Thrice a day, 39-year-old Ashlee Nordquist, an optician in Fargo, North Dakota, logged in to the buying app Temu to feed her fish.
If she fed sufficient fish, by tapping on a floating bag of fish meals on her telephone display, Temu had promised to ship her a free product of her selecting. However Nordquist stored working out of fish meals. To get extra, she wanted to refer a brand new consumer to the app. So, she launched Temu to her shut associates and coworkers. “It’s not charity. They don’t seem to be simply gifting away free issues to be good,” Nordquist informed Remainder of World. “Referrals are the key ingredient to successful the video games.”
After making greater than a dozen referrals, and enjoying numerous rounds of Fishland in addition to different video games on Temu, Nordquist gained a bounty of freebies: a household hotpot-and-grill combo, a small hotpot-and-grill combo (she discovered the primary one too massive), a digital camera drone, a storage organizer, and a meat slicer. Most lately, in February, her fish-feeding routine landed her a free guitar — a present for her good friend’s daughter.
Temu, the U.S.-based subsidiary of PDD Holdings, which operates a sister web site in China as Pinduoduo, has topped app retailer charts since its launch final September. In lower than six months, the app has achieved 24 million downloads, because of aggressive promoting, low-cost pricing, and addictive referral campaigns within the type of cellular video games. In February, Temu knowledgeable suppliers about its Canada launch. “The aim of Temu is to deliver Chinese language provide chains to the world, starting with the U.S. web site,” the corporate stated in a message to suppliers, based on a screenshot seen by Remainder of World.
Pinduoduo, based in 2015, had used an identical technique in its residence market of China — rock-bottom pricing and the gamification of the buying expertise — to change into one of many nation’s hottest e-commerce platforms. In a single sport, customers develop digital fruit timber with their associates to earn actual containers of fruits. In one other, they spin a wheel to win money handouts, after bringing in new customers to the app. The positioning additionally launched the “give me a reduce” marketing campaign, the place customers earn free merchandise by making others click on on their Pinduoduo hyperlinks.
Whereas these ways enabled Pinduoduo’s quick development through the pandemic and subsequent international financial headwinds — its lively consumer base briefly eclipsed Alibaba’s in 2020 — in addition they gave the corporate a controversial status, elevating issues of doable regulatory dangers. Chinese language web customers have complained about being pestered by family and friends to click on their referral hyperlinks. Others have accused Pinduoduo of tricking them by making the video games look a lot simpler than they really are. In 2021, a lawyer sued Pinduoduo after he remained caught 0.9% away from successful a prize on the app — Pinduoduo later clarified the share wanted to be 0.9996427% if displayed in full. The courtroom ordered the corporate to pay 400 Chinese language yuan ($59) as compensation for infringing upon the patron’s proper to know.
Regardless of controversies, a number of different Chinese language e-commerce corporations have gamified their buying expertise. Following Pinduoduo’s lead, e-commerce large JD.com, Alibaba’s buying platform Taobao, and supply app Meituan have all launched their very own digital fruit farms. Abroad, fast-fashion platform Shein additionally permits customers to earn factors by video games and referrals.
Together with these methods, Temu has launched a factory-to-consumer mannequin that retains costs low. As an alternative of functioning as a third-party e-commerce platform like Amazon, Temu has adopted a provide chain mannequin much like that of Shein. It sources merchandise from Chinese language suppliers, then sells them on to U.S. shoppers. Temu handles all worldwide delivery, then pays suppliers after shoppers have acquired their items.
Temu provider Awan Yang, who manages a bag manufacturing facility within the southern manufacturing hub of Guangzhou, informed Remainder of World he began working with Temu shortly after its launch as a result of he believed Pinduoduo would make investments closely in abroad development. Between October 2022 and February 2023, the manufacturing facility offered round 3,300 ladies’s baggage by Temu, on a revenue margin of 15% to 25%, Yang stated, noting that Temu would promote the baggage at 2.5 to a few occasions the unique value.
Simply as Pinduoduo succeeded in a Chinese language market as soon as dominated by Alibaba and JD.com, Temu might set up itself within the U.S. as a “low-priced grocery store,” stated Ashley Dudarenok, founding father of China-focused digital advertising and marketing businesses Alarice and ChoZan, to Remainder of World. Temu will not be on the market making an attempt to interchange trade bigwigs like Amazon and Shein, however merely presents an extra channel for American shoppers to buy on-line, she stated.
In comparison with their Western counterparts, Chinese language tech corporations are extra prepared to develop their merchandise by large advertising and marketing campaigns, wrote Connie Chan, a common companion at enterprise capital agency Andreessen Horowitz, in an evaluation of Temu. Earlier this month, the corporate made its Tremendous Bowl debut, with an commercial that confirmed viewers how they may “store like a billionaire” on the platform. Having numerous early prospects has helped practice Temu’s advice algorithms and create customized product lists as addictive as TikTok’s “For You” web page. “It’s actually shopatainment … shoppers are way more more likely to spend time — and consequently cash — with apps that they get pleasure from spending time with,” Chan wrote.
Though introducing video games to the app might help increase engagement and enhance downloads, Western consumers could also be much less prepared to pay for video games than their Chinese language counterparts, Allison Malmsten, a China market analyst with Daxue Consulting, informed Remainder of World. In spite of everything, Nordquist referred to as the video games “a hustle” — though they have been enjoyable, the final word aim was to win rewards, which required spending an excessive amount of effort and time.
In North Dakota, a number of of Nordquist’s associates have change into avid Temu customers. They even created a bunch chat to change gaming ideas. Whereas feeding her fish for freebies, Nordquist additionally purchased many objects herself: fishing gear, an organizer, a conveyable washer, some hooks, a pack of sponges, an digital iron, a vacuum sealer, and different homeware — which price her a complete of $450.
Nordquist used to purchase these merchandise from Amazon or Walmart, however now prefers Temu for its low costs. They’ll go as little as one-eighth of what her native grocery store expenses, she stated. “I felt like I used to be getting robbed, buying at different locations.”