If you never heard of Temu, picture Amazon but with everything 90% off. Sounds pretty insane, right? The first time I downloaded the App, I know this business idea won’t work. The catch behind the low price is the low quality products. After some time, the customer will abandon the platform due to its inconsistency in the product quality.
I am totally wrong. Let’s look at some of the key stats from Temu.
https://analyzify.com/statsup/temu
Who is buying or who is not buying from Temu?
I know a guy who shops at Temu more than Amazon. He is a well-educated, middle-class male working in the fintech industry. With a good-paying job and a detached house, he seems like the ideal customer for premium brands like Crate & Barrel. However, once he downloaded the Temu app, he was hooked. He constantly clicks on marketing emails from Temu, has enabled deal notifications, and even plays the so-called games in the app to earn better deals.
I asked him if he was happy with the quality of the products. He said that with prices so low, he doesn’t care how long the products last. For him, he can afford to treat the items as disposable — and he does. He ordered a butterfly catcher for his kids, which lasted only about three days. Instead of writing a bad review, he simply purchased another one.
When do we stop valuing the quality of a product? The answer is when the price is low enough.
If I take a step back and look at the bigger picture, considering the economic outlook for both North America and China, the short-term view is not a positive one. Disposable income for the middle class has not grown much since the pandemic. People with well-paying jobs today may lose their jobs to AI in the future. Temu’s success is a surprise to me, but it is an inevitable outcome given the current economy.