Like many of you, I’ve shopped on Temu and shamelessly made some nonsensical purchases. My personal favourite was a champagne bell for my office. Did I need it? No. Did I go there to buy it? Also no. And then there was the vibrating bird for my cat. He would argue that it was a necessary purchase. It may not have been. Temu is ruffling feathers (still on the bird) in Europe over claims of gamification and the encouragement of irresponsible spending. But is that simply because retailers are unsettled by the success of the China owned company? Temu may have cracked the marketing success formula. And as marketers, here’s what we can learn.
About Temu
TEMU is an online retail giant that has gained traction quickly, has seen massive success in its marketing strategy, which is heavily focused on deep discounts, influencer partnerships, and data-driven targeting. With its tagline “shop like a billionaire”, the service has rapidly grown in the EU market, selling everything from cosmetics to clothing as well as furniture and tech. Its approach is noteworthy for generating high turnover, impressive ROI, and rapid user growth despite fierce competition. TEMU leverages strategies like low-cost pricing, social media engagement, and mobile app usage to convert casual browsers into loyal customers.
- TEMU has been one of the fastest-growing players in the e-commerce market. In just its first year of operation in the United States, TEMU’s parent company, PDD Holdings, reported revenue of $30.4 billion in 2022, marking a 65% year-over-year increase.
- With over 47 million downloads, Temu’s app is dominating both the Google Play and the App Store charts.
- Temu’s EU growth has been rapid, registering 75 million users in the EU in April, rising to 92 million in September.
- Its venue jump is attributed largely to TEMU’s entry into international markets, particularly in North America. Reports also suggest that the company achieved significant daily sales milestones, with some sales days reaching turnover figures in the tens of millions, notably on major shopping events like Black Friday.
- Additionally, the brand’s ROI on digital ads has been noteworthy; estimates suggest that TEMU sees a 5-10x return on investment for its ad spend, especially on social media and app-based marketing campaigns.
- A formal investigation was opened recently with the European Commission citing concerns over the platform, which is a cut-price rival to Amazon. The European Commission said it had numerous concerns that the platform, owned by PDD Holdings, was breaching the new Digital Services Act (DSA), which regulates tech firms ranging from Facebook to X and Google.
Marketing Strategies Used By Temu
So how has Temu grown so rapidly? Let’s look at some of their marketing strategies:
#1 Ultra-Low Pricing Strategy
One of TEMU’s most distinctive marketing strategies is its aggressive pricing. Offering rock-bottom prices, often lower than competitors, TEMU markets itself to consumers looking for perceived value. This “price-first” marketing appeals to budget-conscious buyers and has created a buzz that drives initial customer engagement. For example, TEMU’s campaigns often showcase items priced at under $1. This attracts huge traffic to the site and app.
It’s like when you go into Ikea to buy a saucepan and end up filling your cart with 50 other low-cost items that just hopped in. And friends, they do just hop in.
TAKEAWAY: This model, which heavily relies on competitive pricing, is intended to maximise sales volume rather than margin, a tactic like the early strategies of e-commerce giants like Amazon and Wish. And it won’t work for every brand. High end brands won’t devalue their products and services by dropping to rock bottom. Plus of course, the flashy, FOMO vibe of Temu’s marketing won’t work for everyone either. Your marketing approach should be cohesive with your brand style guide and marketing strategy.
#2 Influencer Marketing and Social Proof
Temu has effectively harnessed influencer marketing, partnering with both micro and macro-influencers to drive brand visibility and trust. By collaborating with influencers across platforms like TikTok, Instagram, and YouTube, TEMU reaches a diverse audience, especially younger, price sensitive shoppers.
Influencers often share “unboxing” videos, reviews, and discount codes, creating a sense of excitement and urgency around its products. For example, during one campaign, TEMU leveraged TikTok influencers who generated millions of views by showcasing items under $10 with discount codes, spiking app downloads and customer conversions.
Over 10,000 influencers have collaborated with Temu’s influencer program and earned around $100,000 cash every month. To qualify as a Temu influencer, creators need to match the eligibility criteria. These criteria include a strong social media presence with active engagement and high interaction with followers. Plus, the content creation style and audience demographics should match Temu’s brand and target audience.
