By Deepak Jain
Published: Fri 27 Jan 2023, 4:55 PM
Temu claimed the number one spot for e-commerce app downloads in the US just months after its debut in September, powered by a combination of eye-popping deals, good quality, and reliable and free shipping.
This is a remarkable achievement by any measure, considering that more than 90 per cent of all Internet business start-ups fail within the first 120 days. Most simply do not reach escape velocity at launch for various reasons. For its initial success, Temu thanks its parent company, PDD Holdings Inc.
PDD Holdings is no stranger to e-commerce. As a group, PDD Holdings serves more than 900 million consumers worldwide and handles more than 200 million parcels a day. It is also profitable and has $17.2 billion in cash.
Temu benefits from PDD Holdings’ backing
Temu has benefited immensely from PDD Holdings’ know-how and financial backing. As one industry insider put it, “it helps to be born well”.
Having access to more than 11 million ready suppliers and logistics partners from day one is, of course, an undeniable advantage. But achieving initial lift-off is one thing, successfully getting in orbit and to its eventual destination is quite another.
While Temu survived its first 120 days, the question surely is: now what?
Temu has gained a toehold in the US e-commerce market by offering quality products at affordable prices. It has achieved this chiefly by sourcing merchandise from some of the biggest wholesalers and cost-efficient manufacturers in the world and reducing layers of distributors and markups that stand between the factory gate and the consumer’s front porch.
Temu’s Vision for the new era of e-commerce
But removing middlemen and streamlining the supply chain will probably take Temu only so far. To carve out a unique niche for itself in the competitive US market, Temu needs to offer something more than just efficiency and lower prices.
Temu believes that it can achieve a firmer footing if it positions itself at the “forefront of the next era of e-commerce,” it said in a recent release.
E-commerce will “move beyond disintermediating or optimising the manufacturing supply chain, into matching individualised needs and wants with global resources and delivering them efficiently”, the company said.
In this new era of demand-driven e-commerce and individualised products, it added, new brands and businesses will emerge to meet new-found needs. Traditionally, brands would create products and then advertise them to consumers. With Temu, consumers can communicate their needs through the platform and have them fulfilled by global suppliers, resulting in customisable mass production.
Mass manufacturing as we will know it will increasingly give way to consumer-initiated demand and just-in-time production.
Temu’s C2M programme
Temu is working on this vision through its C2M, or consumer-to-manufacturer, programme. The programme is designed to enhance business decision-making by allowing manufacturers to better match their designs, production, and inventory with consumer demand.
By giving manufacturers a clearer insight into what consumers want and need, the programme helps to improve design, production, inventory, and branding choices, the company has said.
So while the attention is justifiably focused on Temu’s headline-grabbing deals and promotions, the real action may be taking place elsewhere, one order at a time.
— Deepak Jain is an independent blockchain publicist.