Shopping app Temu becomes big hit among US consumers

A portable mini humidifier for $3.48, 12 silicone bowl covers for $2.09 and a digital camera for children at $12.99 — amid inflation and recession fears, consumers in the United States haven't seen prices this low for a long time.

Temu, an online shopping platform that sells goods made in China, has racked up 10.8 million sales in the US since its launch in September, making it the most downloaded free app on both App Store and Google Play for much of the past two months, according to data from analytics company Sensor Tower.

Boston-based Temu is a subsidiary of PDD Holdings, which is the parent company of China's e-commerce giant Pinduoduo. The company recorded success in selling heavily discounted products in China over the past few years, and now it has a market cap of $102 billion. Given the success of Temu, its stock — listed on the Nasdaq exchange as PDD — has gained more than 32 percent in three months.

Temu's business model is an experiment to remove the middleman from the equation, allowing Chinese suppliers to sell directly to US consumers and ship directly from China, instead of building a network of US warehouses.

For Chinese suppliers, Temu offers an alternative to Amazon as a path to US consumers, avoiding the fees that the US company charges suppliers, including a referral fee of up to 15 percent.

The company can offer unbeatable low prices by accessing PDD Holdings' "deep network of merchants and logistic partners, and its established ecosystem built over the years'', according to the company's website.

Temu's deep discounts have resonated with US consumers, especially in the recent holiday shopping season, when they were facing the highest inflation in a generation, posing a new challenge to US e-commerce leader Amazon and other Western online stores.

Bene Neumann bought some children's toys, shoes and a bathroom rug from Temu during the holiday shopping season. "I don't think Amazon has as many good toys on it. I have looked for toys like these on Amazon," he told China Daily.

On Temu, a pair of slippers for women costs $7.19. On Amazon, a similar-looking pair is priced anywhere between $18 and $24.

"Wow! I say wow! I purchased two pairs of these slippers, one gray and one green. They are, by far, the most comfortable slippers I have ever owned," Marcia Stocker, a customer, said in a product review last week. "The price was right, too. Thank you, TEMU!"

Temu's sales in November were roughly four times its sales in October, peaking during Black Friday shopping when daily sales hit $7 million in seven days, according to research company YipitData.

Rui Ma, an investor and analyst who founded Tech Buzz China, a podcast and an investor community, told WIRED that Temu is growing at "China speed" — the kind of rapid growth Chinese companies are known for, and that US companies would struggle to keep up with.

"I think it's offering a pretty good customer experience," said Ma, who has ordered goods three times from the shopping platform. Her orders include household items and $9 Lenovo headphones, more than 11,000 pairs of which have sold on Temu.

Previous attempts by some Chinese companies to break into the US e-commerce market met with limited success. Shein has been successful in fast fashion, but has also been criticized for the environmental impact of selling clothes so cheap that they are almost disposable.

Temu's website says it "will offset carbon emissions from every delivery" and prominently displays its intellectual property policy.

Its shipping process is slower than that of Amazon. According to the company, orders take seven to 15 business days to arrive, longer than Amazon's delivery time, which averages three to five business days. Amazon also offers same-day or next-day deliveries via its Prime subscription services.

"However, the prices on Temu are better. It's cheaper and worth the wait," Neumann said.