Temu's overseas expansion is gradually pressing against Shein
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The valuation of Shein's current round of financing is approximately $64 billion, which is more than one-third lower than its peak period.
Temu is making frequent moves to expand overseas. On February 9th, just one month after launching its Canadian site, Temu's tentacles extended to Australia and New Zealand through Temu. Recently, there has been news that Temu's UK site is planned to go live on March 25th, with Africa and Latin America following closely behind. In addition, the European market is also part of Temu's plans and may go live in the first half of this year.
As Temu sets sail overseas, it will inevitably come into conflict with another Chinese cross-border unicorn, Shein. Previously, there have been comments online joking about the infighting between Temu and Shein, claiming that Shein's valuation shrank by more than a third due to the fierce competition from Temu.
Temu “burns money" to catch up with Shein
According to statistics, when Temu was launched in North America in September 2022, its traffic only slightly increased to 5.1 million, far lower than that of Shein and Wish. But by November 2022, Temu had 37.5 million views, on par with Wish. By December 2020, Temu's traffic had increased to 44.5 million, ranking first, surpassing Wish and Shein.
Temu, who is currently racing overseas, is not hiding its ambitions. As early as October last year, there were reports stating that Temu's total transaction volume target for 2023 was $3 billion, and in the next five years, it aims to achieve or even exceed a volume of $30 billion.
And $30 billion is the target that Shein originally planned to achieve by 2023. 30 billion US dollars, which is expected to be achieved by Shein after about 14 years of online launch. Temu wants to shorten this time to 5 years, but how?
Anyone familiar with the China domestic e-commerce market knows that Temu created the myth that the total Gross merchandise volume in China could reach one trillion yuan in the shortest time: in 2019, the total transaction volume of Temu exceeded one trillion yuan, which is less than 5 years from its establishment, while the other two domestic e-commerce giants (Alibaba and JD.com) reached one trillion yuan in 14 years and 20 years respectively.
Winning market share through burning money subsidies and then increasing the total transaction volume through high customer prices is a strategy that Temu has already achieved in China. Nowadays, Temu's devilish growth overseas is also closely related to this set of tactics.
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Public reports indicate that Temu has established a Referral Bonus mechanism overseas, where users can receive a cash reward of $20 for every successful referral of 5 new users. Targeting Chinese Americans in the US, Temu is offering a reward of 150 RMB for every successful referral of 5 new local users who place an order. Temu is also encouraging consumers to participate in spin-off games and share product links through various discount and promotion activities such as "pick one for one cent" and "user sharing to win bonuses," and inviting bloggers and influencers to promote and provide commission rebates.