China Explained: What's behind the success of TEMU?

2024 saw a number of Chinese apps making international headlines, such as Rednote, Deepsee and TikTok… In the online shopping industry, TEMU is the one hogging the limelight.

Owned by Chinese e-commerce giant PDD Holdings, TEMU was established in the U.S. in September 2022, seven years later than its Chinese peer Pinduoduo. It became the most downloaded shopping app within a month, surpassing retail giant Amazon, Walmart and rising player Shein.

As of the first quarter in 2024, Temu's monthly active users globally grew by 614 percent year-over-year to 167 million, and it was the most download shopping app worldwide in 2024.

What has TEMU done right?

TEMU owes its success partly to its peer in China, Pinduoduo. Growing out of fierce competition among China's e-commerce giants such as JD.com and Alibaba, low price has been a long-term strategy of the company.

And TEMU has learned from that strategy.

Compared with Amazon, a pair of trainers costs less than 20 dollars, T-shirts can cost less than 5 dollars, while iPhone cases cost less than three dollars. The prices on Amazon could be double or even several times those prices.

Meanwhile, TEMU provides users with diverse offers, coupons and discounts which can be accessed by taking part in its games such as the spinning roulette wheel or simply forwarding the platform to their friends and relatives. The designing of the app has sparkling countdown timers, lightening bolts as well, also helping to advertise its discount deals.

The key is to encourage more users to join and keep them for as long as they can, with many customers leaving with a big 'TEMU haul'.

It's a big relief for many consumers, as the world has been struggling to contain inflation for the last few years.

TEMU's Tricks of Trade

TEMU's low-price strategy is closely related to its model of management: the "fully-managed model".

The "fully-managed model" bridges the manufacturers in China directly with global customers, so all the costs from the middle links such as storage, transport, marketing and retail can be slashed.

It was a big relief for Chinese manufacturers who have no experience of cross-border trade. Let alone the barriers of culture, language, foreign policies and laws.

They now have one extra channel to sell their products. All they need to do is to deliver their goods directly to TEMU's warehouse in China, and TEMU will take care with the rest from transporting, marketing to selling. In exchange, TEMU has the final say on prices.

By delivering the goods directly from their Chinese warehouse to the customers overseas, TEMU has managed to control its prices at a relatively low level.

But everything comes at a cost.

For Amazon, with a large number of warehouses and distributing centers deployed, it takes only four or five days maximum for any delivery. But it sometimes takes up to two weeks for TEMU.

Living up to its slogan: Spending like a billionaire

TEMU is selling low-price products. But just like its catchy slogan "spending like a billionaire," TEMU spends massively on advertisement.

It has invested tens of millions of dollars on the U.S.'s most watch show, the Super Bowl, for two consecutive years. Besides, in the year 2023, TEMU was Meta's main customer in the U.S., contributing about 10 percent of the latter's 2023 sales, worth around 13.7 billion dollars.

All helped to boosts its skyrocketing growth. TEMU has been making headlines around the world. It is also among one of the most well-known Chinese apps overseas.

The Price of Success

But when success arrives, so do challenges.

Besides TEMU's strategy, the de minimis exemption was a key factor as well.

This exemption allows packages worth under 800 dollars to enter the U.S. without tariff. However, at the beginning of 2025, the White House has announced that they would close the de minimis exemption along with Trump’s new tariffs. That imposes challenges to TEMU's low-price strategy as well.

At the same time, despite the price, there are occasionally complaints about the quality of TEMU's products. TEMU has been seeking new solutions, such as the "semi-managed models". By offering the manufacturers more say on the pricing and advertising of the products, they will share more responsibility in shipping and warehousing.

TEMU has also been seeking local merchants with warehousing and local supply chain. The new model will enable TEMU to shorten the last-meter delivery time, while allowing them to include bulkier products such as furniture.

The rise of TEMU has inspired many industrial giants to change as well. Amazon, for example, has planned to offer TEMU-like discounts via low-price online stores by importing more goods directly from China.

Who will be the final winner? Maybe there is no definite answer for the question, because the only constant in the commercial world is change. While new apps emerge and competitions still exist, choice will always remain in the hands of consumers. 

Supervisor: Mei Yan

Chief Editor: Qian Fang, Duncan Hooper

Executive Producer: Gleb Burashov

Producer: Ai Yan

Presenter: Michael Marillier

Cameraman: Tom Triebel

Video Editing: Tom Triebel, Ilze Juhnevica

Motion Graphics: Ilze Juhnevica, Alexander Shields