In recent years, e-commerce has grown fast, even in Southeast Asia. New platforms are always emerging, providing opportunities for merchants to reach a larger audience. Temu (pronounced as Tee-Moo) is one such site that has recently gained popularity. What started as a promising company in the United States has now extended into the thriving markets of Southeast Asia. Let us look into Temu's journey and how it has effectively made its mark in the SEA market.
Exploring the Temu Phenomenon
Temu is a global online marketplace that connects customers with a variety of merchants, manufacturers, and brands. It was founded in 2024 in the United States and has its headquarters in Boston. As reported by CNN, Temu is owned by PDD Holdings, a Shanghai-based company that also operates Pinduoduo and is listed on Nasdaq.
Temu's business model is similar to that of AliExpress, Walmart, and Wish, with a strong emphasis on offering affordable products. Recently, Temu has become the talk of the town, attracting attention, visits, clicks, and downloads in an uprising that has caught everyone's eye. Part of the reason for this is the app's clever marketing strategy, which effectively reaches its intended audience and grows its customer base.
The platform sets itself apart from competitors with its remarkably low prices, as customers have a direct purchasing arrangement with manufacturers, usually based in China. Since the products are shipped directly from China, shipping times often take around 7 to 10 days. There are some incredible discounts available, with prices slashed by up to 99 percent. Many products have been reduced by more than half. Temu makes money by taking a percentage cut from the purchases made via its platform, paid by the sellers.
In addition, Temu provides 24/7 customer service to assist with any delays in shipments. Customers have a wide range of options when it comes to shopping, with categories spanning from fashion to electronic goods. Moreover, Temu provides existing users with the chance to invite new customers and unlock discounts through a programme called social referral. The app uses gamification to captivate customers and provides complimentary shipping and gifts by bypassing customs fees.
How It Expanded to SEA Market Starting from the Philippines and Malaysia
Temu, an e-commerce platform, entered the Southeast Asia market by launching in the Philippines on 26 August 2023 and in Malaysia on 8 September 2023.
Temu's entry into the SEA market positions it as a formidable contender in the fiercely competitive e-commerce sector. Despite the dominance of established players like Lazada, Shopee, and TikTok Shop, Temu is making its mark with its bold marketing strategies. In celebration of its launch in the Philippines and Malaysia, Temu offers special discounts and promotions. Customers can enjoy free shipping and save up to 90% on a wide range of products.
Expanding into Southeast Asia was a next step for Temu, following their recent expansion into Japan and South Korea. The e-commerce platform expanded its reach to European markets in April and later extended its offerings to Australia and New Zealand in March. Introduced in the US last September, the app has now expanded its availability to over 38 markets across the globe. Last December, McKinsey & Co published data projecting that the gross merchandise volume (gmv) of Southeast Asia's e-commerce market will reach US$230 billion by 2026.
Temu’s Core Strategies
Competitive Prices & Discounts
The most obvious marketing strategy is low prices that match perfectly with their company’s slogan ‘Shop Like a Billionaire’, meaning customers can spend their money further as they will get more and more discounts.
Similar to Wish, Shein, Alibaba, Temu’s business model is built on undercutting what consumers are used to spending on items. Example, buyers can find various products that cost less than RM5.00. That is the reason why the shopping platform requires a minimum order size of RM49.00 to check out. According to Temu, this minimum makes it less costly to fulfill orders and discourages people from ordering goods to test it out and then returning it. The minimum order is also aiming to increase each customer’s lifetime value.
Additionally, Temu provides even greater discounts and lower prices compared to other similar shopping platforms, featuring special deals like items priced as low as one cent.
Free Shipping and Returns
In addition to its competitive pricing, Temu sets itself apart from other platforms by providing customers with free shipping and returns. This is made possible through PDD Holding's vast network of suppliers and shipping partners.
An efficient logistics network should not be overlooked, as problems with supply and distribution networks are seen as a major reason for Alibaba and Wish's failure to enter the Western market.
