Temu: what makes China’s Alibaba competitor unique
In 2023, the Chinese retailer Temu filled almost the entire internet space. It was then that the general public became aware of this online shop – a direct competitor to Alibaba. Thanks to a multi-million dollar budget and an aggressive promotional strategy, Temu has managed to enter the European market.
The founder of the company is Colin Huang, one of the richest people in China. The boy grew up in an ordinary family, but from an early age showed outstanding mathematical skills. This enabled him to enter a prestigious university and win a scholarship from the American Melton Foundation. Thanks to this support, Juan now has a computer and access to the internet. The young man has also been able to visit other countries.
Colin interned at Microsoft during his studies, and after graduating, he got a job at Google. He worked for three years at the American IT giant’s Chinese office. In 2007, Huang decided to leave the company to start his own business.
First projects
The future billionaire created several projects in the hope of success. Among them were:
– Oukou, a website for selling electronics;
– Leqi, a platform for promoting foreign brands in the Chinese market;
– Xunmeng, a game development studio.
In 2015, the businessman launched Pinduoduo, a platform positioned as a rival to Alibaba and JD. He attracted US investments for the launch, which amounted to US$8 million in the first year and US$100 million in the second year.
Colin developed the site using his experience from previous projects. This allowed him to introduce elements of gamification into the online shopping process.
Pinduoduo’s target audience was older people living in rural areas. For them, the retailer offered goods at low prices with the option to pay via WeChat. This approach made shopping easier, as there was no need to create an additional account. Gradually, the platform also attracted the urban population.
Temu’s uniqueness
In 2022, the parent company, PDD Holdings, decided to expand into new markets. To do this, it chose the Temu brand. First, it entered the US market. Just a few weeks after launch, its app reached the top of downloads. Low product prices and active online promotion contributed to this success.
In 2023, the app was available in the UK, several EU countries, Australia and South Korea. By then, PDD’s revenue had increased by 90% compared to 2022, reaching US$35 billion.
The success of Temu’s expansion was due to a number of factors, including:
– gamification elements, such as a virtual casino;
– low prices combined with an engaging customer experience that encourages consumers to make repeat purchases;
– a chaotic interface that enhances the sense of play.
Significant investment in marketing supports all of this. Anecdotal evidence suggests that in 2023, promotional spending totalled around US$3bn. This has enabled Temu to take the number-one position in app stores in 45 countries.
