In recent years, it has become a trend for Chinese companies to go overseas. From TikTok tok to e-commerce "Four Little Dragons", to year-end skits, Chinese companies have become the "catfish" of the global market. Among them, the temu launched by Pinduoduo has become a catfish in catfish.
At the end of January, Hurun released the "2023 Hurun Global 500", and with Temu's performance in the global market, Pinduoduo ranked 63rd, up 147 places. In the middle of the year, Pinduoduo's market value once surpassed Alibaba.
Just like the birth of Pinduoduo at the beginning, in the past year, Temu has shown the overseas market the power of "cutting a knife".
The Amazon is the enemy
Temu's performance is phenomenal.
Launched in the United States in September 2022, it soon dominated the shopping app charts for several months, surpassing e-commerce giant Amazon and established fast fashion brand Shein. To date, Temu has become the second most popular e-commerce app in the United States, after Amazon.
Directly invading Amazon's base camp, Temu has aroused Amazon's vigilance. First of all, it released the "Ten Ways to Set Sail for the Industrial Belt" support plan to promote Chinese brands to become "world brands". Subsequently, Amazon paid out of its own pocket to launch a discount subsidy, which is considered to be Amazon's version of the "10 billion subsidy". Foreign media gave Temu the name of "sweeping the Internet".
Temu's success is not only in the U.S. market, at present, temu has developed 47 overseas sites, covering North America, Europe, Southeast Asia, the Middle East, Africa, Japan and South Korea and other regions.
From January to November 2023, Temu's GMV was approximately $16 billion. The MAU for November 2023 is 1500 million people, an increase of 96%, which is close to the user level of SHEIN, which has a history of 15 years. In terms of user daily duration, Temu reached 837 seconds per day, surpassing Amazon (data source: SensorTower).
The reason for temu's success in the global market is also simple – small profits and quick turnover. temu means "team up, price down", the more people buy, the lower the **, that is, the group mode. 50 headbands 1$17, 10 pairs of socks 3$87, 6 lipsticks 0$97, 8 makeup brushes for less than $1 ......These products even have free shipping. For global markets in an inflationary environment, this low-priced commodity is extremely attractive.
temu official website.
But the ** of cross-border e-commerce is not so simple to compress. For cross-border e-commerce sellers, the cost of the goods themselves is not high, and the most uncertain is the cost of logistics, customs clearance, warehousing, etc., because this is a great test of operational capabilities.
temu's approach is a fully managed model, where the seller is only responsible for supply (providing supply, product information and delivery), and the platform provides operation, logistics, after-sales and other services. Eliminating the intermediate link can reduce costs and costs, but sellers also lose control over pricing, return policies and payment settlement.
Struggling sellers
In order to achieve low prices, temu can only lower the price of sellers.
For this reason, temu requires the seller to supply at least a lower price than the same product of 1688**. It also launched the "** Horse Racing Mechanism" - once it detects a lower ** product of the same model, Temu will prompt the seller to reduce the price; For some of the products with rapid sales after being put on the shelves, Temu will act synchronously to find other factory sellers, and after getting a lower "factory supply price", it will use this as a standard to ask the original seller to reduce the price.
In addition, there is also a "dynamic sales mechanism", where unsalable products that have no dynamic sales for 14 days or sales of less than 30 pieces and sales of less than $90 in 30 days will be required to reduce prices or withdraw from supply. Rated lower than 42, will also be directly off the shelves.
Some sellers said that there are very professional buyers on temu, and they are very aware of the market, and they will press the profit of each order to only 1-2 yuan. This makes the seller's ** almost squeezed to a level where it is impossible to make a profit.
In this case, small and medium-sized sellers basically have no chance to survive in such an ecology. Therefore, most of the sellers involved in temu are directly admitted by **chain factories, and it is difficult for middlemen and sellers to make profits.
But there is no doubt that under the pressure of extremely low prices, it is difficult to get good quality at a low price. To this end, Pinduoduo's "refund-only" strategy has also been extended to Temu. On temu, some items are allowed to be refunded without even returning. This makes many orders unable to be converted into revenue, adding another burden to sellers.
In addition to "refund only", temu also has a "5 times fine" measure. The so-called "5 times fine" is launched by Temu in response to sellers' violations, including unqualified product quality, delayed delivery, and inadequate after-sales service.
Originally, it was to ensure quality, but due to the cumbersome rules for cross-border e-commerce, there is no unified standard for many quality issues. Most of the reasons for the fines given by temu are after-sales compensation, and do not clearly indicate the specific standards of the fines, and many sellers will be fined inadvertently, and they cannot correct the deviation in time.
