What's Happening?
Temu, an e-commerce platform owned by PDD Holdings Inc., is making a strategic comeback in the US market by offering significant price reductions on its products. This move follows a period of decline due to tariff changes implemented by President Trump, which affected Temu's business model of shipping goods from Chinese factories to American consumers. The company has reduced prices on at least two dozen of its best-selling items by an average of 18%, with some discounts reaching up to 60%. Temu's US sales had previously dropped by over 30% during certain weeks in June, continuing to fall in July and August. The platform is also enhancing its advertising efforts, increasing daily ad numbers to regain consumer attention.
Why It's Important?
Temu's aggressive pricing strategy is crucial for its survival and competitiveness in the US e-commerce market, particularly against rivals like Shein Group Ltd. The tariff changes had previously forced Temu to pivot away from the US, impacting its sales and market presence. By eliminating import fees and offering deep discounts, Temu aims to attract more customers and boost sales during the upcoming holiday season. This approach could potentially restore its position in the market, benefiting both the company and consumers seeking affordable products. However, the success of this strategy will depend on Temu's ability to maintain competitive pricing while managing thinner profit margins.
What's Next?
Temu is working on building a comprehensive logistics network to support its US operations, collaborating with third-party courier services for cross-border shipments, warehouse storage, and last-mile delivery. The company is encouraging sellers to adopt its logistics services to streamline operations. As Temu continues to push for price cuts and increased app traffic, it remains to be seen how these efforts will impact its market performance and whether it can regain its footing against competitors like Shein.
