Experts assess that the short-term impact of Temu's e-commerce in markets like Vietnam remains unclear.
The giant has arrived.
Temu, the sister company of the Chinese low-cost e-commerce platform Pinduoduo, has finally entered Vietnam. This is their second stop in Southeast Asia, after the Philippines.
This comes despite many analysts previously saying that Temu’s low-cost strategy would not work in Vietnam. Vietnamese consumers already have many other options to buy cheap Chinese goods, whether directly or indirectly.
Temu’s competitor in Vietnam is Shopee, an e-commerce platform belonging to Singapore’s SEA. Shopee Vietnam has long witnessed the influx of international stores, mainly from China, selling products directly across the border with very cheap shipping fees.
However, comparing the market presence, it can be seen that Temu is more impressive when operating in 38 countries, while this number at Shopee is only 11.
Momentum Works founder and CEO Jianggan Li lumps Temu in with Shein and TikTok Shop, calling them “rebels” that are disrupting the global e-commerce landscape.
“Although in the short term, the number of products on Temu overlaps with Shopee and Lazada, traditional e-commerce competitors still face a big challenge,” he shared with Tech in Asia.
“These companies are not only bold but also have ample capital from other markets to continue competing. Shopee, in particular, has no choice but to confront and defend,” he said.
Sharing the same view, Mr. Angus Mackintosh, Founder of CrossASEAN Research, commented that in the short term, the impact of Temu on e-commerce in one of the markets like Vietnam is still unclear. “I think it is too early to confirm. There is also no guarantee that they will be successful,” he said.
The expert gave the example of Shein - another similar model of Temu but specializing in fashion. Shein was very successful in the US but failed when entering Indonesia - a country with a similar market context to Vietnam.
Therefore, Temu may also face similar problems, as the authorities have their eyes on it and it is possible that Chinese giants will compete with local small businesses with cheap goods in the near future.
Regarding this point, on the afternoon of October 23, at a regular press conference, Deputy Minister of Industry and Trade Nguyen Sinh Nhat Tan said he was assessing the impact of Temu's business expansion into Vietnam.
Meanwhile, as a manufacturing enterprise and also doing business on an e-commerce platform, Mr. Le Hai Vu, CEO of Velasboost and General Director of Made.vn project, said that the penetration of Chinese sellers into Vietnam is not a new phenomenon.
The business owner believes Temu will have the most impact on small retailers offering low-cost products or items that don’t require a clear brand. This reflects Temu’s business model, which is characterized by easy-to-buy products and a low-price strategy aimed at cost-sensitive consumers.
Mr. Vu predicts that Temu will create competitive pressure on small businesses in Vietnam, especially those operating in the low-cost segment.
Therefore, Vietnamese sellers need to return to systematic and long-term business, instead of depending on short-term trends. At the same time, they should devote resources to research and production activities, even if they only participate in a small stage, according to the founder of Velasboost.
Taking a more cautious view, Mr. Sheji Ho - Co-founder and former Marketing Director of eCommerce noted that D2C (Direct-to-Consumer) businesses, e-commerce integration models and startups need to be especially careful.
He said these businesses often compete in the same product categories, with many of their products also being manufactured in China—a segment Temu is focusing on. The leader said that economic difficulties will cause consumers to spend in two directions: one is to buy cheap goods, the other is to choose high-end goods.
Super low prices are a competitive advantage for Temu. By connecting directly with wholesalers across China, Temu can offer much more competitive prices than its competitors.
They take advantage of the extremely low production costs of factories in China. Temu also benefits from Pinduoduo's huge network of factories and supply chains, allowing it to sell products at only a slight premium to wholesale prices.
Temu even adopted a “loss-selling” strategy when entering foreign markets. This means the company accepts no immediate profits, but still keeps prices low to attract customers and increase brand recognition.
Asset management firm Sanford C. Bernstein estimates that, despite Temu's global revenue of about $13 billion in 2023, the company could still lose about $3.65 billion.
Meanwhile, competitors in the market such as Lazada or Shopee have begun to see their first profits after many years of burning money.
According to Metric, Shopee is still the e-commerce platform with the highest market share in Vietnam in terms of revenue, at 67.9%. In second place is TikTok Shop - a trading platform also from China, accounting for 23.2% of the market share. Lazada and Tiki respectively have 7.6% and 1.3% of the market share.
More broadly, in Southeast Asia, according to Momentum Works, TikTok Shop is expected to capture 13.2% of the e-commerce market share this year, while Shopee will lead with 46.5%. Temu was not included in this report.
Temu plans to expand to more markets in Southeast Asia this year.
(doanhnhanvn.vn)
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