A new marketplace is taking over the world and making managers at Amazon wonder.
Jeff Bezos’ goal was to create the largest department store in the world, and he did it with Amazon. A huge success worldwide and for years no serious competitor.
Even though the online store Otto from Germany, has the second highest turnover as a marketplace, Otto is not a real threat to Amazon.
Now the world could change. The new online marketplace Temu has seen the light of day.
I myself heard about the Temu marketplace for the first time on 04.05.2023 and full of curiosity I immediately visited the website.
Is Temu a reputable online store?
Since it is known that some fake stores are online, I was first cautious and have informed myself.
According to information on the website, Temu belongs to the company Whaleco Inc. from Boston, the USA. Whaleco is a subsidiary of PDD Holding – Pinduoduo Inc.
PDD – Pinduoduo Inc ➚ is a company from China and was founded in 2015 by Colin Huang.
The platform is already very mature and professionally built. Even though we are just learning about Temu, the online platform has already gone online in September 2022.
The numbers mentioned on the website are impressive and show the success of the Temu platform.
February 2023 saw the opening of the marketplace for Canada, March 2023 in Australia and New Zealand. This was followed by the European market with France, the Netherlands, Spain, Italy, England and Germany.
What does the Temu marketplace offer?
There are very many products offered for everyday use. Besides fashion, beauty and electronic items, there are also tools, jewelry and toys.
Like Amazon, the products are offered by various retailers and mostly shipped directly from China.
Pinduoduo takeover of international logistics?
This requires tremendous good logistics and fulfillment worldwide. Both were built in record time. Pinduoduo Holding specializes in logistics processes.
They do not use warehouses in the respective countries, but ship the goods directly from the warehouses in China.
But does it work?
Customers have different requirements in different countries. Not only by law, but also by the habit of buyers.
Customers in Germany, for example, are used to goods being delivered within the next 2 working days. Although in a study by Sendcloud found that Germans are willing to wait even up to 5 business days for the order.
Germans like to pay by invoice and avoid paying separate costs for delivery and returns.
My test order on Temu
After I convinced myself of the authenticity of the store, I was so brave and made a small test order on 03.05.2023.
I bought Lenovo LP5 Bluetooth headphones for 10,98 € including shipping. These earbuds cost €39.99 at Otto.
Otherwise I ordered 1 pair of sports pants, 2 knee bandages and 1 USB cable type C for only 0,88 €.
1) The order process
I really like the arrangement of the products on Temu. The buyer gets the feeling of discovering products with a very good overview.
The store looks very mature. The ordering processes are intuitive. It is easy to choose by sizes and variants. Notices are displayed when a product variant is no longer available.
I found the product photos partially confusing. There, for example, several tools are shown and sometimes talk about a set at one price. When ordering, a tool must then be selected in each case. If the whole set is selected, the price is significantly more expensive than previously displayed. Also, if even these prices are still significantly cheaper than what we pay at the hardware store, it irritates a bit.
In Germany, the packages are delivered with a shipping service provider, such as DHL, Hermes or DPD. The expected delivery time is indicated.
Many payment options are offered. Among them are PayPal, by credit card, Google Pay and even via the Swedish provider Klarna by invoice or immediate payment.
The delivery is still free of charge. Later orders remain free of charge if the cart is over 39 €.
I was targeted for delivery on May 11-14 via DHL.
One product was not in stock. I was offered to wait or cancel it. I cancelled the item and within a few seconds the money was transferred back to PayPal.
2) Order arrived
My order arrived today 09.05.2023 earlier than expected!
All 5 items are safely packed in Temu’s in-house packaging. The package is made of tear-resistant plastic and is black inside to prevent the package from being x-rayed.
All five items arrived undamaged. The headphones are actually from Lenovo and work flawlessly. The instruction manual is in Chinese and English.
Temu a new marketplace for traders?
There are already many marketplaces, specialized and general. For retailers, it is important to offer products to the target group via the right multichannels.
Amazon and eBay have been the most important marketplaces for online retailers to date.
Temu also offers merchants to offer their products on their marketplace. However, it seems that this rather means dealers and manufacturers from China.
Even if manufacturers from Germany register there, it will probably be difficult to cover costs at all given the low prices.
It’s already a pure miracle with the low prices that Temu can even cover shipping costs and the cost of returns.
But probably, in the beginning, it’s a matter of gaining market share rather than making a profit. The Group has around 20 billion in liquid assets, which is enough to attack the market for a while.
Anyway, Temu marketplace can be a global sales platform for traders and provide more visibility.
If you are a dealer or manufacturer, you can submit a request to Temu.
Does Temu represent other marketplaces?
Amazon and eBay will not disappear. Certainly lose some market share, but still have their justification.
It is becoming increasingly difficult to assert oneself with one’s own online store. Retailers or manufacturers should therefore always use multiple sales channels.
Many of our products have been made in China for a long time, that’s no secret! Until now, traders have been able to profit from this by selling goods at a higher price on the Western market. This will now be much more difficult, because with Temu the favorable prices will be passed on directly to the end consumer.
European retailers obviously need their margin to cover the costs of import, customs clearance, legal, packaging, software, shipping, returns, packaging register, GTIN numbers, taxes and more.
There is not much profit left and western traders will therefore not be able to keep up with these dumping prices from Chinese direct sellers.
What can European retailers and manufacturers do?
What has been successful in recent years is the formation of a brand or brand with high quality products.
Build your own community through social media. Offer good explainer videos on YouTube and always keep the customer’s interest in mind.
If the focus is on quality, reliability and benefit, the price is no longer decisive.
Many retailers have already implemented this successfully. Amazon offers companies the advantage here of offering their own pages with the branded products.
But also the own store with real quality advantages, good guidance and reliable customer support, still has the chance to sell goods on the Internet.
My Temu experience
Shopping on Temu is fun for me. It is comparable to strolling in the city. You constantly discover interesting products at hammer prices.
The product description is very well done. There are even small videos for some products.
While everything was still in English last week, the platform is already displayed in German as of this week.
The ordering process and delivery far exceeded my expectations. The cancellation and refund of the order was also smooth.
The quality of the products is good. No imitation junk products, but the promised quality.
Does Temu pollute the environment?
I still can’t imagine how Temu manages this logistical effort so successfully. The products are supplied from China worldwide. Where the returns will go, I do not know yet.
When end consumers around the world order just a few products, this leads to a sharp increase in smaller flows of goods.
Perhaps it would be better to send larger quantities or the returns to regional warehouses?
However, like Amazon, Temu would then have to transport many products to many warehouses in larger quantities.
Here the problem then arises, if the products do not sell, as with Amazon, either the retailer must pick up the goods in the respective country itself or the goods are expensively returned by Amazon.
So maybe it’s better to operate central warehouses in one country after all?
Containers are packed full of small orders every day, rather than large quantities of a few products and shipped. Maybe a good topic for a thesis to answer this question, right?