TAKEAWAY: Establishing a solid influencer marketing / affiliate marketing program is a win for many brands as it essentially extends your marketing workforce on a commission only basis. However, it isn’t enough to just set up an influencer marketing or affiliate program. Nurturing your top performers takes work and they will require regular updates, incentives, marketing materials and support. This is something I have extensive experience of in the finance space.
#3 Flash Sales and Gamification
TEMU uses flash sales and gamified shopping experiences to encourage frequent app visits and increase customer engagement. Users are often given daily rewards, such as discounts or free shipping, for completing certain actions, like sharing with friends or adding products to their cart.
This marketing tactic not only keeps customers returning to the app but also incentivises them to make quicker purchasing decisions. In some cases, the app allows users to “earn” credits or discounts for interacting with TEMU’s social media, driving engagement across multiple platforms. The gamification approach is known to increase customer retention, with some analysts estimating up to a 20% increase in user retention for platforms that implement such strategies.
TAKEAWAY: Temu takes gamification to the next level, and it isn’t for everyone. In my case, I clicked out of any popups as they felt spammy. But then I’m also not a gambler / gamer so perhaps I am not the target audience to get hooked. However, Refer a Friend and loyalty schemes do work across other sectors. A referred customer is 18% more loyal than a customer acquired by other means. Plus, referred customers are 4X more likely to refer more customers to your brand and have a 37% higher customer retention rate. Customer acquisitions through referrals spend 200% more than the average customer.
#4 Data-Driven Ad Targeting and Retargeting
TEMU leverages PDD Holdings’ data capabilities to target its ideal customers with precision. By analysing consumer behaviour and preferences, TEMU creates tailored ad experiences across social media platforms and Google Ads. For example, if a user views or purchases items related to home decor, they may later see ads highlighting TEMU’s home section, often with special discounts. TEMU also utilizes retargeting strategies, showing ads to users who visited their app or website but didn’t make a purchase, encouraging them to return and complete a transaction.
And Temu’s algorithm is smart. It has quickly built a user profile of me as a cat owner who likes nice stationery, pens and pins. And apparently champagne artifacts! So you can guess what I see when I open the platform.
TAKEAWAY: Retargeting plays a pivotal role in converting potential customers into sale dollars. And a smart algorithm that analyses user behaviour and preferences to deliver highly personalised ads is another win. By utilising data-driven insights, these algorithms optimise ad placements and timing, increasing the likelihood of conversion as users encounter relevant offers across various platforms.
#5 High-Profile Advertising and Partnerships
TEMU has invested heavily in high-visibility advertising. Its campaign during the 2023 Super Bowl, which was viewed by approximately 113 million people, exemplified TEMU’s willingness to spend big to build brand recognition in the U.S. Was it a great advert? Not really. The skin colour change of the main character from black to white when shopping the Temu app was questionable. But it seemingly did the job.
The 30-second ad that featured the slogan “Shop Like a Billionaire,” highlighted the app’s affordability and drew substantial attention to its brand in the American market. This high-profile exposure drove significant traffic to TEMU’s site and app and greatly increased its brand awareness among new users.
TAKEAWAY: Temu has spent big on advertising. According to a recent study by MediaRadar, TEMU’s advertising spend has exceeded $5.17 billion since it arrived in the US market in September 2022. According to Spyfu, Temu spends $1.7M per month on Google search ads alone. And of course it works for them. PPC works for ecommerce, especially if you have the right targeting, strategy and budget. Talk to us about PPC for your brand. (If you have a $5.17 billion budget we are especially interested!)
The Temu Success Formula
Temu’s marketing success lies in a mix of affordability, social proof and digital engagement techniques like FOMO and gamification. By capturing the attention of price-conscious shoppers and creating a user experience that rewards frequent interaction, TEMU has been able to build a large customer base quickly. Its combination of influencer partnerships, data-driven ads, and a gamified shopping experience makes for an engaging, and dare I say addictive shopping experience.
Temu’s willingness to invest heavily in advertising, both on social media and traditional media, indicates a strategy aimed at rapidly growing its user base and establishing itself as a household name. Whether the EU likes it or not, TEMU is likely to remain a competitive force in global e-commerce, leveraging marketing as a cornerstone of its rapid growth strategy.