Pinduoduo Temu platform is launched, and low-priced products become the “king of orders”!

After half a month of public investment, Pinduoduo's cross-border platform Temu was officially launched. In the preparation stage, Temu was almost open to all categories of investment, but judging from the platform page, women's clothing and jewelry are currently the mainstream products, and the number of products in multiple categories is still relatively small.

As the outside world had previously speculated, Temu used low prices as a starting point to enter the US market, selling rings and other accessories for less than $1. The prices of some products were so low that some sellers even lamented that the pricing of domestic e-commerce was just like that.

Temu acquires customers at a low price

On September 1, Pinduoduo's cross-border platform Temu was officially launched. The main categories of products on the platform, the pricing positioning, whether it is sold through the website or the APP, etc. have all attracted much attention in the industry.

Temu website currently has 14 major categories - women's clothing, jewelry, shoes and bags, home and garden, children's clothing, pet products, men's clothing, sports and outdoor, beauty and health, underwear and sleepwear, industrial supplies, baby products, electronic products, and office supplies.

At the beginning of the launch, there were not many products on the platform. The investment managers of women's wear, men's wear and other categories are still actively recruiting merchants and connecting with them in a special group to speed up the review and entry process. As sellers continue to upload products, the platform product library is expanding.

The editor has observed that the products with the most orders at present are mainly jewelry such as necklaces and bracelets, accessories with Halloween elements, dresses with strong sense of design, beauty tools such as eyebrow trimmers, pet supplies and tableware (especially wooden ones).

According to the platform introduction, Temu will "discover a wide range of global products at amazing prices", from fashion to jewelry and home decor, users can easily find their favorite new products.

This clearly shows the platform's cost-effective strategy. The prices of its women's clothing are mostly between 5 and 20 US dollars, and the prices of jewelry and accessories are mostly below 5 US dollars. Rings and necklaces priced at less than 1 US dollar can be seen everywhere.

Among them, a men's stainless steel ring was priced at $1.99, which shocked some sellers. However, the product page now shows that the price has been reduced to $0.95, and 17 pieces have been sold. Another minimalist bracelet is priced at $0.38, and 32 pieces have been sold, leading the sales volume by a large margin.

To highlight the price advantage, the platform also has two "stock up" areas on its homepage. One is the "US$10 and below" area, which includes women's clothing, jewelry, Halloween decorations, etc.; the other is the "US$0.99 and above" area, which mainly sells rings, earrings, small accessories, eyebrow trimmers and other beauty tools.

Pinduoduo's cross-border project is aimed at 15 categories, including clothing, mobile phone accessories, and auto parts, and it is determined to build a full-category platform. However , judging from the display on the homepage of Temu website and the marketing posts on social media accounts such as Twitter, women's clothing and fashion products seem to be its main categories.

"In the recent live broadcast, although it is said that small and light products are acceptable, the manager seems to prefer clothing and electronics," said a cross-border seller. Another peer also said that judging from the Meta information such as website title, keywords and description, Temu's SEO direction is women's clothing and fashion categories, and the so-called "full range of products" seems to be a gimmick.

Of course, it is also possible that the platform is more optimistic about the women's clothing category and has more supplier resources in this category. Therefore, when products in other categories are not yet sufficient, it temporarily uses women's clothing to preheat the market.

Previously, when the news of Pinduoduo's overseas expansion to develop an APP came out, some industry insiders pointed out that the majority of Western mobile traffic is on responsive pages, and Pinduoduo's main APP will face high promotion costs. However, after Temu was actually launched, it operated on two legs: website + APP, avoiding the above concerns.

Temu is offering a 20% discount on its first order. Orders over $49 will get free shipping, while orders under $49 will cost $2.99.

Regarding the return policy that sellers are concerned about, except for special products such as customized products, buyers can return and refund most products purchased on the platform.

Shipping is free for the first return on any order. If a buyer has already returned an item from an order and wants to return another item from that order, they can still do so as long as the 90-day window has not expired, but they will need to use a return label and pay a $7.99 shipping fee, which will be deducted from the refund.

Why is Temu so cheap?

Temu's entry into the US market will directly compete with giants such as Amazon and Walmart. In comparison, Temu's biggest advantage may be its price. US media reports pointed out that Temu's prices are much cheaper than Amazon's.

Temu's prices are related to its business model, which is different from Amazon in some ways. Temu's suppliers are different from Amazon's third-party sellers. Amazon sellers have pricing power, but Temu suppliers do not.

Suppose the cost of a pair of jeans is $10. The seller can sell it on Amazon at $20 or $60. When the seller sells it at $20, he has a gross profit of $10; when he sells it at $60, he has a gross profit of $50.

If a seller sells a pair of jeans for $10 on Temu, and the price he negotiates with Temu is $12, then his gross profit is fixed at $2. No matter how Temu sets the price, it has nothing to do with the seller.

To a certain extent, Temu's low price is achieved by squeezing suppliers' profits.

Suppose there are 2,000 sellers selling jeans on Amazon, and they set prices based on product features and market demand. About 10% of these sellers will make a decent profit, 20% may make a satisfactory profit, 20% will break even, and 50% will lose money.

So how will this story play out at Temu? 2,000 sellers apply to Temu, and perhaps only 10% of them are accepted. These 100 sellers send their samples to Temu for a second round of screening. Temu selects the lowest price among similar products, and in the end, only 20 suppliers may be selected.

These 20 suppliers must ensure that their products are priced at the lowest possible price. The final seller can provide Temu with a pair of $10 jeans for $10.50, and Temu can sell it to consumers for $12. This is much lower than the minimum selling price of $20 on Amazon.

Temu's 20 suppliers must always keep their prices the lowest, and once a new factory comes in and can provide similar products at a lower price, Temu will dump the higher-priced supplier. If the product doesn't sell, Temu doesn't lose much because Temu only pays the supplier when the product sells.

As a supplier, to survive on Temu, you must minimize costs. Therefore, Temu sellers are different from Amazon sellers. Amazon sellers need to be good at marketing, while Temu sellers must be proficient in supply chain management and product manufacturing.

These sellers who work with Temu must minimize costs. As Temu develops, many factories will compete fiercely, and the few winners who survive will get all the profits of the market.

Temu’s prices are so low, how about the quality of its products? Its requirement for suppliers is that when consumers request a return or exchange, if it is not a product quality issue, Temu will bear all losses. However, if it is a quality issue, the supplier will be fined five times the cost of the product.

So, from this point of view, Temu’s sellers must ensure that the product price is the lowest and the quality is up to standard.

Temu's situation abroad is different from Pinduoduo's in China. Pinduoduo's domestic traffic fission mode of cutting prices does not appear on Temu. Industry insiders believe that one of Pinduoduo's biggest highlights in China is cutting prices. Now that it has entered the US, it can only rely on low prices to attract consumers.

Another industry insider said that Pinduoduo won in China by relying on price, but this may not work abroad. Apps that were previously positioned as low-priced in the industry are now having a hard time. In addition, foreigners pay attention to product quality, and it is difficult to guarantee quality at low prices.

When talking about overseas business, Chen Lei of Pinduoduo mentioned: "We will not repeat what others have done. We will start from the needs of consumers and create unique value. Overseas business will not be achieved overnight, and the accumulated experience will be very valuable to the team."

In addition to low prices, we look forward to Pinduoduo's new gameplay in overseas markets.

Pinduoduo, cross-border