Source : fashionweekdaily
Leading online marketplaces traditionally take years, or even decades, to develop, establish name recognition, gain customer trust, and work out the efficiencies and logistics required to succeed.
Temu (pronounced tee-moo), a Boston-based online marketplace known for affordable merchandise, has largely conquered the steep learning curve and become the top-ranking free app on both the Apple and Android stores soon after it launched in September 2022, a position it has held ever since.
It has achieved this primarily by leveraging the resources, experience, and deep pockets of its parent company PDD Holdings – which is no stranger to the retail industry. PDD Holdings’ knowledge, vast network of suppliers and manufacturers, and logistics capabilities meant it could launch Temu straight to the top tiers of the e-commerce market from day one.
Who is PDD Holdings and how is it helping Temu
PDD Holdings is a multinational commerce group listed on the Nasdaq (Nasdaq: PDD) with a market cap of over US$100 billion. With over a decade of commercial experience, the Group has built a global network of over 11 million suppliers and brands.
Building this network also led to the development of advanced fulfillment and logistics capabilities. PDD Holdings serves over 900 million people worldwide and deals with 200 million parcels a day. In 2021 alone, it fulfilled a staggering 61 billion orders. This success has proved profitable, with the company making US$17 billion in revenue and generating US$4.6 billion net cash in the 12 months leading to September 2022.
PDD Holding’s resources, experience, vast network, economies of scale, and logistical know-how make it the perfect parent company for new enterprises in similar fields. The Group already owns and operates a portfolio of businesses.
Having such a significant heavy hitter as a parent corporation has given Temu the resources to enter the market at the top. Temu established its headquarters in the prestigious Back Bay area of Boston, Massachusetts, and immediately got down to business.
Temu’s success also comes from its fresh approach
In addition to considerable support, Temu has differentiated itself from the competition with a new approach to online retail. The company describes itself as a “pure” e-commerce platform that focuses on individual needs and just-in-time manufacturing. The platform doesn’t sell its own brands to customers but has instead cultivated an ecosystem of merchants, logistics partners, and customers.
To make this work, Temu uses the Customer-to-Manufacturing “C2M” model pioneered by PDD Holdings that connects manufacturers with consumers. The model removes layers of intermediaries and allows consumers to buy products at lower prices. The C2M process enables manufacturers to develop in-trend products with the benefit of real-time insights into consumer preferences, resulting in a closer match to what consumers want. Using this approach, PDD Holdings has helped merchants and manufacturers to incubate nearly 1,000 brands since 2015, enabling manufacturers to respond quickly to market shifts and tailor their products to consumer tastes.
Temu’s commitment to understanding the culture and markets it works in has been key to its success. It has improved the effectiveness of the C2M model and helped to grow and support its ecosystem. Connecting customers more directly to merchants not only means lower prices but also creates a deeper understanding of individual needs.
Temu’s values of empowerment and inclusion are aligned with consumers’ interests
PDD Holdings’ Chairman and Chief Executive Officer Lei Chen said, “We fully respect that there are many differences across different markets. And we also understand the need to constantly experiment, and we expect that the process will be full of challenges. So we will be patient and work together with our partners to create long-term value for consumers.”
To achieve these aims, Temu is guided by four core values that influence every aspect of the business, from marketing to governance. These are empowerment, diversity and inclusion, integrity, and social responsibility. These values shape how the company operates and underpin its approach to e-commerce.
“We will not just simply repeat what others have done in this field. What is important to us is that we start from the needs of consumers and strive to create our own unique value,” CEO Lei Chen said.
Temu’s rapid rise to prominence is impressive but not unexpected. With the support of PDD Holding’s vast network, and the ability to cut out intermediaries and consequently lower prices, consumers have been flocking to the platform.
“I’m betting Temu will have staying power here in the U.S.,” said Connie Chan, a general partner at Andreesen Horowitz, a tech venture capital firm.“I’m even more excited to see how the platform introduces U.S. shoppers to new online shopping norms and behaviors that will continue to shake up online shopping here.”