PDD joins the fierce battle and continues to increase investment in exchange for GMV
Temu has set an aggressive GMV target for 2024 - $30 billion, more than double this year's.
Temu’s aggressive investment and rapid growth are unprecedented not only among Chinese overseas companies, but also among global companies.
Temu has enabled about 9% of Americans to place orders on its platform in the past year. In the world's largest consumer market, Temu's September GMV has approached SHEIN, which has been operating for more than ten years. In September, Temu had 120 million people browsing its products and shipped an average of 1.6 million packages a day — most of which were shipped by sea to the United States.
Behind this are huge market launch costs. the business has a marketing budget of between $2 billion and $3 billion this year. When the Temu project was first established, Pinduoduo’s management planned to continue investing in it and were prepared to suffer losses for three years.
A Google source said that Temu's launch budget next year will be much larger than this year, but the specific data has not yet been determined. In February of this year, Temu spent $14 million (approximately 95.5 million yuan) to buy two 30-second advertising spots for its Super Bowl appearance. The night the ad ran, Temu saw a 45% increase in downloads and a 20% increase in daily active users.
The cost of a single Temu order is about US$32, of which the logistics cost is US$8-9. Logistics and marketing costs mean that Temu's current global loss rate is around 40%, with the US loss rate slightly lower at 30% - 35%. Temu's losses in the early market expansion period were due to its pursuit of a larger market. What should be more concerned about is whether its users can continue to retain after reducing subsidies.
The global market is full of huge opportunities and full of geopolitical complexities. This is no longer a blitz war that can be ended by throwing money and people quickly, but a protracted war that requires long-term investment from all parties involved.
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MonkeyGee : I think alot of people are done with Temu. poor quality stuff
Steven J MonkeyGee : Not quite, Temu quality is almost the same as Amazon 3 party vendors/ sellers. Temu just cuts the middle mans cost. Also comparing Temu’s quality to $Dollar General (DG.US)$$Dollar Tree (DLTR.US)$ ( dollar stores) Temu will win in that section by a landslide and it’s the reason why the dollars stores are losing share to Temu $PDD Holdings (PDD.US)$.
Quick example :
You have American ecommerce influencers (middle man sellers) advertising in social media platforms selling the same items they bought from Chinese Manufacturers and they raise the prices for something you can get at TEMU that can provide value, saving and same quality. Huge price difference
MonkeyGee : well that goes for the same for Amazon. The 3rd party sellers are causing so much trouble for Amazon. High returns and high defects.