Temu's global expansion strategy is currently at a crucial stage, with its market potential and profit prospects remarkable. Morgan Stanley believes that the platform is expected to achieve profitability as early as 2025, with enormous growth potential for GMV, and is expected to reach $130 billion by 2030.
"Chinese concept stocks"$PDD Holdings (PDD.US)$The overseas expansion of "pdd holdings", a widely watched focus in the industry, has been rapidly growing in the global market since Temu, its international business, launched in September 2022, thanks to its low stock price strategy and rich selection of commodities.
Morgan Stanley analyst Eddy Wang and others pointed out in the latest research report that Temu's global expansion strategy is at a critical period, and its market potential and profit prospects are remarkable. The platform is expected to achieve profitability as soon as 2025, and its GMV growth potential is huge, reaching $130 billion by 2030.
Going Beyond the USA and Achieving a More Balanced Global Strategy
Temu is gradually adjusting its global strategy, shifting from initially focusing on the US market to achieving a more balanced global layout. In 2023, Temu experienced a radical user acquisition phase in the US market. In 2024, the company's strategic focus in the United States shifted to improving the richness of its product variety (SKU) and enhancing user experience, while actively expanding into emerging markets such as Europe and Latin America.
Analysts noted that in May 2024, Temu's monthly active users (MAU) in Europe had already surpassed Amazon and AliExpress, with increases of 38% and 82%, respectively. This strong growth momentum is expected to continue into the second half of 2024, bringing Temu a more balanced global market layout.
Huge GMV Growth Potential with a Possible $130 Billion by 2030
With the adjustment of its global strategy, Temu's distribution of GMV (gross merchandise volume) by region is undergoing a significant change. Analysts predict that the contribution of the US market to Temu's GMV will drop from over 50% in 2023 to 33% in 2024, and further decrease to 30% in 2030. At the same time, the European market is expected to become Temu's largest source of GMV in 2024, accounting for 37%. The Latin American market is also expected to contribute approximately 10% of Temu's GMV in 2024.
Based on this trend, analysts predict that Temu's GMV will increase from $19 billion in 2023 to $53 billion in 2024, and expect Temu's GMV to reach $130 billion by 2030. Despite its rapid growth, Temu's market share in e-commerce markets in various regions is still relatively small, with less than 2% in the US market and less than 4% in Europe and Latin America in 2024, which leaves tremendous room for potential growth.
Profit Prospects and Business Model Optimization to Achieve Profitability by 2025
With the promotion of its semi-managed model and the improvement of operating efficiency, Temu's profitability is expected to be significantly improved. Analysts predict that Temu may achieve profitability by 2025, and its operating profit is expected to reach $9 billion by 2030. The improvement of this profitability outlook is mainly attributable to the following factors:
The promotion of the semi-managed model, which helps expand the marketable scale and improve gross margin;
Optimization of warehousing and logistics management, improving user experience while reducing operating costs;
Achieving a more balanced global layout to diversify market risks and improve overall operating efficiency.
Editor/Somer