
While it's too early to gauge Chinese e-commerce giant Temu's long-term impact on the e-commerce market in Thailand and the region, sellers may need to prepare for another price war, says market analytics firm Cube Asia.
If Temu can maintain strong incentives and a consistent low-price strategy, it has the potential to change the dynamics of regional e-commerce just as Shopee, Lazada, and TikTok Shop have shifted their focus towards profitability, according to Simon Torring, co-founder of Cube Asia.
Temu, the cross-border e-commerce platform of China's PDD Holdings, established a presence in Thailand in mid-July following launches in the Philippines and Malaysia last year.
The platform has achieved remarkable success in Western markets, especially in the US, where it became the most downloaded app, surpassing Amazon. Temu reached 70 markets worldwide within just 24 months.
By directly connecting manufacturers and wholesalers -- mainly in China -- to customers around the world, Temu offers low prices.
A significant portion of products available on platforms such as Shopee and Lazada come from official stores operated by brands or authorised resellers, according to Cube Asia.
Temu does not follow this model, instead favouring a largely unbranded assortment of products.
While Temu does feature a blue checkmark verification for authorised sellers or direct shipments from brand manufacturers, a study of 1,000 products revealed only 12% of its assortment of products falls into this category.
Despite branded products tending to be mainly limited to electronics and gadgets, rather than fast-moving consumer goods or fashion goods, Cube Asia's initial study benchmarking price competitiveness revealed that three out of five products on Temu were priced higher than on Shopee, Lazada or TikTok Shop.
In some cases, the high discount rates available on Temu resulted from higher list prices that made the discounts appear more attractive.
Temu also offers subsidies, such as generous first-order incentives, vouchers and free shipping.
Temu's unbranded portfolio also faces significant pricing competition from other platforms.
To test prices across platforms, Cube Asia looked for identical products by conducting an image search and comparing product specifications, analysing the prices of five products across platforms by choosing the cheapest listing that had at least one unit sold.
Even in this category, Temu was the cheapest option when compared with Shopee, Lazada and TikTok Shop in only two of the five reference products selected. For some of these products, the rival platforms were also shipping directly from China, suggesting that Temu's cost advantage in connecting the manufacturer to the buyer may not be structural.
Mr Torring said Temu's success is largely attributed to its cross-border model, which is not unique in Southeast Asia.
In addition to platforms such as AliExpress, Amazon and Shein, regional platforms such as Shopee and Lazada also offer cross-border shipments from overseas, with many of the goods also originating from China.
Although Temu emphasises its economies of scale, this approach may not be differentiated enough to disrupt the market as most similar products are already available on existing platforms, making it challenging to shift customer loyalty.
Moreover, Southeast Asian consumers are already accustomed to low-priced Chinese goods.
To attract them to its platform, Temu appears to be intensifying the competition with other platforms by offering additional discount coupons and special deals, he said.
This strategy is making great waves in the short term, not only among consumers, but also among industry stakeholders, said Mr Torring.