Temu, a rapidly growing shopping app owned by Chinese e-commerce giant Pinduoduo, has been making waves in the US market since its launch in September 2022. With over 50 million downloads and a market cap of over $120 billion, the shopping platform is on track to challenge Shein, the current leader in the fast-fashion industry.
In the first quarter of 2023 alone, Temu saw 19 million downloads, bringing its total to 33 million since its US launch. The app’s popularity has been fueled by its aggressive pricing strategy, offering extremely low prices and in-app flash deals that have attracted millions of users. According to a recent report from US app analytics firm Data.ai, US consumers spent more than 2.8 billion hours on shopping apps in 2022, with Temu tapping into this growing trend.
Temu’s growth has even outpaced rival Shein in terms of daily downloads. In October 2022, Temu averaged around 43,000 daily installs in the US, while Shein averaged about 62,000. By November, Temu’s average daily installs grew to 185,000, while Shein’s climbed to 70,000. Last month, Temu averaged 187,000 installs, while Shein saw about 62,000.
The company has set an ambitious sales target for its North American business: to report at least a single day of gross merchandise value that tops Shein’s between now and September 1, marking the anniversary of its entry into the US market. If Temu can sustain its momentum, it will join a select few Chinese-owned internet services that have succeeded in the US, such as Alibaba’s Aliexpress and ByteDance Ltd.’s TikTok.
Temu’s success can be attributed to its parent company, PDD Holdings, which provides deep pockets, extensive supply chains, and expertise in consumer data. This has allowed Temu to headhunt Shein employees, target suppliers, and rapidly change its offerings based on consumer preferences.
However, it remains to be seen whether Temu’s aggressive growth strategy will pay off in the long run. The company faces challenges similar to those encountered by other discount shopping apps, such as long delivery times, fake listings, missing orders, and poor customer service. Additionally, having a high number of downloads does not guarantee a high number of monthly active users or customer retention.
Despite these challenges, Temu’s rapid growth and ambitious goals have positioned it as a serious competitor in the fast-fashion industry. As the app continues to gain traction in the US market, it will be interesting to see if it can surpass Shein and maintain its momentum in the coming months and years.
Jeanel has 15 years of retail, marketing and brand management experience. She has started an ecommerce business in 2019, after working in corporate retail and real estate as a senior managing director and former consultant. She's traveled all over the world, speaks at world renowned trade shows and events, holds a Bachelor’s of Commerce (B.Comm) and a Certificate in Commercial Real Estate. You can connect with her on Linkedin.