According to the Science and Technology Innovation Board Daily on October 16th (Reporter Xu Cihao), pdd holdings' cross-border e-commerce platform Temu is accelerating its layout in Southeast Asia.

It is reported that Temu has recently entered the markets of Vietnam and Brunei. Since embarking on the Southeast Asian market journey in August last year, the Philippines became its first stop for overseas expansion. Subsequently, in September of the same year, the Malaysia site also opened smoothly.

In July of this year, Temu opened its Thailand site. Currently, Temu's presence in Southeast Asia has expanded to five countries, with only Indonesia, Singapore, and other leading markets remaining unexplored.

However, the competitive situation of Temu in Vietnam is not optimistic. The e-commerce channel development consulting and analytics company YouNetECI's report on the sales of e-commerce platforms in Vietnam in the second quarter of 2024 shows that Shopee, TikTok Shop, Lazada, and other platforms have market shares of 71.4%, 22%, and 5.9%, respectively, and generally adopt a low stock price strategy.

Analyst Xiao Danyun of EqualOcean said in an interview with the Science and Technology Innovation Board Daily that the success of the low stock price strategy depends not only on being 'cheap,' but also requires coordinated efforts in logistics, service, policy compliance, and local operation. '

'Taking Shopee and Lazada as examples, their success is not just about offering low stock price products, but also about quickly responding to market demands, optimizing user experience, and utilizing local resources to improve operational efficiency. Clearly, Temu's development in the Southeast Asian market still requires efforts in these areas to better adapt to the market environment of this region.'

Entering Vietnam and Brunei, adopting a fully managed model.

According to the report on e-commerce in Southeast Asia published by the Singapore technology website OpenGovAsia, Vietnam and Thailand have become the two fastest-growing e-commerce markets in the Southeast Asian region.

Among them, Vietnam's e-commerce market has maintained an average annual growth rate between 16% and 30% over the past four years. Its Gross Merchandise Volume (GMV) has grown by as much as 52.9% year-on-year, followed closely by Thailand at 34.1%. Currently, Vietnam has surpassed the Philippines to become the third largest e-commerce market in Southeast Asia, undoubtedly driving Temu's expansion into Vietnam.

The reporter noticed that in order to quickly penetrate the market and launch the initial phase of the Vietnam site, Temu continued to use previous strategies such as low-price and logistics subsidy support, including providing 90 days of free return service, and offering up to 90% product discount promotion.

In addition, discount promotions remain a means of expanding Temu's presence in new markets. For example, the launch of discount activities on the Vietnam site includes discounts of 70,000 VND for orders over 750,000, 170,000 VND for orders over 1,250,000, and 250,000 VND for orders over 1,850,000.

According to an investment manager named Li Li (alias) from Temu, the Vietnam market adopts a fully managed model where merchants on the platform do not need to pay service fees or commissions, but the platform will sell at a markup based on the merchants' quotes.

Li Li also emphasized that currently Temu implements a fully managed model throughout Southeast Asia, while a semi-managed model is only available in markets such as the USA, Canada, Mexico, Australia, New Zealand, Japan, and Europe.

The journalist learned that in the fully managed model, e-commerce platforms are fully responsible for store operations, warehousing, distribution, after-sales, and other processes, while merchants only need to focus on providing products, mainly lightweight and high-cost-effective categories such as 3C accessories and fashion outfits.

Regarding platform activities, Li Li stated that Temu also advertises on Google and other mainstream platforms to attract traffic.

Currently, the initial version of the Vietnam station is basic, only supports English, only accepts credit card payments, and only two logistics companies (Ninja Van and Best) are connected. On the merchant side, Temu has not yet introduced support policies.

However, previously it took 5 to 20 days for Temu to deliver to Malaysia and the Philippines. Due to the geographical advantage of bordering China, the delivery time in Vietnam has been reduced to 4 to 7 days after the station opened, significantly improving speed.

Currently, Temu has achieved preliminary success in the global market. Data analysis platforms Statista and AppMagic have found that as of now, Temu's global download volume has exceeded 0.735 billion times, with monthly visits in the first quarter of 2024 exceeding 0.5 billion times. In addition, in May, June, and July 2024, Temu's monthly download volume exceeded 50 million times, three times that of the international e-commerce giant Amazon.

