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Temu is arguably the hottest shopping app of the moment. Launched in September 2022, Temu has quickly become one of the most popular shopping sites in the US, featuring what Wired magazine called a “mesmerizing” selection of merchandise at “mind-bending” prices.
“Temu seems to marry the ‘everything store’ selection of Amazon with the low prices and social elements that have made fast-fashion juggernaut Shein so successful,” Wired reported. It probably helps that Temu has chosen to launch when household budgets are increasingly under stress from the highest inflation in a generation.
But how “mind-bending” are Temu’s prices? One of the best-selling items on Temu is a pair of wireless earphones by Lenovo, priced at $3.70. Then there are the products that you probably never even knew existed – like a $30 portable washing machine that uses blue light to sterilize your laundry and folds up to fit in your suitcase. Say what?
Indeed, the ultra-low prices have aroused skepticism among some consumers that they are too good to be true.
So who is behind Temu? And are they legit?
Who Owns Temu
Temu is a US online marketplace owned by PDD Holdings, a multinational conglomerate that listed on the Nasdaq (ticker: PDD) in 2018. Besides Temu, PDD Holdings owns and operates a number of businesses, including Pinduoduo, one of the largest commerce platforms in the world. Last year, PDD Holdings generated $14.7 billion in revenue and handled 61 billion orders from a network of more than 11 million suppliers.
Temu has leveraged the procurement and fulfillment capabilities built up by PDD Holdings to scale up its offerings quickly. Many of these suppliers are top-notch manufacturers who have honed their production technology through years of catering to global customers and selling directly to customers through Pinduoduo, Temu’s sister company.
Extreme Value
There are three main components to how Temu can offer such low prices, which it characterizes as wholesale prices to retail buyers “anytime, anywhere, any quantity.”
First, Temu enjoys access to a pool of world-class manufacturers ensuring that it can choose only the most cost-efficient and quality producers to supply goods to its customers.
Second, Temu adopts the Next-Gen Manufacturing model pioneered by its parent, PDD Holdings, to drive efficiency gains in production and matching of demand and supply. By gaining insights into consumer preferences, manufacturers can develop products more precisely and reduce the risk of overproduction and unsold inventory. The resulting cost savings are passed on to consumers through lower prices.
Third, as a third-party online marketplace, Temu reduces the number of intermediaries and price markups by connecting producers directly with consumers.
The result is ultra-competitive wholesale prices without restrictions on minimum order size or a limited selection.
To be sure, Temu has a long way to go before it can realistically challenge e-commerce giants like Amazon and warehouse wholesalers like Costco and Sam’s Club.
But with fast-improving delivery times, super-responsive customer service, and super-low prices, Temu is betting that there is a big enough niche for its brand of wholesale prices at “any time, anywhere, any quantity.”
