According to The Washington Post, “Retail industry watchers are saying that Amazon.com Inc. has met its match with the viral popularity of online shopping app Temu.” One of Temu’s most famous slogans is “shop like a billionaire.” It’s been paraded at the Super Bowl as well as on ads all over Facebook, Google, and more.
CNN reported that this “new online shopping platform linked to one of China’s top retailers has quickly become the most downloaded app in the United States, surpassing Amazon and Walmart.” Under the umbrella of China’s PDD Holdings Inc., Temu is increasingly gaining the reputation of being a formidable competitor to platforms like Amazon, given its expansive inventory where items can be acquired for as low as 14 cents.
This pricing strategy has led many to liken Temu to SHEIN, a Chinese fast-fashion giant known for its affordable assortment of apparel and home items, which has successfully penetrated markets like the United States. Coresight Research pointed out that besides SHEIN, Temu also competes with Wish and Alibaba’s AliExpress.
Though Temu might seem like an “Amazon killer” to some, recent data from Earnest Analytics, a consumer data research company, indicates that Temu’s successful rise has actually had the biggest impact on Dollar General Corp. and Dollar Tree Inc. According to the firm’s in-depth study, which focused on existing brand customers and their spending habits across competitive brands, Temu’s slice in the discount market soared from 0% to a whopping 14% within the year ending in September.
Concurrently, major discount brands such as Dollar General and Dollar Tree, the latter of which also owns Family Dollar, witnessed a decline of 8% and 4%, respectively, in their market share. Similarly, brands like Five Below Inc. and Ollie’s Bargain Outlet Holdings Inc. experienced about a 1% dip.
This trend signifies Temu’s potential to disrupt the market grip that dollar stores have had on budget-conscious and discount-driven consumers for years.
With its unbeatably low prices, Temu is changing the game. While dollar stores offer value, Temu undercuts even their most competitive prices. Interestingly, Amazon has distanced itself from Temu, omitting it from its price-match guarantee in June.
Data from Numerator reveals that nearly half of Amazon’s clientele belong to the higher-income bracket. These shoppers have the inclination to splurge on premium services like Amazon Prime for quicker deliveries. In contrast, Temu’s free shipping takes notably longer, spanning between nine and 20 days. Furthermore, compared to Amazon Prime’s more forgiving return policy, Temu’s stricter returns could deter those who are willing to pay extra for flexibility.
According to Jungle Scout, Temu offers three main advantages over its competitors:
- Users can group together to buy products at a discounted price.
- Users can refer others to the platform and earn credits.
- Temu combines with gamification to urge users to shop on the platform while offering prizes for completing certain objectives.
ZDNET explained that Temu is a good option if you’re interested in buying cheap tech accessories like phone cases, if you can wait a few weeks for your items, and if you want to experiment with “dupes” or copycat products that are generally lower quality. ZDNET also discussed four brand-name tech items that seemed fine overall. However, when the author reached out to HP about a brand-name mouse they bought, a representative told her that “the company has no way of guaranteeing that the products sold on Temu in the U.S. are ‘from an authorized reseller or are authentic HP devices’ because HP does not operate a direct store on Temu in the U.S.”
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