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Temu Is Fast Growing But It Is Not Fast Fashion: Here’s Why

Temu Is Fast Growing But It Is Not Fast Fashion: Here's WhyPhoto from Unsplash

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What is Temu and Is It a Fast Fashion Company

As one of the fastest-growing e-commerce companies in recent years, Boston-based Temu has earned numerous accolades, including being referred to as “mind-bending,” “the real deal,” and “extremely aggressive.” However, what sets Temu apart from other companies, particularly fast-fashion companies like Shein, is its unique business model.

Although Temu’s rapid growth rate has led to comparisons with Shein, there are fundamental differences between the two companies. For instance, Temu is not a fast-fashion company and has a business model that stands out in the e-commerce industry. In January, Bloomberg reported that Temu’s website visits surpassed those of Shein, an impressive achievement for a company that only started operating in September 2022.

Thus, in this article, we’ll delve into Temu’s Next-Gen Manufacturing model and how it enables the company to offer competitive prices while minimizing waste. Additionally, we’ll explore the differences between Temu and Shein’s business models and why Temu’s approach sets it apart as a promising contender in the online marketplace industry.

Temu’s marketplace and Next-Gen Manufacturing

Temu is an online marketplace, providing a wide range of products from various independent sellers. The platform offers over 25 major categories of merchandise, including electronics and kitchenware, among others. Temu is not limited to fashion items, as it provides an extensive selection of products, as described by Fast Company, creating a “riot of choice.”

Temu leverages its parent organization PDD Holdings Inc.’s vast network of more than 11 million merchants to expand its product listings rapidly. Moreover, PDD’s expertise in managing complex logistical fulfillment enables Temu to overcome typical challenges that startups face during the initial stages. As a result, Temu’s Next-Gen Manufacturing is a promising venture with a distinct business model, unique offerings, and access to an extensive network, ensuring its competitive advantage in the marketplace.

According to Bloomberg:

“Temu operates more like a marketplace than a self-run brand such as Shein. It doesn’t handle design and production, instead recruiting suppliers to offer a list of products, which Temu selects from and then allows a store to open on its platform.”

Temu’s Next-Gen Manufacturing model enables the company to offer competitive pricing by efficiently matching supply and demand. The model leverages timely insights into consumer preferences to enable manufacturers to be more targeted in production, leading to cost savings that are passed onto consumers. The result is a win-win situation: reduced waste translates into lower prices and generates more sales, while consumers receive more customized products at affordable prices.

In contrast, fast fashion companies follow a test-and-repeat model, producing small quantities of new designs for its online stores, often thousands of designs daily, according to Coresight Research, an e-commerce and retail industry consulting firm. However, Temu’s innovative business model stands out, making it a promising contender in the online marketplace industry, offering consumers high-quality products at affordable prices.

Temu and Shein are clearly not identical

“The Temu and Shein business models are clearly not identical,” said Deborah Weinswig, Coresight’s founder and CEO. Temu’s model “enables companies to quickly respond to and capitalize on rapidly changing trends in the market. As this model cuts out any middlemen, it greatly reduces prices for consumers,” she added. Temu leverages its Next-Gen Manufacturing model to provide fast and affordable services.

Temu’s combination of ultra-low prices and flash sales has proven attractive at at time consumers are becoming more careful with their spending, according to Abe Yousef, a sniper analyst at Sensor Tower, which tracks mobile apps. Temu’s mobile app has been downloaded 24 million times since inception and it’s gathered about 11 million monthly active users as of January, Yousef estimates.

“Given the current challenging macroeconomic environment and the backing of parent PDD Holdings, Temu is well-positioned to continue its aggressive growth strategy among US consumers,” he said.

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