Temu Considers Launching A Platform Model
After Trump’s re-election, the restrictions on cross-border e-commerce set by the US government during Biden’s term are likely to be further strengthened. Chinese cross-border e-commerce platforms have already anticipated this. Earlier this year, Chinese cross-border e-commerce considered semi-warehousing as the most effective response model – merchants independently ship goods in batches to the United States, clear customs and enter warehouses, with platforms responsible for pricing and sales.
The most radical transformation is Temu. In the past ten months, Temu has dispatched many senior managers to lead teams and build a team of nearly a thousand business development personnel, hoping to double the supply of goods this year. They have set aggressive goals for their semi-warehousing business launched only in March – aiming to achieve $20 billion GMV by 2024, accounting for one-third of their overall target.
We understand that as of October this year, in both European and American markets, Temu’s recruitment of merchants and quantity of goods under semi-warehousing did not meet its original targets. Temu denies these two sets of data and statements.
As a result, Temu has made several adjustments: in late October, almost all business development staff for semi-warehousing were converted into category operations; some even returned to their initial full warehousing operations. Additionally, Temu is preparing to establish overseas distributed mini warehouses (DMWs) where they will stockpile some popular products ahead of time overseas.
Temu initially fully adopted the ‘full hosting’ model, where merchants send goods to domestic warehouses, and the platform takes over pricing, sales, and transportation, sending each consumer’s goods directly to their destination via postal parcels. Now it has added a more locally adaptable ‘semi-hosting’ model. Temu is also considering launching a third-party platform model similar to Taobao, where merchants independently select products for pricing, open operating stores, ship overseas, and the platform collects transaction commissions.
If this model is implemented, in the future Temu will simultaneously adopt three models: full hosting, semi-hosting, and third-party platforms. Previously Shein and Alibaba‘s AliExpress have already provided these options.
Since its launch in September 2022,Temu has experienced rapid growth and completed what competitors took more than ten years to achieve in just over a year. Its success is not only due to the full hosting model turning cross-border e-commerce into an easily accessible business but also largely stems from China’s supply chain capacity accumulated over time as well as Pinduoduo‘s strong organizational efficiency.
As Temu moves beyond its initial rapid growth phase towards more complex overseas markets,it must conduct business with greater localization considerations involving multiple stakeholders and facing bigger challenges. The past endowments and advantages are being challenged,and the platform can no longer solely pursue a single goal.
SEE ALSO: Temu’s GMV in the US Region Exceeds 20%, Expanding Business in Latin America and Southeast Asia
