The inflation that consumers are experiencing is driving them towards retailers offering cut-price products. According to an analysis report by FoxIntelligence by NielsenIQ, this is one of the secrets behind the success of Temu, the platform available in Europe from spring 2023 that competes with Shein and Aliexpress. But low prices are not the only strategy of this new-style marketplace.
In times of high inflation, e-commerce players are playing hardball to keep their customers and win new ones. Many different strategies can be applied to achieve this objective, but the simplest is to offer ever-lower prices. This is the conclusion drawn by FoxIntelligence by NielsenIQ in its analysis of Temu's sensational arrival in France.
This marketplace from the Pinduoduo group offers millions of products at derisory prices (sometimes less than 50 cents), and was launched in the United States in September 2022, a few months before arriving in Europe. It was an almost instant success, ranking 2nd among e-commerce sites in terms of order volume in Italy, 3rd in Germany, 4th in the UK, 5th in Spain, and 6th in France.
Aggressive marketing, combining advertising and a unique customer experience
A serious competitor to Shein, Wish and AliExpress, Temu owes its popularity to very aggressive marketing, according to FoxIntelligence by NielsenIQ. The brand took out a $7 million advert during the Super Bowl half-time show. Its slogan: "Shop like a billionaire". On the social networking front, Temu has been harpooning new customers through sponsored publications and numerous partnerships with influencers. The brand is even offering items to users who promote the application on their social networks. Encouraging their friends and family to become customers too.
In addition to its advanced marketing strategy, the platform offers a surprising customer experience by combining shopping and gaming. Visitors to the site can play a variety of games, winning which entitles them to discounts or free items. These gifts, which encourage repeat orders, represent the very definition of "shopatainment", a mix between shopping and entertainment. This is how Temu ensures the commitment and loyalty of its customers.
Temu leads the way in European markets
Since Temu's arrival in Europe, a number of players have lost market share. In France, the marketplace draws on a base of customers who shop on its platform as well as on those of Kiabi, Shein and Aliexpress. The players are vying for this customer base, and Temu seems to be winning the battle. The average shopping basket on the brand's website is €35, compared with €13.6 at Aliexpress.
The same is true in the other European countries where the platform is present (Germany, UK, Italy and Spain): on average, consumers spend two to three times more on the Temu site than on the Aliexpress site. Overall, Shein and Aliexpress are losing the most market share to Temu.
These encouraging figures for the marketplace are less so for environmental issues. FoxIntelligence by NielsenIQ points out that this success story is based on a business model that relies on the sale of products at ultra-competitive prices, with parcels shipped from one continent to another, and with the risks of addiction strongly pointed out.
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