Temu: Dominating App Stores in Japan and South Korea

Temu: Dominating App Stores in Japan and South Korea

The Chinese low-cost retailer, Temu, has made its mark in the global market by surpassing its rival, Shein, and dominating app stores in Japan and South Korea. Temu’s successful expansion in Western markets has propelled its rise to the top, with a rapid expansion beyond the U.S. and into more than 40 countries. This article examines Temu’s achievements, growth prospects, and its rivalry with Shein.

Goldman Sachs highlights Temu’s expansion into various international geographies, signaling significant opportunities for growth in the future. The investment firm estimates that Temu, owned by PDD Holdings, now generates over $1 billion in monthly transaction value. This positive trajectory is expected to continue into the second half of 2023.

Temu’s rapid rise to prominence can be attributed to its consistent top position in shopping app rankings in Japan and South Korea. Data.ai analysis reveals that Temu has claimed the #1 spot for daily iOS & Google Play shopping app downloads for a substantial number of days in both countries. In Japan, Temu spent 101 out of 124 days as the top-ranked shopping app, while Shein only achieved this distinction for 17 days during the same period. Similarly, in South Korea, Temu ranked No. 1 for 65 days out of 93, outperforming competitors like AliExpress.

Furthermore, Temu outpaced its rivals in reaching download milestones. In Japan, Temu became the fastest app to reach four million downloads in just 121 days, while Shein took 155 days to achieve the same feat. The data also reveals that Temu entered South Korea with a strong impact, reaching two million downloads in just 88 days compared to Shein’s 382 days and AliExpress’s 366 days.

The competition between Temu and Shein extends beyond the e-commerce space and into the courtroom. Shein filed a lawsuit against Temu in December for intellectual-property infringement, while Temu accused Shein in July of pressuring manufacturers into exclusivity agreements. However, recent developments indicate that both companies have applied to end their lawsuits against each other, marking a temporary halt to their legal disputes.

Temu, backed by Chinese tech giant PDD Holdings, made its initial push overseas with its launch in the United States in September 2022. This venture quickly propelled Temu to the top of app stores, leading to its expansion across several countries, including Australia, New Zealand, France, Italy, Germany, the Netherlands, Spain, and the U.K. Temu’s headquarters is located in Boston, Massachusetts, and it focuses on offering low-priced made-in-China goods to budget-conscious consumers worldwide.

Similar to Shein, Temu relies on contracted manufacturers primarily located in China to design, produce, and ship its affordable products. Temu’s entry into Asian markets began with launches in Japan and South Korea in July, followed by expansion into the Philippines and Malaysia.

Market analysts cite Temu’s rapid rise in popularity as a result of the company’s elevated marketing investments, competitive pricing, promotional efforts, and successful referral campaigns. Citi analysts, in an August 29 report, attribute PDD’s significant year-on-year growth in transaction service revenues and cost of goods sold to Temu’s performance. Additionally, Bernstein analysts contend that Temu’s multi-million Super Bowl advertisement played a vital role in solidifying its position in the minds of target customers.

Looking ahead, analysts anticipate an increase in active users and order volume for Temu, contributing to its non-U.S. transaction value and further growth. The company’s success can be attributed to its effective utilization of its parent company’s supply chain and marketing capabilities.

In June, the U.S. House Select Committee accused both Shein and Temu of violating import tariff laws by importing goods into the U.S. without paying import duties or undergoing human rights reviews. This development adds a legal dimension to the rivalry between the two retailers.

Temu’s dominance in app stores in Japan and South Korea showcases its successful expansion beyond Western markets. The rapid growth of Temu, fueled by its marketing investments, competitive pricing, and effective utilization of supply chain capabilities, has positioned the company for continued success. As Temu navigates legal disputes and seeks further international opportunities, its trajectory is worth monitoring for investors and industry observers alike.

World

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