Temu, a Boston-based online marketplace, has quickly risen to become the most downloaded app in the United States, surpassing industry giants such as Amazon and Walmart. Temu’s impressive growth can be attributed to its wide range of affordable, high-quality products, including home goods, apparel, and electronics, and its low prices have drawn comparisons to Shein, the Chinese fast fashion upstart.
In November, Temu soared to the top of both iOS and Android mobile app stores in the US, with 24 million downloads and over 11 million monthly active users. According to Abe Yousef, a senior insights analyst at Sensor Tower, Temu’s success is largely due to its ability to acquire new users by offering extremely low prices and in-app flash deals, such as 89% off certain items.
Temu’s recent appearance during the Super Bowl showcased its proposition to users: feel like you’re splurging by buying lots of stuff cheaply. The commercial encouraged consumers to “shop like a billionaire,” highlighting the company’s affordability and commitment to providing customers with a sense of freedom. A swimsuit costs just $6.50, wireless earphones are priced at $8.50, and an eyebrow trimmer costs 90 cents.
For those interested in tools and home improvement, Temu is a promising marketplace to keep an eye on. Its parent company, Pinduoduo, made its name with a group-buying business model that allowed people to save money by enlisting friends to buy the same item in bulk. Temu utilizes its parent company’s “vast and deep network” to offer a wide range of affordable quality products, and its success in China has paved the way for expansion to the US and, more recently, Canada.
As Michael Felice, an associate partner at management consulting firm Kearney, points out, Temu may be exposing a white space in the market wherein brands have been producing at extreme low cost, but there has been so much bloated cost passed on for margin along the value chain. While there is the question of whether it is “too cheap to be good,” Temu’s ability to maintain low prices, free shipping, and other perks remains to be seen.