Temu Dominates App Stores in Japan and South Korea, Overtaking Shein

Chinese low-cost retailer Temu has established itself as a dominant force in app stores across Japan and South Korea, surpassing its rival Shein. Temu’s successful expansion in Western markets has propelled its growth, leading to its rapid rise in popularity in these two Asian countries. According to Goldman Sachs, Temu is now available in over 40 countries and generates more than $1 billion in monthly transaction value. The investment firm expects Temu to continue its growth into the second half of 2023.

Data.ai analysis shared with CNBC indicates that Temu has outperformed Shein in Japan and South Korea by maintaining its position at the top of the shopping app rankings for a longer period of time. Since its launch in July in Japan, Temu has consistently ranked number one in daily iOS and Google Play shopping app downloads for 101 out of 124 days. In contrast, Shein only held the top spot for 17 days during the same period. Furthermore, Temu achieved four million downloads in Japan in just 121 days, faster than Shein’s 155 days, Japanese marketplace Mercari’s 427 days, and Amazon’s 660 days.

Similarly, in South Korea, Temu secured the number one position in daily iOS and Google Play shopping app downloads for 65 out of 93 days from August 1 to November 2, surpassing Alibaba’s AliExpress, while Shein remained among the top five. Temu also achieved two million downloads in South Korea in approximately 88 days, outperforming Shein’s 382 days and AliExpress’ 366 days to reach the same milestone.

The competition between Temu and Shein extends beyond the e-commerce space into the courtroom. Shein filed a lawsuit against Temu in December, accusing the retailer of intellectual-property infringement. In turn, Temu accused Shein in July of pressuring manufacturers into exclusivity agreements. However, recent documents reveal that both companies have applied to end their lawsuits, suggesting a potential resolution to their conflicts.

Temu is backed by PDD Holdings, a Nasdaq-listed Chinese tech giant that also owns China-based e-commerce app Pinduoduo. Launched in the U.S. in September 2022, Temu quickly rose to the top of app stores and expanded across numerous countries, including Australia, New Zealand, France, Italy, Germany, the Netherlands, Spain, and the UK. The Chinese online retailer, headquartered in Boston, Massachusetts, focuses on selling affordable made-in-China goods, ranging from fashion to household products, to budget-conscious consumers worldwide.

Shein operates in a similar manner, relying on contracted manufacturers, primarily based in China, to design, produce, and ship its low-priced products. Temu made its entry into the Asian market through Japan and South Korea in July, following with launches in the Philippines in August and Malaysia in September.

Citi analysts attribute PDD’s 131% year-on-year growth in transaction service revenues and 135% year-on-year growth in cost of goods sold in the second quarter of 2023 to Temu’s impressive performance. Leveraging PDD’s strength in supply chain and marketing, Temu has been able to capitalize on its parent company’s resources to expand rapidly. Bernstein analysts suggest that Temu’s significant marketing investments, low prices, focus on promotions, and successful referral campaigns have contributed to its rise in popularity and mind share among its target customers. They anticipate an increase in the number of active users and order volume on the Temu platform, resulting in sustained growth and further contribution to non-U.S. transaction value.

In June, the U.S. House Select Committee accused both Shein and Temu of violating import tariff laws by importing goods into the U.S. without paying import duties or subjecting shipments to human rights reviews. The outcome of these allegations and their potential impact on the two retailers remains to be seen.

Temu’s dominance in app stores in Japan and South Korea signifies its successful expansion beyond Western markets. By consistently ranking at the top of shopping app downloads and achieving impressive milestones in terms of downloads and popularity, Temu has overtaken its rival Shein in these two Asian countries. With backing from PDD Holdings and a focus on affordability and promotions, Temu is well-positioned for continued growth and success in international markets.


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