Temu, who was racing all the way, slowed down

Since its launch in the United States in September 2022, Temu has been in expansion mode and now has more than 70 sites worldwide.

On the other hand, Temu's revenue growth is also very exaggerated. In the past year, Temu's annual revenue reached 247.6 billion yuan, a year-on-year increase of 90%.

However, Temu's growth story did not last long.

Temu's GMV growth rate in the third quarter dropped sharply

According to public data, Temu's GMV in the third quarter of this year was around 13-14 billion US dollars, and the month-on-month growth rate dropped to around 15% or even lower, while the month-on-month growth rate in the previous quarter was about 50%.

Pinduoduo's executive director said in a previous earnings call that "Pinduoduo's global business is facing increasingly fierce competition. This competition, coupled with a complex external environment, is bound to cause some fluctuations and impacts on our business."

Indeed, Pinduoduo's latest quarterly report also confirms this view. Its third-quarter financial report shows that the transaction service revenue, including Temu, is 50 billion yuan, and the growth rate has dropped from 234% in the previous quarter to 72%, which is 3 billion lower than market expectations.

Some industry insiders analyzed that the growth rate was lower than expected mainly because Pinduoduo's main site reduced technical service fees and other fees, thereby lowering the main site's commission income.

Of course, the decline in Temu’s overseas growth also had a certain impact on Pinduoduo’s financial report.

It is understood that Temu will focus on developing semi-hosting business this year, because semi-hosting has very obvious advantages over full hosting: the semi-hosting model gives sellers more autonomy in warehousing and logistics, which is suitable for sellers who have certain experience in e-commerce operations and mature supply chains; the platform can also save high cross-border logistics costs, which can be said to be a win-win strategy.

However, as Temu continues to increase its online and offline semi-hosted investment promotion efforts, the results it receives have not continued to grow in direct proportion.

Overseas media have previously reported that the main targets of Temu's semi-hosted investment promotion are mostly Amazon sellers with certain experience. Some Temu investment promotion staff even directly recruit people to move in at Amazon sellers' office buildings.

This is because the semi-hosting model has certain requirements for the seller's overseas shipping capabilities, and Amazon sellers who have worked overseas for many years have undoubtedly become Temu's best choice.

However, after the initial "assault" phase, Temu's semi-hosted investment promotion fell into a bottleneck period. First, Temu's investment promotion team had attracted most of the Amazon sellers who were willing to join in a short period of time, while those Amazon sellers who were not willing were difficult to impress, which resulted in very limited targets for investment promotion in the later stage.

On the other hand, sellers who have already settled in will eventually choose to withdraw from the store due to reasons such as revenue not meeting expectations, fines, and heavy inventory pressure. Industry insiders said that in November this year, Temu's semi-hosting in the US region showed signs of decline.

In addition to internal reasons, Amazon also created considerable external competitive pressure on Temu.

Amazon's low-price mall impact

In June this year , Amazon announced that it would open a dedicated "Low Price Store" section on its main site.

After five months of preparation, Amazon quietly launched this new section at the top of its mobile app two weeks before the Black Friday promotion and named it Amazon Low Price Mall (Haul).

As the name suggests, the Low Price Mall is full of super low-priced goods, most of which are shipped directly from China. Currently, this feature is only available on mobile devices.

It is understood that Amazon's low-price mall requires that the price of all products on the site cannot be higher than US$20. In addition, the low-price mall will provide free delivery services for orders over US$25, and the higher the value of each order, the higher the discount, which encourages consumers to buy multiple products per order, hence the name Haul (buy a lot at a time).

However, cheaper prices come with slower delivery speeds, and items on Amazon's low-price mall usually take one to two weeks to reach consumers.

However, overseas consumers obviously do not have any "resentment" towards low-price shopping malls because of this . Instead, they are still enthusiastic about them.

According to Google Trends data, the search popularity of "Amazon haul" began to rise from November 13, and reached a small peak on November 15, after which the popularity declined slightly.

Then came the good news of the first batch of sellers who signed up for the platform. According to feedback from many sellers, the initial traffic of the low-price mall was indeed beyond expectations.

"We can now sell more than 100 orders every day, and several products have been sold out."

"An investment manager told me that there are links that have generated thousands of orders per day, which is really exciting."

“You can give it a try in the early stages. There are not many sellers now, so there is still room for profit.”

Although the profit margin is limited due to the low prices, industry insiders believe that in the current market environment most sellers can still make a lot of profit if they control costs well.

The feedback from sellers in low-price malls also shows that after the sellers in low-price malls have a large number of orders, it will definitely have a significant impact on the traffic of competing platforms.

From the outside, Amazon's low-price mall is mainly designed to cope with the low-price impact brought by Temu. Even the interface is designed to be similar to Temu. Foreign media even call the low-price mall a "copy of Temu."

Of course, how much of a threat the low-price mall can pose to Temu ultimately depends on whether consumers will pay for it. In the past year, Temu's monthly active users in the United States have grown exponentially, while the number of users on Amazon's main site has declined. Now that the two are finally standing on the same battlefield, it remains to be seen who will win in the future.

But what is certain is that as the low-price competition continues to escalate in the future, the only winners of this low-price war may be consumers who enjoy real discounts.

Temu

Revenue

increase

Slowdown