Temu and Shein are leveraging a real-time retail strategy using platforms like TikTok, Instagram and Facebook to identify and respond promptly to emerging trends they constantly monitor on social media. If Taylor Swift embraces a new fashion trend, you bet Shein and Temu are already on it. And, oh, no one can match their price point. Temu doesn’t just sell US$4 T-shirts (less than a Starbucks Venti latte), it also sells five pairs of socks for just US$1.69, excluding shipping costs.
Online shopping platform Pinduoduo, owned by listed PDD Holdings, recently overtook e-commerce giant Alibaba Group Holdings to become China’s No 2 Internet player behind video-gaming, music and messaging supremo Tencent Holdings (market value of US$373 billion or $501 billion). The change of leadership among China’s tech giants has as much to do with the fading of Alibaba as the rise and rise of new players like PDD, TikTok owner Bytedance and apparel e-retailer Shein whose addictive apps aren’t just dominating the domestic market but are big global players.
The engine powering PDD’s phenomenal growth and its market capitalisation of US$190 billion ($255 billion) is America’s most downloaded app, Temu, an online marketplace of heavily discounted goods based in Boston, Massachusetts, which in turn is controlled by listed PDD that is based in Ireland, the European tax haven. Temu and Shein are popular among Gen Z consumers for their low-cost trendy merchandise. Unlike Amazon.com which aims to deliver within hours or by the next day from a network of local warehouses across the US, Temu takes several days to deliver directly from China yet customers hardly seem to mind since they are getting a great price.
