After gaining a solid foothold in the US market and expanding into multiple Western markets, Temu, the cross-border e-commerce app owned by PDD Holdings, has set its sights on the Asian market.
On Thursday, the platform, known for its wide range of ultra-low-priced products such as electronics, household goods and apparel, started selling in Japan.
Founded in 2022, Temu focuses on selling low-priced made-in-China products to overseas consumers. By leveraging its parent company's strength in supply chain and marketing, the platform has been growing rapidly since its launch. In March 2023, the company announced that Temu had reached 10 million users.
Shanghai-based PDD Holdings also operates Pinduoduo, a budget shopping platform in China.
Temu is currently available in the US, Canada, Australia, New Zealand, France, Italy, Germany, the Netherlands, Spain, and the UK.
Revenue in Japan is expected to reach $180.7 billion by 2023, making it the third-largest e-commerce market after China and the US.
While the number may seem staggering, it's important to realize that online shopping accounts for only a small percentage of personal consumption in Japan. A study by Japan's Ministry of Economy, Trade and Industry shows that e-commerce only accounted for 8% of total merchandise sales in 2020.
What’s more, Japanese are about 40% less likely than average to shop for daily necessities online, according to a 2022 survey of 39 countries by German research firm Statista.
Temu's entry into Japan was apparently inspired by the success of its rival Shein. The fast-fashion brand has established a considerable presence in the country and currently holds the top spot in both the App Store and Google Store.
However, Shein's achievements may lie in its strength in the fashion segment, offering a wider selection at lower prices compared to Zara, H&M, or Uniqlo. Given that Japanese brick-and-mortar store chains like Daiso, Seria, Natural Kitchen, and Cando maintain a distinct edge in the electronics, and home goods segments, boasting both affordability and variety, Temu's potential to establish a unique position for itself remains uncertain.
As Japan's largest and most popular 100 yen chain, Daiso offers 70,000 products ranging from cleaning supplies, kitchenware, beauty products, stationery, toys, baby products, food, and more at low prices but with reliable quality. Daiso has more than 3,000 stores throughout Japan and has opened more than 2,000 stores overseas, and is still growing.
Although Temu has not yet been a significant revenue generator for its parent company, its strategic value is well-recognized, prompting PDD Holdings to invest heavily in the platform
Temu reportedly paid $14 million for two 30-second slots during Super Bowl LVII in February 2023, and has paid for more than 900 app store search terms to get to the top of listings.
According to PDD Holdings' first-quarter earnings report, its revenue jumped 58% year-over-year to 37.64 billion yuan ($5.19 billion), while sales and marketing expenses came in at 16.26 billion yuan, up 45% from 11.22 billion yuan in the same quarter of 2022.