Advertisement

Temu is trying to win over America. Good luck.

A woman dressed in orange in an ad for Temu
Temu is embarking on an advertising blitz to win over American consumers.Temu
  • Get ready to see a whole lot more of Temu.

  • The Chinese-owned marketplace spent millions of dollars on ads during the Super Bowl.

  • It's a sign that Temu is gearing up to win over as many American consumers as possible.

Taylor Swift may have scrambled all the way from Tokyo to see boyfriend Travis Kelce play at the Super Bowl, but even that show of support didn’t earn her as much airtime as Temu.

That’s because the online marketplace operated by Chinese tech giant Pinduoduo — which sells cheap goods primarily from China — is embarking on a huge spending spree to conquer America as it spends billions of dollars on advertising campaigns to win over consumers.

During the game’s commercial breaks, Temu managed to grab several 30-second ad slots estimated to cost $7 million each. Swifties will have seen their star on screen for about 54 seconds.

In an event that was watched by over 123 million viewers, Temu’s screen time totaling no more than three minutes will have given it a reach that’s hard to get elsewhere.

Americans can expect to see its orange and white logo around a whole lot more.

Temu, launched in the US in September 2022, already spent $3 billion on marketing last year, per figures from Bernstein Research, while its Super Bowl campaign suggests there’s no plans for it to slow down.

The huge spend reflects the size of the task at hand: Temu is seeking to achieve scale in the West that few Chinese-owned companies have had beyond rival retailer Shein and social media app TikTok.

Temu is spreading across America

Signs so far suggest US consumers are buying the Temu hype.

Results published this month from a survey of around 600 consumers, carried out by investment bank Jefferies, found that almost one in three, or 31%, had used Temu. A third said they planned on increasing spend in 2024 versus last year.

The desire to use cheap e-commerce services more broadly was even clearer to see when Shein was factored in, with 70% of consumers acknowledging that they had used at least one.

The growing presence of a company whose ads are littered with price tags of goods no more than $9.99 is something rivals are paying close attention to.

According to The Information, Amazon executives have fretted internally about Temu’s growth, as they’ve weighed different options such as finding ways to “incentivize sellers to lower their prices,” as well as reducing seller fees to make doing business with Amazon cheaper.

That’s something it may need to consider more as it emerged in an AP report last month that the Chinese marketplace was set to open up to sellers in the US and Europe.

An uncertain road ahead

Temu does have some hurdles to overcome though in its conquest to dominate America.

In December, a month when retail sales were up 0.6% in the US to $709.9 billion versus November, Temu suffered a 12.5% month-on-month drop in observed sales, according to data compiled by Bloomberg Second Measure.

There could be several reasons for this drop, but one that may take some time to resolve comes simply down to the fact that US consumers often search for goods that Temu simply doesn’t have, despite all the inventory it possesses.

Almost 50% of the US consumers surveyed by Jefferies said over 40% of the clothing they bought was branded apparel. Temu lacks US-based apparel brands, the bank said, making online window shopping on the site less appealing to Americans, for now.

The company is also locked in a legal battle with rival Shein over claims that the competitor has attempted “Mafia-style” intimidation of merchants who use both services. Shein has said the lawsuit is “without merit.”

Broader challenges weigh on it too. Its Chinese ownership poses a long-term risk in an era of hawkish US policy towards Beijing — something Chinese-owned TikTok has learned the hard way.

That said, Temu looks ready to put its all into America. How long it can sustain its current spend to do that is another matter.

Read the original article on Business Insider