In just four months, an unknown shopping app has overtaken
- TikTok,
- YouTube,
- Amazon,
It is now the most downloaded free app in both the Apple App and Google Play in the U.S. – and that’s just the start.
It follows the successful launches of other Chinese online businesses – who all think, act and communicate the same way,
- Alibaba,
- Shein,
- ByteDance,
www.temu.com – is like Amazon – but cheaper.
How did it grow so fast?
- Users earn credits and better deals if they play certain in-app games,
- Recommend the app to their friends on their social media,
- Significant spend on paid advertising to launch. When TikTok (owner ByteDance) launched in 2018, the paid advertising spend was around $1 billion.
Their PITCH
- TEMU offers a wide range of products at dirt-cheap prices,
Who owns TEMU?
- Pingduoduo is Temu’s Chinese parent company,
- In 2020, Pingduoduo replaced Alibaba as the company with the most e-commerce customers in China – with over 730 million monthly active users—double the U.S. population.
Chinese business success in the western world – think, act and communicate differently,
The problem
- AI-driven e-commerce businesses’ operating discovery algorithm recommendations software need an initial explosion of user data – the recommendations software does not work with small datasets,
- Typically western world businesses focus on organic social media – not paid advertising in the startup phase, then top up with paid advertising once they have real people – with real traction.
The solution
- An aggressive high, spending marketing budget at launch is the price they pay to get off the ground.
- The Western world approach is – to search first (Amazon)
- The Chinese approach is – discovery first.
The playbook
1) Paid Advertising
- TikTok 2018 launched the algorithm-powered discovery app in the U.S. ($1bn in paid advertising). The algorithms needed vast user data to run a successful and addictive – For You – page. It worked with nearly 100 million USA monthly active users.
- TikTok used the same playbook with Douyin, its sister business – now with 600 million daily active users.
- The playbook – have a long-term monetisation strategy, and spend a lot to get to scale and network effects as fast as possible.
- Temu is following the same launch strategy.
2) Continuous Scroll
- Like fast-fashion e-commerce giant SHEIN and other successful Chinese businesses like TikTok, they give the user an endless scroll – endless videos to entertain.
- Temu serves an endless scroll of products you can buy. It lifts the dwell time on site – hoping to inspire you to buy more.
- Big data needs new purchasing data from many buyers and new products. To personalise the shopping experience for the end user (SHEIN adds roughly 6,000 new items daily).
3) Discovery-Based
- Discovery-based shopping copies the in-store shopping experience, walking the aisles of a department store – browsing,
- Buyers spend time—and money—with apps they enjoy – discovery-based approach is this for many people,
4) Timing is everything
- Launching before the USA holidays,
- Spending big on paid advertising to promote the app,
- Very low prices,
- Continuous scroll-discovery business model,
It’s how Temu remains the USA’s most downloaded mobile app – ever. Temu is new and differentiated from its competitors to stand above the market’s noise.