Temu, the cross-border e-commerce platform launched by Pinduoduo, has an average daily GMV (Gross Merchandise Volume) of over $1.5 million, Chinese tech news outlet 36Kr reported on Thursday.
Although the figure is slightly lower than expectations, the company is upbeat about its growth because Black Friday, the largest shopping festival in North America, is around the corner, the report cited people familiar with the matter as saying.
By leveraging China's supply chain and building a direct-to-consumer model, Shein has taken the world by storm. The fast fashion retailer's success story has become a playbook for Chinese e-commerce players to open up overseas markets.
Therefore, Pinduoduo, China's well-known budget shopping app, brought its Shein-like cross-border e-commerce site Temu to the US on September 2nd , hoping to grab a piece of the world's largest consumer market.
Currently, Instagram accounts for 30% of Temu's new customer acquisition, Facebook accounts for 30%, Google accounts for 20%, other channel including TikTok, YouTube and more, accounts for 15%. The distribution is similar to the renowned fast fashion e-tailer Shein.
Temu's marketing budget for next year may exceed 7 billion, but the exact amount will depend on market conditions, the sources said.
The platform's 30-day repurchase rate is 10%, which is somewhat higher than that of its competitors, and it now has over 60,000 daily active transaction users. However, per customer transaction amount of Temu is pretty low, standing at $25. By comparison, per customer transaction amount of Shein came in$75 in Q2 2022.
The platform now loses an average of $30 per order due to large-scale discounts offerings and free shipping, according to the sources.
In an effort to catch up with Shein, the Pinduoduo subsidiary has targeted a GMV of $30 billion in the next five years, according to the sources. In the first half of 2022, Shein's sales topped $16 billion, a year-on-year increase of more than 50%.
Pinduoduo, whose work culture is known for being fast-paced and scrappy, has grown Temu from its first debut on September 23 with 200 employees to its current size of 700. With its aggressive marketing activities, including generous referral bonus, it has climbed swiftly in the App Store and Google Play, once topping the shopping category.
Temu is Pinduoduo's first test in overseas markets, and it is going swimmingly thus far. Founded in 2015 by former Googler Colin Huang, Pinduoduo is one of the fastest-growing internet companies in China. It carved out its niche in the e-commerce market dominated by Alibaba and JD.com and went public on the Nasdaq in 2018.
"The overseas business is one of the opportunities we see many peers in the industry achieving good results, so we believe it’s a direction worth trying out," Chen Lei, CEO of Pinduoduo, said in the company's second-quarter earnings conference call.
It looks like the company is still looking into more international markets. After getting a foothold in the US, Temu is said to have started offering its service in Africa in the past few days.
Cross-border e-commerce has become a key driver of the Chinese economy during the COVID-19 pandemic. In 2021, the country's cross-border e-commerce exports climbed 24.5% year-on-year to 1.44 trillion yuan ($312.6 billion), official data showed.