Temu's Rapid U.S. Growth Disrupts Rivals, Faces Legal Challenges
Temu, a Chinese e-commerce platform, has made significant strides in the U.S. market. Despite having just over half the retention rate of Amazon, Temu has grown to capture 1% of the online retail market share in less than 18 months. Its rapid growth has led to legal disputes with competitors, including a lawsuit against Shein in December 2023, alleging 'mafia-style intimidation'.
Temu's user base is largely shared with other major retailers. Around 96% of Temu users also shop at Walmart and Amazon, and 84% shop at Target. Despite this overlap, Temu has had minimal impact on these established retailers' sales. However, it has significantly disrupted other online discounters like Wish and AliExpress.
Temu's growth has been remarkable. Its sales grew by 840% from January 2023 to 2024, and by over 1100% during the 2023 holiday season. Around 18% of U.S. households have shopped on Temu, and 28% of its customers return to the platform 16 months after their first purchase, nearly double the retention rate of Walmart and Amazon. Temu surpassed Shein's sales in just 10 months, despite having half as many active users in its first three months.
In December 2023, Temu faced a lawsuit from German telecommunications company Telekom Deutschland GmbH due to issues related to payment method confirmation and refund claims linked to suspected phishing or fraudulent activities.
Temu's rapid growth and high customer retention rates suggest it is here to stay in the U.S. market. Despite sharing nearly all of its customers with Walmart and Amazon, Temu has had minimal impact on their sales. However, its disruptive effect on other online discounters is clear. As Temu continues to grow, it will be interesting to see how it navigates legal challenges and maintains its impressive sales growth.
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