It is in the news that Pinduoduo is launching a new ecommerce app in the US called Temu.
The news came after Pinduoduo reported a very good set of Q2 results, and the CEO saying that consumer sentiment is recovering in China.
Temu, which is apparently cross border, is available not only in the US, but also in a number of stores.
Our thoughts (and some historical facts) on the launch:
- A year ago, we wrote a commentary “Pinduoduo shows it can be profitable if it chooses to”. Guess that is still quite relevant.
- Last year, when Pinduoduo reached 800 million ‘annual active buyers’, some friends were already saying “the growth in user numbers in China is probably approaching the ceiling. They would either need to show profitability, or continue user growth outside China”. It seems they are now doing both.
- Colin Huang, Pinduoduo’s founder, spent 7 years tinkering with various startup ideas before founding Pinduoduo. The companies he founded earlier included cross border ecommerce and gaming companies.
- Even after founding Pinduoduo, Colin Huang’s team still tinkered with some cross border attempts. The most notable was probably VOVA, which existed between 2018 and 2022.
- Some reports have compared Temu to SHEIN, about which we published a report recently. It is interesting that the media also reported that SHEIN’s sales/GMV for the first half of the year surged toUS$160 billion. However, a look at the Temu app reveals that at this stage it really looks more like Wish.
- Building SHEIN’s level of supply chain management is not easy – Shopee and many others have tried to build the “small order, quick reorder’ model SHEIN is famous for, without much success. Besides, it is very very hard to acquire the initial critical mass of customers at the cost that SHEIN initially paid in the early 2010s.
- That said, like all major consumer tech companies in China, Pinduoduo’s strength is decidedly in user acquisition and operations. This (coupled with subsidies) is exactly how it almost caught up with Alibaba in user numbers. Shopee took the same approach in Southeast Asia and beyond. We can’t dismiss Pinduoduo’s prospects in this round of cross border push.
- The real difficulties, if they want to make this a sustained business rather than just a surge in user acquisition, lie in leadership, people, organisation and only, finally, product.
Seeing the unseen
Much of the experiences and lessons learnt are covered in our new book “Seeing the unseen: behind Chinese tech giants’ global venturing”, which is published by Wiley and is already available in major bookstores. You can also order the book on Amazon.
We recently spoke about Pinduoduo, cross-border e-commerce and SHEIN in Momentum Academy and 01VC’s sharing – Off the Record: Behind SHEIN’s Success and global cross-border trends. You can read about our sharing and insights here – Part 1, Part 2 and Part 3.