Temu becomes one of the top advertisers in the U.S. with $3 billion in spending

According to foreign media, in order to grab a certain market share from the global e-commerce giant Amazon, Pinduoduo has made high marketing investments in its cross-border e-commerce platform Temu. This figure has attracted the attention of industry insiders.

Goldman Sachs analysts previously said that Temu spent about $1.2 billion on advertising on Meta alone;

A report recently released by advertising intelligence company MediaRadar also mentioned that Temu's advertising expenditure increased by 1,000% year-on-year from January to November last year;

The latest data released by research firm Bernstein shows that Temu's total marketing expenses in the United States last year were close to $3 billion.

The massive spending has catapulted Temu into the top tier of online advertisers in the U.S., alongside established players like Amazon, Target and Walmart.

According to Mike Ryan, head of e-commerce insights at Smarter Ecommerce, “Temu is bombarding all (advertising) channels with cash.”

Despite Temu's heavy advertising spending and its growing popularity in the U.S., more and more industry analysts are questioning how long this money-burning strategy can last. Many industry observers are also concerned that Temu's product quality is discouraging repeat customers.

Additionally, an analyst at Similarweb also mentioned that attracting people to a website is one thing, but converting them into paying customers is another.

Similarweb analyzed Temu’s traffic across all advertising channels in the United States, including social media, display ads and paid search, and found that the percentage of visits converting to sales declined by the end of 2023.

However, Temu said that the company is gradually improving its marketing strategies for different markets, and the marketing expenses for each market will eventually be adjusted based on local conditions.

Temu also noted, “We are seeing word-of-mouth recommendations becoming more and more influential, even more so than advertising.”

Last month, analysts at Bernstein said there was a growing overlap between consumers visiting Temu and existing U.S. marketplaces including Amazon and eBay.

However, Amazon still has a large and loyal user base, all of whom are fans of Amazon Prime's fast delivery service. Even though Temu has taken away some of Amazon's market share in the clothing and accessories field, Amazon has still managed to hold on to most of its "territory" by virtue of its diverse product categories and its loyal customer base.

At a recent promotion conference, Temu said it is recruiting Chinese suppliers with warehouses in the United States, hoping to increase its competitiveness with Amazon and Walmart by shortening delivery time.

It currently takes four to nine days for Temu to deliver express from China to the United States, and one to three weeks to deliver packages. In contrast, Amazon customers can receive their orders the next day or even the same day most of the time.

Temu

USA

Marketing expenses