Temu, the eCommerce marketplace introduced to the US by PDD Holdings, has become one of the largest online advertisers in the country with a $3 billion investment. Despite concerns about its high-spending strategy and low conversion rate, Temu has attracted a user base of 70 million monthly active users and aims to improve delivery times to compete with Amazon.
Temu: The Rising eCommerce Marketplace in the US
Temu, the eCommerce marketplace introduced to the US by PDD Holdings, has become one of the largest online advertisers in the country with a $3 billion investment. Despite concerns about its high-spending strategy and low conversion rate, Temu has attracted a user base of 70 million monthly active users and aims to improve delivery times to compete with Amazon.
( Credit to: Pymnts )
Temu, introduced to the United States by Shanghai-based company PDD Holdings, has emerged as one of the leading online advertisers in the country. With a whopping $3 billion investment in online advertising in 2023, Temu has positioned itself as a major player in the eCommerce market. This significant investment has not only helped Temu gain popularity but has also raised concerns about the sustainability of its high-spending strategy.
Despite its massive advertising budget, Temu only managed to capture 1% of the US eCommerce market in 2023, leading analysts to question the effectiveness of its marketing efforts. Furthermore, there has been a noticeable decline in the conversion rate, with only 4.5% of monthly visits to Temu’s website resulting in sales, compared to rival Amazon’s impressive 56% conversion rate.
However, Temu has managed to build a user base of 70 million monthly active users in the US, indicating that it has successfully attracted a significant number of consumers. This achievement is a testament to the appeal of Temu’s affordable goods shipped from China.
Recognizing the importance of refining its marketing strategy for each market, Temu is focusing on improving its delivery times to compete with industry giant Amazon. Currently, it takes between one to three weeks to ship packages from China to the US, or four to nine days with express delivery. In comparison, Amazon customers often receive their orders within two days, giving them a clear advantage in terms of speed and convenience.
Temu’s entry into the US market marked the first major overseas expansion of PDD Holdings’ eCommerce company, Pinduoduo. Known as the largest online marketplace for agricultural products in China, Pinduoduo has successfully attracted sellers from various categories, particularly low-priced daily necessities and home products.
In February 2023, just five months after its launch in the US, Temu aired Super Bowl ads to promote its online shopping app. The parent company, PDD Holdings, aimed to showcase the competitive prices offered by Temu and the freedom consumers can experience while shopping on the platform.
Contrary to its reputation as a platform for younger consumers, Temu has managed to attract a significant number of baby boomer and Generation X shoppers in the US. This indicates that Temu’s appeal extends beyond the younger demographic, allowing the platform to tap into a wider range of consumers.
Despite the challenges and concerns raised by analysts, Temu’s massive investment in online advertising has helped establish it as one of the largest players in the US eCommerce market. With a user base of 70 million monthly active users, Temu continues to refine its marketing strategy and aims to improve delivery times to compete with industry giant Amazon.