In June, Temu sent out a survey to its sellers asking which platforms they are already using in Japan, Korea and Southeast Asia.
Temu Korea’s homepage on its first day of launch
With these recent expansions, Temu is now selling in 27 countries worldwide – mostly developed countries.
How is the ecommerce landscape in South Korea?
South Korea has one of the most digitally-advanced populations in the world, with mature ecommerce infrastructure (payment and logistics) and a competitive online retail landscape encompassing ecommerce marketplaces, brands’ own sites/apps and category-focused players.
While NYSE-listed Coupang is definitely the largest player, other large internet and traditional groups such as LINE-parent Naver and Lotte also operate online platforms/marketplaces.
Since Nov 2022, AliExpress has also deepened its investment in the South Korean market, increasing subsidies and launching an express cargo ship service to Korea to “cater to the increased demand in the market”. This reflects the potential of the South Korean market.
Beyond marketplaces, there are also vast brand players like Nike and category-focused players like Chinese-owned Cider (clothing and fashion) and KREAM (for trading limited edition fashion and accessories), which further add to the fragmentation.
Top 10 shopping apps in Google Play Store (Source: Similarweb)
Ultimately, South Korea (and Japan) are attractive, affluent markets for Temu. It remains to be seen whether Temu can adapt the same model effectively and navigate the local nuances and competitive landscape.
However, with Pinduoduo’s experience (and cash flow) in China, Temu can probably carve out a piece of the market that demands value-for-money / differentiated products. What affluent Asian consumers see as value-for-money or differentiated probably differs greatly from that of US consumers – but it probably does not matter much for Temu.
Will Temu enter Southeast Asia?
While Temu decided in their first steps that Southeast Asia was a less attractive market, with the launch in Japan and Korea, it is becoming more and more likely they will give it a try at Southeast Asia.
Recently, a message has also been circulating by headhunters on Maimai (脉脉), LinkedIn’s competitor in China, that says: “According to reliable sources, Pinduoduo has already deployed its vanguard team and completed research in various Southeast Asian countries. Soon, Temu army will dominate the Southeast Asian ecommerce market, challenging Shopee, Lazada, AliExpress, and TikTok Shop. We are expecting to witness a spectacular battle in ecommerce in Q4 2023”.
If that happens, Temu, which is much more efficient and aggressive, could be the great catfish (in the Norwegian sense) for the region.
Read Momentum Works’s Who is Temu report as well as Ecommerce in Southeast Asia report for more insights and analyses on the platform, as well as the potential shift of ecommerce competitive landscape.