The race to bring Chinese-made goods to Western consumers through online stores is heating up. Pinduoduo, the Chinese e-commerce giant known for offering hard-to-believe deals, has quickly gained momentum for its first international venture in the US
The company’s overseas shopping app called Temubriefly claimed the top spot among Android shopping apps in the US in mid-September before diving to No. 15 this week, according to app analytics platform Data.ai. The rankings indicate new downloads, so it’s difficult to gauge the app’s user retention and activity.
At a glance, Temu doesn’t look much different from other e-commerce platforms that export cheap goods from China, such as Amazon, Alibaba’s AliExpress or Wish. The landing page features a dazzling collection of discounted products, from a $2.77 blouse to a $1.39 soap holder.
Pinduoduo is relatively late in the cross-border e-commerce scene. In almost every major market outside of China, one can find an online retailer that imports goods directly from Chinese suppliers or manufacturers. Lazada, which is owned by Alibaba, and Shopee, which is backed by Tencent, have strong positions in Southeast Asia. AliExpress is a popular option in Russia. Shein, the fast fashion e-commerce site with a growing product category, is the go-to shopping app for young people across Europe and the US
Temu’s edge over its competitors could be its extensive connections with factories in China. Founded in 2015, Pinduoduo quickly rose to challenge Alibaba’s dominance that began more than a decade earlier. The company’s meteoric rise is due to a clever strategy of connecting manufacturers directly with consumers, reducing the costs of intermediaries and ultimately enabling it to price products at much lower prices than rivals that rely on layers of distributors.
It looks like Pinduoduo will continue to play abroad. Only this week, the company announced that it will invest “tens of millions of RMB” in “cultivating 100 export-oriented brands.” In addition, the initiative aims to help 10,000 domestic manufacturers to sell worldwide.
Temu has an edge in sourcing products thanks to Pinduoduo’s supply chain resources, but it can be difficult to replicate the success of the user acquisition strategy that enabled Pinduoduo’s rapid growth at home. In its early years, Pinduoduo relied heavily on its investor Tencent’s WeChat app, where users shared deals with friends to get product discounts.
The setup worked because WeChat has changed much more than a messenger app, with a built-in mini-app ecosystem that integrates seamlessly with its social features, a user scenario lacking in western equivalents like WhatsApp.
Temu may also face the same challenges that Shein suffers from. The fast fashion perfumer has been repeatedly criticized for his opaque supply chain practices and accused of intellectual property infringement. In 2019, the US added Pinduoduo to its infamous blacklist for suspected counterfeits, though the company has pledged to crack down on counterfeits.