The journey of cross-border e-commerce in Southeast Asia is not easy.

EqualOcean analyst Xiao Danyun told the Star Daily that PDD Holdings has largely benefited from its social media marketing and traffic guidance strategies in China.

However, in the Southeast Asian market, local consumers have developed relatively fixed shopping channel preferences, and social media usage habits differ significantly from the North American market. For example, TikTok's influence in Southeast Asia is particularly significant, while PDD Holdings' current investment in this area is clearly insufficient, resulting in a significant discount on its social spread effect.

Xiao Danyun further pointed out that the Southeast Asian e-commerce market is relatively fragmented, online consumption habits are not yet mature, e-commerce penetration rate is still low, and offline shopping still dominates. At the same time, protection policies for local small and medium-sized enterprises in Southeast Asian countries also limit the expansion of foreign platforms like Temu.

Taking Indonesia as an example, according to Indonesian local media Antara news, the Indonesian Ministry of Communication and Information has banned access to the Chinese online shopping platform Temu in Indonesia to protect domestic micro, small, and medium-sized enterprises from the impact of foreign platforms.

Indonesian Minister of Communication and Information, Budi Arie Setiadi, stated that the decision to block Temu was based on the increasingly serious threat that foreign products pose to domestic small and medium-sized enterprises.

Currently, TEMU can still be found and downloaded in Indonesia through the Google Play Store or their website. However, users are unable to select Indonesia as the destination country in the app settings.

In fact, platforms like SHEIN and TikTok Shop have previously been shut out by Indonesia.

Previously, benefiting from the 'small amount exemption' policy, particularly in cross-border e-commerce transactions dominated by small parcel trade, platforms like TEMU, AliExpress, TikTok Shop, and SHEIN were able to dominate the global market with their extremely high cost performance advantage.

However, recently, multiple countries and regions have tightened their small amount exemption policies.

In the Southeast Asian market, starting from January 1st this year, Malaysia has abolished the 'small amount exemption' and started imposing a 10% low-price goods tax on imported goods valued below 500 Malaysian Ringgit (approximately RMB 816).

Thailand stipulates that starting from July 5th, imported goods below 1500 baht (approximately RMB 312) will no longer enjoy tax exemptions, and all low-priced imported goods will be subject to a 7% value-added tax.

As for Vietnam, they plan to cancel the tax exemption policy for small imported packages worth less than 1 million Vietnamese dong (approximately RMB 287). It is reported that Vietnam originally planned to impose value-added tax on imported goods below 2 million Vietnamese dong this May. The proposal submitted by the Vietnamese Finance Minister in June requires a 10% value-added tax on cross-border e-commerce small packages, seemingly without any tax-free threshold.

The shrinkage of the small exemption policy will inevitably lead to cost increases for platforms and merchants relying on the cross-border small parcel delivery model, directly impacting the fully managed model of platforms like Temu and SHEIN, which are part of the "Four Little Dragons" of cross-border China, as well as independent sellers of cross-border shipments.

Due to the policy differences between Southeast Asian countries and the Chinese market, cross-border e-commerce platforms represented by Temu clearly cannot directly replicate domestic experience and successful low-price strategies validated in the European and American markets in the Southeast Asian market.

Wu Jian, Operations Director of Vietnam Panshi Investment Consulting Co., told the Star Daily that despite the wide development space for low-cost commodities in the Southeast Asian market, established e-commerce platforms like Lazada and Shopee have been deeply rooted for many years, possessing a well-established logistics system with extremely high logistics efficiency.

In his view, as a latecomer, Temu not only faces competition from these strong rivals in the low-price commodity sector, but also needs to overcome the fact that Southeast Asian consumers are more inclined to use platform interface payments and cash on delivery payment habits. "Temu mainly relies on international mainstream credit card payments, which undoubtedly increases the difficulty of its market expansion in Southeast Asia, where credit card coverage and usage rates are not high."