How Temu Is Able To Offer Unbeatable Prices

by Amir Bakian

Temu, a Boston-based e-commerce platform that made its debut last fall, has taken the United States by storm. With affordable prices and an extensive selection of products, the online shopping newcomer has become the most downloaded app on both Apple and Google Play app stores. In the last six months, the app has been downloaded 24 million times, according to Sensor Tower. The platforms popularity can be attributed mainly to its affordable prices across a wide spectrum of quality consumer goods, sourced from a global roster of suppliers and manufacturers cultivated by its parent, Nasdaq-listed PDD Holdings Inc. Its name is short for “Team Up, Price Down,” a nod to the company’s approach to driving down costs for consumers and suppliers through economies of scale. Temu has said that its mission is to empower consumers to live their best lives by providing the most affordable, quality products so they can pursue their dreams. With 60% of Americans living paycheck to paycheck according to the latest LendingClub report, Temu has swiftly become the go-to destination for people who love the best deals, whether they want to try a new sport or instrument or simply maximize their budget. Temu’s popularity has received a Super Bowl bump after the company joined American household names in advertising during the Big Game. Its 30-second spot, “Shop Like A Billionaire,” played not once, but twice during the game and featured a joyous shopper enjoying the freedom of shopping on Temu because of the affordability of the products. “Temu can potentially disrupt US e-commerce and offer consumers a fresh and innovative shopping experience,” said Arne Jeroschewski, founder & CEO at Parcel Perform Parcel Monitor, an e-commerce logistics platform. “Its recent Super Bowl ad was a significant milestone for Temu as it looks to expand its customer base and increase brand awareness.”

Secret behind Temu’s affordable prices


Temu’s prices per item rank among the lowest verus global peers, according to an analysis by Sanford C. Bernstein. But just how does Temu offer such unbeatable prices compared to e-commerce platforms and retailers like Amazon, Walmart, and Target? The answer lies in its extensive network of top-tier global suppliers built up by parent PDD Holdings over the years. This network enables Temu to source the best products at the best prices from the best suppliers.

Temus low prices are also sustainable because they are derived from savings that come from reducing extra “hidden” costs and improving demand forecasting. Its Next-Gen Manufacturing business model channels consumer insights to manufacturers so they can develop products that consumers want at the time they want them. This results in higher sales, less waste from unsold goods, and lower costs that are passed on to consumers. One satisfied Temu customer, Tina, was impressed by the price and quality of the presents she bought for Thanksgiving from the platform, known for its year-round low prices and wide selection of everyday merchandise. “I started out buying the cheapest stuff like car accessories, kitchen utensils, and gadgets. After seeing how surprisingly good quality the items were I moved on to baby clothes and even shoes,” she said in a review on Sitejabber. “Im super impressed with the quality of Temus products! It also arrives in a week or so.” Tina is not alone in her appreciation for the quality of Temus products at such low prices. Many customers have been impressed by the quality and variety of goods available on the platform, which sources its merchandise from top-tier global suppliers cultivated by parent company PDD Holdings.

Temu’s value for money message
“Temu is already a popular app in the US. The Super Bowl commercial has stimulated even more interest and will no doubt boost downloads and ultimately sales,” said Neil Saunders, managing director of GlobalData and a retail analyst. “Not least because the low prices and value for money message Temu pushed during the Super Bowl will resonate with many Americans.” Moreover, Temus commitment to its core values of integrity and social responsibility means it works with brands, manufacturers, and sellers who share the same values. The platform has a strict vetting process for all of its third-party sellers, and sellers who violate its policies can be permanently banned from the platform. By connecting consumers directly with manufacturers and removing the middlemen and markups that occur with each layer of distribution, Temu is disrupting the traditional e-commerce model. Michael Felice, an associate partner at management consulting firm Kearney, said, “Temu might be exposing a white space in the market wherein brands have been producing at extremely low cost, and along the value chain, there’s been so much bloated cost passed on for margin.” Temu has seemingly hit on a winning combination by focusing on bringing more value to its customers, and by offering affordability on a wide range of options that meet every person’s unique individual needs.

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