Aggressive advertising
According to MediaRadar, Temu has expanded advertising by more than 1000% to $480 million, with a heavy investment in sponsored social in 2023. Aside from sponsored social, Temu spent heavily at the Super Bowl on Sunday night (Feb 11) with its "Shop Like a Billionaire" 30-second ad, which aired six times.
On top of that, following Shein's successful approach, Temu sends free items to numerous influencers and micro-influencers to promote its products on YouTube and TikTok.
Win Freebies with Temu Games
Temu, like Shopee, incorporates games as part of their shopping strategy. Games such as Fishland, Coin Spin, and Card Flip provide prizes, encouraging players to spend more time on the site and experience the thrill of winning free things. Temu relies significantly on referrals, which are an important component of its revenue model, to keep players engaged in these games.
Wide range with low prices products
Temu's target is to sell affordable products from Chinese manufacturers directly to consumers at wholesale pricing. Unlike businesses that specialise in specific categories, Temu, like Amazon and Walmart, offers a wide variety of products, from clothing to kitchen appliances. This makes Temu a convenient one-stop shop for a variety of requirements.
Promotion strategy with targeted ads boost Temu sales
Temu's marketing strategy centers on promoted social media posts and digital commercials, with a significant presence on Instagram and TikTok, both popular with its target population. Temu customizes ads based on consumers' interests and search histories while offering a diverse product selection. For example, if someone searches for kitchen housewares online, Temu advertisements for kitchen housewares are frequently displayed in their social media feed.
5 Reasons Why Sellers May Need to Consider Joining Temu
As Temu grows in popularity in Southeast Asia, e-commerce sellers in the region may strongly consider joining Temu for various compelling reasons.
Access to a Rapidly Growing Market
Temu's Southeast Asia growth gives sellers access to one of the globally fastest-growing e-commerce markets. McKinsey & Co. expects the region's e-commerce market to reach US$230 billion by 2026. Sellers can profit on this growth and reach a large audience of eager buyers by joining Temu.
Marketing and Promotion
Temu frequently participates in marketing and promotional activities. The platform has made significant investments in advertising, including a prominent presence during the Super Bowl and a robust influencer marketing campaign. Sellers on Temu benefit from significant marketing support, which helps them to increase their visibility, attract a larger customer base which will drive traffic and possible purchases to their sites.
Seamless Logistics and Shipping
Temu provides free shipping and returns, which is a huge edge over many competitors. This is made possible by PDD Holdings' wide network of suppliers and shipping partners. For merchants, this implies fewer logistical difficulties and higher consumer happiness, as shipping is frequently a major pain point in e-commerce.
Strong Customer Support
Temu provides 24/7 customer service, which helps in addressing any issues promptly and maintaining high customer satisfaction. For sellers, this means fewer returns and complaints, as customer issues are resolved efficiently, contributing to a smoother selling experience.
Potential for High Sales Volumes and Brand Building
Joining a well-known platform, such as Temu, allows sellers to boost their visibility and credibility, attracting more buyers who trust the platform's quality control and service standards. Temu's broad reach and strong marketing may create considerable sales volumes, allowing sellers to take advantage of its growing user base and marketing efforts to increase sales and expand their business footprint throughout Southeast Asia.
Conclusion
From its US launch to its rapid development into Southeast Asia, Temu has shown its adaptability and strategic insight in the competitive e-commerce industry. Temu has built a position in the growing SEA market by leveraging its parent company's large network, aggressive marketing techniques, and dedication to customer satisfaction through competitive prices and solid support services. The marketplace offers competitive rates straight from manufacturers, saving users money and offering a large range of products. Gamification and social referral programmes make Temu buying enjoyable and rewarding.
Temu offers sellers a tempting way to enter one of the fastest-growing e-commerce sectors. Strong marketing campaigns, smooth logistics, and customer service help merchants grow their businesses on the platform. Temu's influence in the SEA industry will certainly rise as it expands and innovates, setting new standards for e-commerce platforms and teaching strategic market entry and expansion. Temu shows that a well-executed e-commerce business that prioritises cost, accessibility, and consumer satisfaction can succeed.
