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Pinduoduo has launched new US site, Temu, to compete with Amazon and popular e-commerce websites for a share of the international market.
Pinduoduo Inc (NASDAQ: PDD) recently launched its US shopping site as a signal of intent for its expansion abroad. The new website, dubbed Temu, debuted on Thursday and stands to eventually rival US e-commerce giant Amazon.
Temu currently lists items spanning several categories, including clothing, jewelry, pet supplies, as well as home and garden. Furthermore, the recently-launched Pinduoduo US e-commerce site will likely source the bulk of its inventory from outside the US, especially in China. However, Temu states that shipping these items to the US could take up to two weeks. Speaking directly to these projected delivery times compared to the relatively quicker times of rival e-commerce platforms, Temu’s shipping information explains:
“It’s important to keep in mind that you may see longer delivery times than you’re used to from other e-commerce websites. This is due to the fact that items that may be coming from another country or need to be bundled or packaged with other similar-sized items.”
In addition, the provided information also states that shipping is free for orders exceeding $49.
Operational Challenges Posed to New Pinduoduo US Site
In its quest to assert itself in the US e-commerce marketplace, Pinduoduo stands to face some challenges. For instance, the Shanghai-headquartered company would need to establish a brand reputation akin to that of Amazon. As Jacob Cooke, CEO of e-commerce tech and marketing firm WPIC put it, Temu’s primary challenge is “cultivating trust and awareness among customers”.
There are fears that Pinduoduo’s US site may eventually become the victim of its protracted shipping times. This especially seems apparent when compared to the 24-hour delivery cycle afforded to Amazon Prime subscription customers.
Temu could also face constraints from its relatively thin inventory in some cases. For instance, some categories of items, such as men’s wristwatches, feature just two products. However, despite all these suggested hurdles, Temu could have a comparative advantage over its US rivals in price. On Thursday, the Pinduoduo US site offered a 20% discount, and several of its items appear to be very affordable. For instance, the price of listed women’s dresses mostly came in at less than $20.
Another way Temu might look to undercut its competitors is to leverage its ongoing relationships with “low-cost manufacturers in China”. This is because many of these manufacturers are yet to expand into the US, according to Cooke.
Chinese Tech Giants Seek Succor in Overseas Markets
Pinduoduo’s deliberate push into international frontiers comes amid the macroeconomic challenges currently impacting the Chinese economy. These challenges range from the resurgence of the coronavirus pandemic to stiffer government regulations on the domestic tech space. Consequently, economic growth in China has stagnated, and consumer sentiment is at worrying lows.
Owing to these economic challenges, several prominent Chinese tech companies are looking overseas. They include Tencent, JD.com, as well as Jack Ma-owned Alibaba. However, due to its relatively younger age, Pinduoduo still lags behind these companies in terms of international expansion.