Temu opens its “bloody mouth” to snatch food from Shopee

Less than a year after its launch, Temu has already taken over most of the European and American markets, but its appetite is far greater than that. Last week, following the Mexican site, Temu opened its second Latin American market stop - Chile. Sensor Tower data shows that Temu ranked 13th among similar apps in the Google Play Store as soon as it was launched in the Chilean market.

Just as Temu entered Chile, it immediately expanded into Southeast Asia.

Prior to this, rumors about Temu's Southeast Asian site were rampant. In June, Temu conducted a survey on platform sellers, with the theme of "Research on Cross-border E-commerce Platform Sellers in Southeast Asia, Japan and South Korea". However, after the two major Asian markets of Japan and South Korea were launched, there was no accurate news about its Southeast Asian site.

On August 27, Temu held a "grand opening" event, officially launching its Philippine site, announcing the finalization of its Southeast Asian e-commerce expansion plan. So far, Temu has been operating in more than 38 countries around the world, covering many countries and regions in Asia, Europe, North America, Latin America and Oceania.

Temu has continued its low-price model in the Philippine market. Opening the official website, the overall style of the platform cannot be said to be completely different from that of European and American sites, but it can be said to be exactly the same: simple interface design, similar product categories, and dazzling benefits - up to 90% discounts, low-price promotion areas, massive discounts...

Specifically, the price range of products on Temu Philippines is generally maintained below 1,500 Philippine pesos, about 200 yuan, slightly lower than other local e-commerce platforms. Under the temptation of high cost performance, although the online time is not long, many products in the discount area have already started crazy sales mode, and there are links with sales of 10,000+, 50,000+, and 100,000+.

Why did Temu’s first stop in Southeast Asia land in the Philippines?

Southeast Asia, as the most promising emerging blue ocean in recent years, has been coveted by many e-commerce giants. According to a McKinsey research report, the Southeast Asian e-commerce market consists of 11 economies at different stages of development, and the e-commerce GMV is expected to reach US$230 billion in 2026.

Among the six largest e-commerce markets in Southeast Asia , Indonesia accounts for half of the market share, with an e-commerce GMV of US$51.9 billion, while the Philippines ranks third with a share of 11.5%.

Although Indonesia, as the largest e-commerce market in Southeast Asia, is the first choice for giants such as TikTok Shop, the local government is currently preparing several new regulations: first, the value of imported goods sold on Indonesian e-commerce platforms should not be less than US$100; second, imported goods entering the Indonesian market must obtain distribution licenses and supplementary licenses; and third, e-commerce platforms are not allowed to sell self-operated goods while acting as a sales medium for third-party sellers.

The first and third articles directly target small and light commodities and the fully managed model, which are the lifeblood of Temu. The above regulations are still in the drafting stage, but the TikTok Shop, which was originally planned to launch a fully managed model locally, has already been affected. Therefore, the Indonesian market is an extremely difficult nut to crack for Temu.

On the other hand, the Philippines, as the second most populous country in Southeast Asia, has a large proportion of young people and huge potential for economic development. In recent years, boosted by the COVID-19 pandemic, the dividends of the Philippine online e-commerce market have been released. Faced with such a booming e-commerce hotspot, it is reasonable for Temu to be chosen as the first stop.

However, for the newcomer Temu, behind the vast opportunities in the Southeast Asian market lie even more daunting challenges.

At present, the e-commerce infrastructure in Southeast Asian countries is still underdeveloped. Due to the different customs regulations and decentralized import tax systems, the customs clearance process is lengthy and inefficient. In the Philippines, it may take 25 days to complete customs clearance. The complex geographical environment also leads to low efficiency in the last mile delivery, and the entire warehousing and logistics link will face great difficulties.

At the same time, what awaits Temu ahead will be a joint encirclement and suppression by many "local tyrants".

The timing of Temu's arrival in Southeast Asia is actually quite subtle.

It is reported that Shopee Philippines' 9.9 Super Shopping Day will be held from September 1st to 10th. Shopee has said that this year's Super Shopping Day will be "bigger, better and more valuable than ever before." In addition, Lazada and TikTok Shop are not far behind and are expected to launch big promotions in the same period.

As the local giants are about to launch their promotion campaigns, Temu suddenly appeared out of nowhere and shook up the existing e-commerce landscape. It is not difficult to guess that Temu is trying to harvest a wave of traffic and seize the market opportunity before the promotion begins by taking advantage of its extreme cost-effectiveness.

Can things really turn out as Temu wishes?

Judging from Temu's expansion strategy, when it first entered overseas markets, it chose the European and American markets with relatively high consumption levels as its first strategic strongholds. After building its brand reputation, it gradually extended its tentacles to Latin America, the Middle East and Southeast Asia, where the economic levels are relatively backward.

Based on Temu's low-price platform positioning, most people may have thought that it would choose to start its overseas expansion in the Southeast Asian market, which has a large number of low-spending people. But the fact is that after returning to Asia, Temu first landed in the developed markets of Japan and South Korea, and then raided Southeast Asia.

Although the market consumption structure in Southeast Asia is highly consistent with Temu's route, the development of low-cost e-commerce here is far more mature than in Europe and the United States. According to the latest research by Singapore consulting firm MomentumWorks, Shopee's GMV in Southeast Asia will reach US$47.9 billion in 2022, accounting for nearly half of the local market share, followed by Lazada and Tokopedia. The three companies share most of the Southeast Asian market.

Unlike the flourishing European and American markets, Temu faces many powerful competitors in Southeast Asia. These companies may also have Chinese e-commerce genes, but they have already taken root for many years and are subtly eroding the low-price mentality of local consumers.

It is worth noting that the full-hosting model that Temu is proud of is not new in the Southeast Asian market. Lazada and Shopee have both recently launched this model.

With similar platform positioning and difficult-to-determine play styles, under this circumstance, if Temu wants to snatch food from giants like Shopee, the most direct way is to adopt a more aggressive money-burning strategy, relying on the lowest product prices and the highest cost-performance advantages to quickly plunder consumers. In the long run, if it wants to penetrate the hinterland of the Southeast Asian market, it needs to develop a differentiated sales route.

In fact, Shopee’s development strategy is becoming more conservative at this stage, and its money-burning model is unsustainable due to continued losses. If Temu continues its aggressive expansion momentum, it is not impossible that the Southeast Asian e-commerce landscape will be reshaped.