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Over the past year, Temu's rapid growth has been unstoppable. According to data from Similarweb, as of December 2023, Temu's global independent customer visits had reached 467 million, ranking second among global e-commerce platforms. Other data showed that its sales in January 2024 soared 805% compared with the same period last year. Temu, which is expanding rapidly, is constantly eroding the market share in many global markets with its extremely cost-effective strategy, posing a hidden threat to the development of local e-commerce giants. But Temu, which is gaining momentum, cannot rest on its laurels. As it has taken away a lot of people’s “cheese”, regulatory authorities in Europe and the United States have begun to focus on Temu. According to a report by the Wall Street Journal, the U.S. Department of Homeland Security has stepped up its crackdown on the "small exemption" import policy. This policy allows small packages worth less than $800 to pass customs quickly without paying tariffs. Temu, as a platform that mainly sells small and light goods, has also benefited from the "small exemption" dividend to a certain extent. As the number of packages on Chinese e-commerce platforms such as Temu has grown dramatically, squeezing the market space of local platforms, lawmakers have been putting pressure on US government agencies to ban exemptions for low-value packages from China. It is understood that the U.S. Customs and Border Protection has suspended Seko Logistics' qualification to participate in the customs clearance of T86 packages for at least 90 days. Recently, there was news that CBP suddenly closed 15 customs clearance companies. However, one crisis has not yet subsided, another crisis has arisen. Temu, which has encountered regulatory pressure in its main market in the United States, has been caught in multiple sieges in the European market. In mid-last month, foreign media reported that consumer protection organizations across the European Union jointly accused Temu, claiming that it had committed a series of violations of the EU Digital Services Act (DSA). European consumer group BEUC, which represents 45 regional consumer protection organisations in 31 EU countries, said it had filed a complaint against Temu with the European Commission and called on the bloc to urgently designate it a very large online platform (VLOP). At the same time, 17 member organizations including France, Germany and Spain also accused Temu of violating a series of requirements of the DSA Act, including failure to provide traceability information of traders, manipulative business practices and opaque product recommendation algorithms. Just recently, the European Union took formal action in response to a series of accusations: Temu will be included in the list of platforms facing the highest level of digital scrutiny in the EU. According to the EU's Digital Services Act, platforms with more than 45 million users will be classified as "very large online platforms". According to a spokesperson for the European Commission, Temu's monthly active users have exceeded 75 million, far exceeding the 45 million threshold set by the EU. The bill stipulates that "super-large online platforms" must comply with as many as 17 basic regulations, and the EU will "tailor" regulatory rules for super-large digital platforms that serve more than 10% of the EU population. Platforms that fail to comply with the bill will face fines of up to 6% of their global turnover. It is understood that since DSA came into effect last year, about 20 technology companies have been subject to the EU's strictest supervision, including Facebook, TikTok, YouTube, Instagram, Amazon and Google. After being included in the above-mentioned regulatory scope, T emu must strictly comply with DSA regulatory obligations within four months of receiving the notice, including assessing and reducing "systemic risks" such as listing and preventing the sale of counterfeit goods, unsafe products and items that infringe intellectual property rights. In response, Temu stated that it will be committed to complying with the rules and regulations set out in the Digital Services Act to ensure that the information security and consumer rights of users within the EU are protected. As the saying goes, "a tall tree attracts the wind." Temu, which has been running wild in the European and American markets, is being closely watched by multiple forces, and the regulatory pressure and operational challenges it faces will further increase. Especially with the precedent of the TikToK ban taking effect, Temu has to have many concerns. According to people familiar with the matter, when the House of Representatives passed the TikTok ban bill in March, Temu's concerns intensified, so it further accelerated its actions to seek other sources of growth and reduce its dependence on the US market to reduce risks. According to foreign media statistics, as of now, Temu has opened sites in more than 60 countries and markets around the world, including North America, Europe, Asia, Latin America and Australia. According to the latest news, following the Latin American sites in Chile, Colombia, Mexico and others, Temu Brazil site was officially launched on June 6, thus achieving full coverage of the mainstream markets in Latin America. It can be seen that after gaining a foothold in the US market, Temu has extended its tentacles to all parts of the world, continuously reaching mainstream markets in various continents and widely laying out its business territory. Compared to a year ago, the traffic pattern of Temu's major markets has changed significantly. According to data from similarweb, Temu's total monthly visits will be 544 million as of May 2024. Judging from the distribution of traffic channels, the US market is no longer the only one. Specifically, the US market accounts for 17.61% of the traffic share; the Japanese market follows closely behind, accounting for 16.34% of the traffic share; while Germany, France, and Mexico rank in order with 6.55%, 4.90%, and 4.22%, respectively. The data clearly shows that Japan, which was only launched in July last year, has already quietly caught up. According to Japanese media reports, the number of Temu users in Japan is growing rapidly. As of January this year, the number of users in Japan has exceeded 15 million. Since entering the Japanese market, Temu has seen a monthly user growth of 2.2 million people. Currently, the number of users has reached 52% of the average number of users (about 29.7 million) of the three major Japanese ECs, Amazon, Rakuten and Yahoo. I still remember that when Temu first went online, it was questioned by many parties: Japanese consumers focus on product quality and emphasize consumption experience, while Temu's low-price route is obviously incompatible with Japan's mainstream high-end consumption needs. However, in the current environment of consumption downgrade in Japan, Temu has made strong inroads and gradually seized market share in the Japanese e-commerce market with its strong Chinese supply chain advantages and extremely competitive prices. It is reported that Temu has successfully attracted a large number of housewife consumers seeking high cost-effectiveness by organizing various promotional activities and displaying a large number of products with various types and attractive prices. They have gradually turned to Temu for online consumption from traditional e-commerce platforms such as Rakuten. Not only that, excellent logistics services have become an important killer for Temu to seize the Japanese market. Affected by the aging problem, the labor cost of logistics distribution in Japan is relatively high, and Temu targets this pain point to provide efficient, convenient and low-cost delivery services. It can be said that the rapid rise of the Japanese market is a very important leap for Temu's global business layout. Temu, which has encountered multiple regulatory constraints in mature markets in Europe and the United States, urgently needs to find more business growth after the US market. Now under pressure to grow, Temu continues to expand. But behind the scenes, the hidden worries about profits are also looming. Whether it can balance the challenge of market expansion and profitability is also a major issue that troubles Temu.
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