Shein lead under the fire; Chinese-owned app Temu tops the US charts

Shein lead under the fire;  Chinese-owned app Temu tops the US charts

It took Shein a decade to overtake Inditex SA’s Zara as the world’s biggest fast fashion retailer. Now, a new online upstart is looking to overtake Shein—at least in one important measure—within a year.

Temu, the shopping platform of Chinese e-commerce heavyweight PDD Holdings Inc., last month set a lofty sales goal for its North American business: report at least one day of gross merchandise value that exceeds Shein’s by Sept. 1. It would be celebrating the anniversary of its entry into the U.S. market, according to people familiar with the matter, who asked not to be identified because they were not authorized to speak publicly.

This is the first step in Temu’s wider plans to dominate the online shopping landscape. PDD, which has successfully penetrated the underserved, lower-tier segments of the Chinese market dominated by Alibaba Group Holding Ltd and Inc, is now hoping the new app will lead to longer-term overseas business. is ranked No. 1 in Asia Database’s Digital Commerce 360 ​​ranking of Asia’s largest online retailers based on Internet sales. Alibaba also owns No. 2 Lazada Group.

Alibaba owns Taobao, which is ranked #1 in the Global Online Marketplaces Digital Commerce 360 ​​database. It also owns Tmall (No. 2). ranks 4th.

Shein, Temu fight for cross-border e-commerce dominance

He considers Temu Shein to be his greatest short-term rival. He wants to surpass his dominance in the next few years, the people said. But the company, which sells everything from clothes to kitchen supplies, is ultimately looking to take on global behemoths and eBay Inc.

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Amazon is #1 in 2022 Digital Commerce 360 ​​Top 1000 database. The Top 1000 ranks North American Internet retailers based on sales. It is ranked #3 in the Digital Commerce 360 ​​Online Marketplaces database, which ranks the 100 largest global marketplaces.

eBay ranks Number 5 in the database of online marketplaces.

Suitable for growth

Temu’s growth is already taking off. It has been the most downloaded app in Apple’s US app store for most of the past few months. According to data analytics firm YipitData, the company had about $500 million in GMV in the US in its first five months of operation. The figures show sales totaled almost $200 million in January alone. Temu launched in Canada, its second market, in February.

Temu is betting that a massive marketing campaign will drive sales growth. The company debuted a Super Bowl ad in mid-February with two 30-second spots featuring a customer twirling and dancing in an array of outfits. Super Bowl ads typically cost millions of dollars to produce and air. It also implements social marketing practices similar to Pinduoduo’s Chinese strategies. This includes offering discounts, cash rewards and freebies to customers who refer their friends.

The strategy is bearing fruit, in January, Temu’s website traffic exceeded Shein’s. If Temu can maintain its momentum, it will join some Chinese-owned Internet services that have been successful in the United States. These include Alibaba’s Aliexpress and ByteDance Ltd’s TikTok.

Aggressive prices

The app’s formula of ultra-low prices and flash sales has proven attractive at a time when consumers are tightening their belts, said Abe Yousef, senior analyst at app tracker Sensor Tower. Temu has been downloaded 24 million times since its inception. By January, it had amassed around 11 million monthly active users. Yousef estimates that this is up 47% from the December shopping season.

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“With the current challenging macroeconomic environment and support from parent company PDD Holdings, Temu is well positioned to continue its aggressive growth strategy among US consumers,” he said.

It’s hard to compare Shein’s finances. However, the scant details revealed indicate that Temu’s target will require rapid expansion to accelerate.

Fast fashion and Shein’s role in the US

Shein already dominates the US fast fashion market. According to YipitData, it is far ahead of rivals Zara and H&M. The Financial Times reported last month that Shein predicted global GMV would grow to $80.6 billion by 2025. This is 174% more than last year. Revenue could grow to $58.5 billion in 2025, up from $22.7 billion last year, according to the report, which cites an executive presentation to investors.

Temu’s staff were not given a daily sales target – a figure closely guarded by senior management. Instead, they were told to shift from growing users of their app and website to developing ways to increase customer spending.

The company did not respond to inquiries.

Shein’s rapid success has paved the way for a host of newcomers looking to enter the burgeoning e-commerce market, but Temu is widely seen as the most serious competitor. Temu is already headhunting Shein’s employees and targeting suppliers, while leveraging parent PDD’s deep pockets, extensive supply chains and expertise — particularly in consumer data that enables rapid changes to offerings — which is already China’s controls roughly 13% of online retail. Pinduoduo platform.

While both companies are synonymous with cheap, easy-to-find products, Temu operates more like a marketplace than a stand-alone brand like Shein. It does not handle design and manufacturing. Instead, it recruits suppliers to offer a list of products. Temu then selects from them and allows a store to open on its platform. After sellers send products to Temu’s warehouses in China, the company handles shipping, marketing and promotion, and after-sales services.

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