Retail

Amazon Gets Competition

Amazon
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No one in the United States had heard of Temu until it spent millions of dollars on Super Bowl ads. And, it is still spending. The Chinese company believes it can take meaningful market share from Amazon, the e-commerce king. Amazon.com Inc. (NASDAQ: AMZN) does not appear worried for now. (Amazon’s shares have surged this year.) However, Temu plans to up its marketing game.

According to JPMorgan, Temu will spend $3 billion on marketing in the United States this year. By some estimates, it will be the second largest advertiser on Facebook, behind only Amazon. The idea that Temu is an obscure company is not accurate. Temu is already doing well in some countries, particularly South Africa, Israel, Japan and South Korea. The Temu app is among the most downloaded in the United States. According to Business of Apps, it had over 70 million active users last year. Its shipping volume in the United States is over 2.2 million packages a day.

China-based PDD Holdings Inc. (NASDAQ: PDD) owns Temu, along with Chinese e-commerce site Pinduoduo.

Temu has been accused of selling counterfeit products and being a marketplace where credit card information can be stolen. According to ZDNet, “Temu was accused by the US government of potential data risks after its sister site, e-commerce platform Pinduoduo, was suspended by Google for containing malware.”

Is Temu a real competitor to Amazon? That depends on three things. Do its low prices draw people? Will people be worried about the site’s security? And how much money is management willing to spend to get customers?

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