Entering a new gold mine, Temu earns more than 2 billion in one year!

Looking around the world, cross-border e-commerce is booming in an unstoppable manner. Some sellers describe it as "cross-border e-commerce is like riding a rocket, soaring all the way." While many platforms and sellers are focusing on the red ocean market, some previously inconspicuous small markets have also quietly brought new opportunities, such as the recently popular Central and Eastern European market - Hungary.

Research data shows that Hungary's e-commerce market revenue will reach 1.92 trillion forints (about 4.7 billion euros) in 2024, a year-on-year increase of 15%. In this market with great development potential, Chinese e-commerce giants Temu and Polish e-commerce giant Allegro have taken the lead.

Small markets in Central and Eastern Europe are growing faster

As one of the world's leading e-commerce markets, Europe's development speed has always amazed sellers. According to data released by the European E-Commerce Association, the scale of European e-commerce will be about 950 billion euros in 2024, and it is expected that by 2029, this figure will soar to more than 1 trillion euros.

Among them, Western European countries such as the United Kingdom, France, and Germany are the main growth drivers of European e-commerce. In addition to these mainstream countries, the potential of some niche e-commerce treasures is also being further explored, and Hungary is one of many countries.

Recently, market research firm PwC released a research report on the Hungarian e-commerce market. According to the measurement data from the first three quarters of 2024 and the preliminary estimated data from the fourth quarter, in 2024, the revenue of the Hungarian e-commerce market will reach 1.92 trillion forints (about 4.7 billion euros), a year-on-year increase of 15%.

In the total e-commerce revenue, sales from local e-commerce increased by 10% year-on-year, while sales from cross-border e-commerce websites reached 330 billion forints, a year-on-year increase of 17%. It is not difficult to find from the two sets of data that cross-border e-commerce is the key driving force for the growth of the country's total e-commerce revenue and plays an important role that cannot be ignored.

According to local media analysis, the rapid development of e-commerce in Hungary in recent years has benefited from multiple factors.

On the one hand , Hungary is located in the "heart" of Europe and is an important transportation hub connecting Eastern Europe and Western Europe. Its geographical location is very advantageous, which further promotes the flow of goods and information within Europe and is of great benefit to the development of cross-border e-commerce.

On the other hand , Hungary has a population of nearly 10 million. With the increase in wage levels, consumer confidence and shopping ability have continued to increase in recent years. In particular, as many as 75% of consumers have switched from offline to online, which in turn has promoted the increase in e-commerce sales.

In addition , the rise of domestic e-commerce platforms and the entry of foreign platforms such as Temu and Allegro have also promoted the prosperous development of the Hungarian e-commerce market. While they have intensified market competition, they have also enabled local platforms to continue to innovate and optimize.

Temu crushes local platforms, with revenue reaching more than 2 billion

Let’s first talk about Temu, a Chinese e-commerce platform that occupies an important position in the Hungarian market and has the most outstanding performance .

Data shows that in 2024, Temu's order volume in the Hungarian market exceeded 9 million, with revenue of approximately 110 billion forints (approximately RMB 2.079 billion) , accounting for almost one-third of the total cross-border e-commerce revenue.

In addition to order volume and revenue, Temu's local customer base has also soared. Last year, its active users reached 1.8 million , accounting for 31% of the total number of online shoppers .

It is not surprising that Temu has achieved such results in this area, which can be seen from the earlier data.

Since the launch of the Hungarian site in September 2023, Temu has been growing rapidly in the country. In April 2024, the platform had already exceeded 1.28 million customers in the country just over half a year after its launch, laying a solid foundation for the increase in orders and sales.

Data shows that in the first quarter of 2024, the platform's order volume in Hungary was about 1.5 million, and it soared to 4 million by the middle of the year. In addition, from January to June 2024, local consumers purchased a total of 140 billion forints from foreign e-commerce platforms, of which 50 billion forints were generated on Temu, accounting for 35% of the total revenue.

In addition, among Hungarian online shoppers, 31% visit Temu every month, 31% shop on the platform at least once a week, and users will continue to buy a second time or even more times after their first purchase, with a repurchase rate of up to 68%.

Based on the above data, some institutions predicted at the time that Temu's order volume may exceed 10 million in 2024, and it is expected to become the most influential cross-border e-commerce platform in the Hungarian market.

It must be said that Temu's success is mainly due to the following factors:

The first is the low-price strategy. The platform directly connects with factories, and the price of the same product can be 40% cheaper than that of local products. In addition, it often issues coupons and flash sales, which attracts a large number of users to place orders.

Secondly, localized operations. In order to gain a deeper understanding of local users’ consumption habits, Temu set up a local team in Hungary. The targeted marketing strategy, coupled with local warehouse logistics to reduce delivery time, won users’ favor in all aspects and greatly improved their shopping experience.

The blue ocean market continues to attract giants to dig for gold

As a blue ocean market, Hungary continues to generate new opportunities. In addition to Temu, it has also attracted many platforms to come and make money, including Poland's e-commerce giant Allegro .

In early October last year , Allegro officially announced the launch of its business in Hungary, further expanding its business footprint in Central Europe. Its Chief Business Officer Matthias Frechent said that the Hungarian e-commerce market has broad development prospects, and entering the market is a key step for Allegro to realize its vision of "becoming the most popular shopping platform in Europe."

In addition, professionals also estimate that the Hungarian website allegro.hu is expected to bring 10 million new potential customers to Allegro.

Looking at the Temu and Allegro platforms, although they have gained new development opportunities in Hungary, they are also subject to strict supervision by relevant departments in this market.

Temu’s rapid rise in Hungary has brought considerable impact on local businesses and sellers. Earlier, there were reports that in order to balance the market and protect the local economy, relevant Hungarian departments planned to implement new policies to restrict platforms such as Temu.

In order to attract consumers, Allegro used "lowest price guarantee" as its slogan on its website and mobile application. However, the Hungarian Competition Authority (GVH) pointed out that the "lowest price guarantee" clause contained many restrictions and routines, deceiving consumers, and announced an investigation into Allegro on this basis.

The above-mentioned supervision also serves as a warning to many e-commerce platforms including Temu and Allegro. No matter which market they enter, if they want to gain a foothold and go further, they must be down-to-earth and focus on legal and compliant operations.

However, for the majority of cross-border sellers, the Hungarian market has shown significant growth in recent years and has now become one of the hot markets for cross-border e-commerce in Europe .

If sellers do not want to survive in the red ocean market, they might as well devote some energy to the niche blue ocean market. However, they must remember that opportunities are often accompanied by challenges. Only by deeply understanding market dynamics and adjusting operational strategies in a timely manner can they have the opportunity to stand out in the new market.