A comprehensive cross-border e-commerce ** report found that some sellers were deducted 130,000 yuan because of size problems. Some sellers were even deducted 190,000 yuan, which is equivalent to a month's profit.
Blue Ocean Yiguan Network, courtesy of the seller.
Originally, the seller's profit was very low, and there was a risk that it would be replaced by a lower price at any time. It seems to be soaring, but in fact, the seller has become a devotee and even a victim of this ecology.
The ecological dilemma
If e-commerce is an ecology and the platform is a towering tree, then the seller is the soil that supplies nutrients to the platform.
Sellers are often the role that is easy to ignore, but often the ecology of sellers is the key to determining the operation of the platform. The platform can only profit if the seller is profitable. The reason why Pinduoduo has a strong impact on the first in China is precisely because the small and medium-sized sellers of the first have been included in Pinduoduo one after another.
But in the rapid expansion of overseas platforms, sellers have not benefited from it. In the previous Amazon model, the threshold for sellers was higher, but once one or two popular models were made, and their product links (listings) were ranked to a certain extent, they would have the opportunity to "trickle down the water" and continuously obtain Amazon's traffic. This model can usually slowly increase revenue even if it can't achieve huge traffic.
However, under the temu model, low prices are always the "king", and if the lowest price is not maintained, the pit will be occupied at any time. The impact of this model itself is manifold.
On the one hand, sellers are always under pressure in this ecosystem. Sellers are already making small profits but quick turnover, and they will continue to reduce their profits and face traffic declines and losses caused by being replaced. However, once it encounters refunds and fines, it will still face a lot of losses, and the pit seems to have become a "besieged city". In such an ecology, the survival situation of sellers is not good. By extension, when sellers lack profits, the input to engage in production will be correspondingly reduced, and this involution method will not be of much benefit to economic vitality.
Last year, the Pinduoduo ecosystem encountered a crisis in the Chinese market, and the counterattack launched by small and medium-sized merchants around Pinduoduo's "refund only" rule once spread from Pinduoduo's self-operated stores to tens of billions of subsidized stores and brand stores. This is actually the seller's ecological dilemma breaking through the critical value.
On the other hand, for the entire cross-border e-commerce enterprise, it is also doubtful whether the involution of the floor price is a long-term model. In the field of cross-border e-commerce, Chinese sellers have relied on relatively low prices to obtain benefits, but now Temu has rolled up the low price to a higher intensity, and the entire cross-border e-commerce sellers are facing a certain impact.
According to AMZ123 survey data, as of the end of June 2023, more than seventy percent of China's Amazon sellers' sales volume was higher than that of the same period in 2022**, of which 267 of the sellers even dropped by 30 50, and only 30 of the sellers saw an increase, but the increase was not significant. In the second half of 2023, among the 1,647 Chinese sellers surveyed, nearly forty percent of the sellers saw a decline in Black Friday sales, of which 1433 of sellers even dropped their sales by more than 50 to just 2532 of the sellers sold the same amount**, and the remaining 36 sellers sold the same amount as usual.
Behind Temu's hurricane, it is actually the ** chain seller with a certain strength who nourishes the platform by transferring profits. But for the sellers themselves, there are doubts about whether most people can make more money than before. For more sellers who are not in the ecosystem, this model has not been very helpful, but has impacted an otherwise good business. In the long run, this overseas model still needs to be optimized, which should make the original sellers survive better, and allow more sellers to participate and share the fruits of going overseas.
Of course, including TEMU, the brilliant results of the "Four Tigers Going Overseas" have brought great confidence to Chinese enterprises going overseas. At present, going overseas has entered the deep water area, and Chinese companies are no longer only exporting high-quality digital and home appliances, but have begun to export business models, which is a positive signal. However, no matter how far it develops, the ultimate goal of going overseas is to expand the market, let more enterprises benefit, and let the economy gain more external energy. An ecosystem that sellers can't benefit from broadly is not a healthy system, and ultimately it can't be sustained for a long time.
References:
Temu just knocked on Amazon's door, ** on the outside.
The deduction exceeded 190,000 yuan a month, and the 5 times fine of temu was too ruthless.
Four Little Dragons to the Sea", challenging the Amazon? , *China News Weekly.
Pinduoduo temu** war escalated, small and medium-sized sellers can't hold on, ** e-commerce newspaper.