Temu, a cross-border online marketplace launched in 2022 by Chinese company PDD Holdings, has challenged the dominance of e-commerce giants like Amazon and Alibaba. Both its website and mobile app became one of the most visited and used online platforms in the world in 2023. The gross merchandise value or the total dollar value of all goods sold on its platform reached USD 20 billion in the first half of 2024. It is also now available in about 80 countries. The initial success of Temu stems from its overall business strategy and specific initial marketing strategy that heavily focused on global customer acquisition.
The Marketing Strategy of Temu: Acquiring and Retaining First-Time Customers Around the World
1. Product Strategy: Mobile-First Platform Design with User Interface and User Experience that Encourage Product Browsing and Impulse Buying
The online marketplace is the main product of Temu. This is accessible via its official website and a dedicated mobile app. However, despite the fact that website traffic remains relevant in electronic commerce, Temu has a mobile-first platform designed to cater to mobile-native consumers. This reflects the reality that most online shopping happens on mobile devices.
Moreover, to cater further to the sensibilities of mobile-native users, the mobile app borrows some user interface and user experience principles from social media apps. This includes an infinite and scrollable product discovery page similar to TikTok that deviates from the usual search-and-buy interface in favor of a scroll-and-buy interface optimized for product discovery.
The product discovery design of Temu specifically involves an infinite product feed in which users scroll continuously through curated deals. This can be engaging and addictive. It reduces decision fatigue and encourages prolonged product browsing without specific intent. Users do not search for something they need to buy but discover products they suddenly want.
Moreover, to drive impulse buying further, it showcases low-ticket or inexpensive products that are fun to purchase. The specific artificial intelligence strategy of Temu is also incorporated into its product strategy. The platform learns from user interactions with the entire interface and adjusts the product feed in real time for a personalized user experience.
2. Pricing Strategy: Penetration Pricing Combined with Some Aspects of Promotional Pricing Price Bundling, and Loss Leader Pricing
Penetration pricing is a pricing strategy that involves setting prices extremely low to attract a large number of consumers and quickly gain a considerable amount of market share. Some established firms adopt this strategy for new product launches or to boost existing ones. This is also common among new entrants like Chinese consumer electronics manufacturers.
The aforesaid pricing strategy is at the core of the marketing strategy of Temu. This is somewhat similar to the strategy of Shein against other low-priced fast-fashion retailers. However, to keep a low price, it is also important to underscore that Temu, unlike Amazon and AliExpress, handles all pricing decisions on behalf of sellers because it is a managed marketplace.
It also uses promotional pricing. This is similar to penetration pricing. The platform temporarily lowers the prices of selected items through discounts and other sales promotion tactics to increase demand or draw attention. This is specifically seen in flash sales, time-limited offers, and welcome discounts which are all aimed at drawing attention and creating a sense of urgency.
Multiple products are also offered together at a discounted total price. This is called price bundling and this is an effective pricing strategy to increase sales in a single transaction and average order value per customer. Temu specifically uses this strategy by encouraging customers to purchase often-bundled products or related items or offering bundles to first-timers.
The overall pricing strategy of Temu is crucial in acquiring and retaining first-time users. This is one of the main reasons why it has become one of the most popular electronic commerce platforms in recent years. It is also worth mentioning that both big data analytics and artificial intelligence are leveraged to inform and automate its pricing decisions in real-time.
3. Placement Strategy: Global Expansion Focusing on Overall Internationalization in Careful Consideration of Localization and Centralization
Temu is owned and operated by the Chinese multinational company PDD Holding. This company is registered in the Cayman Islands and has a principal address in Dublin. Moreover, in the U.S., Temu is owned by PDD Holdings subsidiary and Delaware-registered Whaleco. This structure has optimized the operations of the platform across different market conditions.
Nevertheless, as a result of its initial efforts to expand its global reach, the online marketplace is now available in more than 80 countries. It has a critical market presence in Asia and the Pacific and the United States and has also been expanding across Europe and Canada. Temu approaches its internationalization strategy in consideration of localization.
Remember that Temu is an online marketplace accessible via a website and mobile app. These two channels have made rapid international expansion possible. However, not all geographic markets are the same. The platform localized the content of its website and apps based on local languages, currencies, holidays or special events, and popular product categories.
The platform remains centralized. Remember that it is also a managed marketplace. It controls vendor relationships, logistics and inventory management, warehouse operations, and customer service centrally. The overall placement strategy of Temu enables global scaling while maintaining control over pricing and other aspects of marketing and promotions.
4. Promotion Strategy: Aggressive Advertising and Promotional Tactics Using Relevant Digital and Traditional Channels and Mediums of Communication
Another critical element of the marketing strategy of Temu is its promotions strategy and specific promotional tactics focused on maximizing target audience reach using all relevant channels and mediums of communication. It spends heavily on and strategically on advertising to flood both digital and traditional media spaces with its marketing messages.
For example, in 2023 and 2024, it placed TV advertisements and brand spots in the Super Bowl, which is known as one of the most effective and expensive channels for paid marketing in the U.S. This exposure reached around 123 million American audiences. The website visits and app downloads of Temu in the U.S. demonstrated the success of its Super Bowl ads.
Temu also runs general advertising campaigns and places specific regular digital advertisements across popular social media platforms like Facebook, Instagram, TikTok, and YouTube. Its ads can be seen in ad networks used by ad-based mobile apps. Temu has also invested in paid search and search engine optimization for both paid and organic ranking boosts.
Influencer marketing is also essential to its localized promotional campaigns. It taps known local online and traditional celebrities in each country for user-generated content arrangements, paid product reviews and unboxing content, and direct band endorsement, among others. This tactic is done to reach local mobile-native Gen-Z and Millennial audiences.
The paid marketing tactics of Temu are also complemented with sales promotions. Both are aimed at acquiring firs-time users and encouraging repeat sales. Specific sales promotional tactics include first-time user coupons that provide heavy discounts, free shipping and free returns, regular flash delas and limited-time sales, and gamified reward and loyalty programs.