand, it seems to have learned from Shein’s rapid success in leveraging the new social media ecosystem for the US market. It is now actively recruiting content creators on Instagram and TikTok, and one of the most prominent links at the bottom of its homepage solicits ‘Influencer collaboration’.
Fast fashion has long been associated with waste, but with rock-bottom prices and streamlined logistics now offering near instant gratification – compounded by hyper-consumerist trends such as the so-called “Shein haul” – potential environmental impacts are staggering.
Given rising inflation in the US, however, the bargains and glitzy promoters will likely encourage domestic consumers to keep visiting low-cost online shopping sites for the foreseeable future.
Joanna Williams is taking a stand against the emerging paradigm in global fashion and e-commerce with Moore Collective, which works to supply creators with equitable brands that can also withstand current market conditions.
Still, competing head-on with new e-commerce giants like Temu and Shein will be tough.
“SHEIN set the stage, and I don’t think you can put the genie back in the bottle,” says Williams. “Amazon came to dominate our online e-commerce in however many years, and if you’ve got a cheaper mousetrap, it feels like it’s easy.”