While it remains early to assess the long-term effects of Temu, the Chinese e-commerce powerhouse, on Thailand’s e-commerce landscape and the broader region, market analytics firm Cube Asia suggests that sellers may need to prepare for another round of price competition.
According to Simon Torring, co-founder of Cube Asia, if Temu can sustain its strong incentives and maintain a consistent low-price approach, it could potentially alter the dynamics of regional e-commerce—as seen with platforms like Shopee, Lazada, and TikTok Shop, which have shifted their strategies toward profitability.
Temu, the cross-border e-commerce platform under China’s PDD Holdings, established its presence in Thailand in mid-July after previous launches in the Philippines and Malaysia last year.
The platform has seen impressive success in Western markets, particularly the US, where it became the most downloaded app, surpassing even Amazon. In just 24 months, Temu has expanded to 70 markets worldwide.
By directly linking manufacturers and wholesalers, primarily based in China, to consumers around the globe, Temu is able to offer competitive pricing.
According to Cube Asia, a significant portion of the products listed on platforms like Shopee and Lazada come from official brand stores or authorized resellers. In contrast, Temu mainly features a largely unbranded selection of products.
While Temu does provide verification for authorized sellers or direct shipments from brand manufacturers, a study of 1,000 products showed that only 12% of its inventory falls into this category. Most of these branded items consist of electronics and gadgets, rather than fast-moving consumer goods or fashion items. Cube Asia’s preliminary analysis of price competitiveness indicated that three out of five products on Temu were actually priced higher than comparable offerings on Shopee, Lazada, or TikTok Shop.
In some cases, Temu’s substantial discount rates resulted from inflated list prices, making the discounts look more appealing. Additionally, Temu offers various subsidies, including significant first-order incentives, vouchers, and free shipping.
However, Temu’s unbranded products also face considerable price competition from other platforms. To investigate pricing across different platforms, Cube Asia conducted an image search for identical products and compared specifications, analyzing five products across platforms by selecting the lowest-priced listing with at least one unit sold.
Even within this comparison, Temu emerged as the cheapest option in only two out of the five products examined. For some products, rival platforms were also shipping directly from China, indicating that Temu’s cost advantage in connecting manufacturers to buyers may not be consistent.
According to Mr. Torring, Temu’s success stems largely from its cross-border model, which is not exclusive to Southeast Asia. Alongside platforms such as AliExpress, Amazon, and Shein, regional players like Shopee and Lazada also provide cross-border shipping, with many items sourced from China.
Although Temu touts its economies of scale, this strategy may not be sufficiently distinctive to disrupt the market, as similar products are already offered on existing platforms, making it difficult to shift customer preferences.
Furthermore, Southeast Asian consumers are already familiar with low-cost Chinese products. To draw them to its platform, Temu is seemingly ramping up competition by providing extra discount coupons and exclusive deals.
This approach is creating significant momentum in the short term, impacting not just consumers but also stakeholders within the industry, according to Mr. Torring.
