The race to bring Chinese-made goods to Western consumers via online stores is heating up. Pinduoduo, the Chinese e-commerce giant known for offering unbelievable deals, has quickly gained momentum for its first international venture in the US
The company’s overseas shopping app called Temubriefly held the top spot among US Android shopping apps in mid-September before falling to No. 15 this week, according to application analytics platform Data.ai. The ranking shows new downloads, so it’s hard to gauge user retention and app activity.
At first glance, Temu doesn’t look much different from other e-commerce platforms exporting cheap goods from China, such as Amazon, Alibaba’s AliExpress or Wish. Its landing page features a dazzling collection of competitively priced products, from a $2.77 blouse to a $1.39 soap holder.
Pinduoduo is relatively late on the cross-border e-commerce scene. In almost every major market outside of China, you can find an online retailer that imports goods directly from Chinese suppliers or manufacturers. Alibaba-owned Lazada and Tencent-backed Shopee enjoy a strong foothold in Southeast Asia. AliExpress is a popular option in Russia. Shein, the fast fashion e-commerce site with an expanding product category, is the shopping app for youth in Europe and the US
Temu’s advantage over its competitors can be attributed to its extensive links with factories in China. Founded in 2015, Pinduoduo quickly rose to challenge the dominance of Alibaba, which launched more than a decade before it. The company’s meteoric rise is due to a smart strategy of connecting manufacturers directly to consumers, cutting middleman costs and ultimately allowing it to price products at much lower prices than competitors relying on layers of distributors.
It looks like Pinduoduo will continue to play to its strengths as it goes overseas. Just this week the company announced that it will invest “tens of millions of RMB” in “cultivating 100 export-oriented brands”. The initiative thus aims to help 10,000 local producers sell globally.
Temu has a lead in product sourcing thanks to Pinduoduo’s supply chain resources, but may struggle to replicate the success of the user acquisition strategy that allowed Pinduoduo’s rapid growth at home. In its early years, Pinduoduo depended heavily on its investor Tencent’s WeChat app, where users shared deals with friends to receive product discounts.
The setup worked as WeChat became well beyond a messaging app, with a built-in ecosystem for mini apps which integrates seamlessly with its social features, a user scenario that is missing from Western equivalents like WhatsApp.
Temu may also face the same set of challenges that bother Shane. The fast fashion startup has been repeatedly criticized for its non-transparent supply chain practices and accused of intellectual property infringement. In 2019, the US added Pinduoduo in its infamous blacklist for alleged fakes, even though the company has promised to fight fakes.