Temu, the online marketplace operated by Chinese e-commerce giant PDD Holdings, continues to defy expectations, achieving in two years what takes most companies a decade. With sales skyrocketing to approximately USD 20 billion in the first half of this year—a significant leap from USD 18 billion in total sales for 2023—Temu is rewriting the playbook for global e-commerce expansion.
To grasp the magnitude of Temu’s recent milestone, consider this: Shein, another e-commerce juggernaut, took nine years to hit the USD 20 billion mark. TikTok’s e-commerce arm managed it in three. Temu? Just two years.
What’s notable about Temu is its strategy that goes beyond rapid expansion. The company is executing a deft pivot from a full consignment model to a partial one. According to 36Kr, by early July, this new approach accounted for 20% of Temu’s US sales, barely four months after implementation.
The partial consignment model requires merchants to handle their own fulfillment, freeing Temu from the constraints of managing logistics for small items. This move promises greater scalability and reduced costs.
Temu’s recent growth has been propelled by US trade policies. The de minimis threshold exemption allows consumers to import goods valued at USD 800 or less without tariffs. In 2023, this policy facilitated the entry of up to 1 billion packages into the US, with Temu and Shein jointly accounting for a third of this volume. However, the potential return of Donald Trump to the White House could derail this policy, prompting Temu to double down on its partial consignment model, which is not reliant on the tax exemption.
Temu’s ambitions extend far beyond US borders. The company aims to reduce its US gross merchandise value (GMV) share from 60% to 30% this year, spreading its footprint globally. In Brazil, Temu became the most downloaded app within a month of launch, demonstrating an almost viral ability to penetrate new markets. Europe is the next frontier, with Temu aggressively implementing its partial consignment model across the UK, Germany, France, Italy, and Spain. By targeting Amazon merchants with logistics experience, Temu aims to capture a 50% market share in the region—a highly ambitious goal.
This expansion plan comes with its own set of challenges. As most Amazon sellers currently use Temu only as a channel to clear inventory, many of them lack cross-border e-commerce experience, leading to logistical hiccups. To address these issues, Temu has been exploring partnerships with overseas warehouses, expanding from seven to over 20 partners.
As Temu races toward its annual sales target of USD 60 billion, with partial consignment expected to contribute around USD 20 billion, the e-commerce landscape is shifting. Amazon’s launch of a discount store project in response to Temu’s model signals the beginning of what could be an epic battle for market dominance.
Rewriting the script won’t be easy for Temu. The company needs to navigate regulatory challenges, intense competition, and the complexities of its ambitious expansion plan. But one thing is clear: the future of online retail is fast changing.