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Temu is an online marketplace headquartered in Boston and owned by its parent Chinese company PDD Holdings, the parent company of the eCommerce giant Pinduoduo. They launched in the US in September 2022 and entered the New Zealand and Australian markets in March 2023. If you run an eCommerce store, you will have most likely seen Temu appear in your Auction Insights report over the last couple of months
Think of Temu as an improved and localised version of AliExpress, another Chinese eCommerce marketplace entering Western markets with a similar “low price” strategy. Regardless of the specific market your product sits within, you need to pay attention. There are some key offerings from Temu that New Zealand eCommerce stores don’t always provide.
Range - They sell a vast array of items, ranging from fast fashion and homeware to toys and electronics. All at extremely low prices.
Free Shipping - Standard shipping aims to deliver orders to New Zealand in 7-14 days in one single package. Sellers deliver the goods to Temu and they consolidate them for shipping. This is a better experience than AliExpress.
Free Returns - A better offer than a lot of NZ eCommerce retailers. Their returns process is also very straightforward. If it’s anything like Amazon, they will refund virtually anything, no questions asked. Lowering the barrier to purchase.
Price Adjustments - Temu will provide the price difference if the item is reduced within 30 days of purchase in the same country. So customers have less concern about buying early and missing a potential upcoming promo.
Global installs of the Temu app have been wildly successful. It managed to become the 8th most downloaded shopping app in the US last year, despite launching halfway through the year! Both SHEIN and Wish took about 3 years to cross 50 million installs, it took Temu about seven months. The vast majority of these downloads are paid acquisitions, raising the question, how sustainable is their growth strategy?
Consumer experience in New Zealand so far hasn’t been great. Temu has a 2.6/5 score on the Better Business Bureau, so some customers have had negative experiences. There are also sceptics on social media questioning the legitimacy of Temu, mostly because of its wildly low prices, a perceivably scammy-looking interface, and some bad shopping experiences shared by customers.
This perception is currently the leading theme for New Zealand consumers, with Google's “people also ask” results dominated by questions like “Is Temu a safe company to order from?” and “What is Temu and is it legit?”.
Despite this brand image, it’s safe to assume that consumers could easily be reassured by positive word-of-mouth stories, product reviews from NZ residents and potential site design changes.
Google Trends data for the New Zealand market shows that Temu has greater search interest than both AliExpress and Shein, but that interest since the initial launch has flattened.
In Australia, where Amazon is also in market, they are seeing sustained interest growth, matching SHEIN, but still well behind Amazon.
At Reason, we have seen Temu bidding across most of our eCommerce clients in some capacity over the last couple of months.
They are spending far more aggressively across the Shopping auction than Search. For most clients, Temu’s impression share increased dramatically in June but hasn’t seen much MoM growth since.
The product categories that we have seen the most aggressive spending from Temu include; Homeware, Storage Solutions, Security and Lighting.
It’s impossible to predict what the future of Temu will be within the New Zealand market, though they clearly have the resources available to have a fair stab at market success. Temu might not be the place New Zealand consumers go to buy high-price points or designer goods but will be a tempting solution for cheap, non-urgent items, think kitchen utensils, a Halloween costume, or a desk organiser.
Temu, along with other key international eCommerce players may not seem like your top-of-mind competitors today, but ignore them, and you might be confused to find yourself in a very different market in a couple of years.
