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“They’re not jokes at all, they have to be taken very seriously”: how the Chinese platform Temu wants to “kill” the low-cost market
“They’re not jokes at all, they have to be taken very seriously”: how the Chinese platform Temu wants to “kill” the low-cost market
(SPECIAL SUBJECT / FRANCE 2)
In less than a year, the Temu e-commerce platform has broken all records. How did it manage to quickly become the most downloaded shopping application, in the United States but also in France? For “Special Envoy”, an online commerce specialist deciphers the formidable strategy of the Chinese site.
Every day, 170 million orders fly from China to arrive at your door for free, between five and twelve days later. At AliExpress, its compatriot and rival, it takes twenty to forty days, paying for delivery. This is because to establish itself on all continents, the Temu platform is ready to spend billions of dollars. Even if it means losing money… for the moment.
According to Adrien Naeem, online commerce specialist interviewed by “Envoyé Spécial”, it is in reality a very elaborate strategy. By charging very low prices, which cause it to lose on average 30 dollars (a little more than 27 euros) per order, Temu exposes itself to a catastrophic start, perfectly anticipated in its business plan. From 2023, the platform has invested more in advertising on Facebook or Instagram than Coca-Cola or Nike, underlines Adrien Naeem. After this growth stage, “once they are present, once they have stifled competition, they will increase prices to have a viable model”, predicts the expert. So right now, Temu isn’t making any money, and that’s not a problem… because she has the means.
Economic empire and volunteer ambassadors
Behind the impressive Temu headquarters building in Shanghai hides an economic empire: that of Colin Huang. Its first baby, Pinduoduo, born in 2015, focuses on the Chinese market. It was a year ago that the former computer engineer trained at Google in California decided to conquer the world with Temu.
For his new online sales platform, the CEO has a revolutionary idea: to engage customers… to make them spend more. Addicted, some fans have fun every morning spinning a sort of wheel of fortune, or even feeding the animals on a virtual farm. A way for the platform to keep them on the site, up to 15 minutes each visit for French users… and 23 in the United States (double that of its competitors). And since you have to log in often to win these little games, the Internet user will come back several times during the day to window shop.
Finally, to promote its promotions, Temu has no need to pay salespeople: the application can count on an army of volunteer ambassadors. All over the world, consumers delighted to unwrap their packages on social networks praise, in all languages, the gems unearthed on the site.
Excerpt from “Temu: always cheaper… but at what price?”, a survey broadcast in “Envoyéspecial” on March 14 2024.
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