Devan Burris did a fabulous job on producing and narrating the video about Temu that I’ve attached. I encourage everyone to watch the video as it provides valuable information about Temu and it’s business model. For the purpose of this post, I am focusing on the things U.S. retailers can learn from Temu and apply to their companies.
To begin with, the Holy Grail of retail is social commerce. What Temu refers to as “Team up, price down.” Put simply, it’s the process of friends and family teaming up to purchase the same products (buying in bulk) to receive a discount from the manufacturer.
I’ve researched the concept of social commerce since 2004 when Facebook was launched. Had Facebook offered their users the ability to shop online, buy in bulk, use auctions to bid on pricing, and use Facebook’s social media to post about their retail activity, Facebook could have become Amazon’s biggest threat.
Team buying is massively popular in China and Pinduoduo, who owns Temu, has mastered team buying in China. The goal of Temu is to convert U.S. shoppers to use team buying. Unlike China, I think Temu will struggle to achieve their goal.
U.S. retailers can succeed at team buying, they only need to use the following model. For example, Amazon can design and launch company-specific team buying, not consumer team buying. Amazon can create a program whereby every Tesla employee who makes a purchase on Amazon receives an additional discount. If Tesla employees “team up” to make a purchase on Amazon, the savings are increased. How many Tesla employees are also Prime members?
Kroger can design and launch company-specific team buying programs for groceries that can easily be expanded to entice consumers to team up. Amazon, Walmart and other grocery retailers can offer similar programs. These retailers can leverage team buying and online auctions to disrupt themselves to grow market share and increase recenue and profits.
U.S. retailers, and large conglomerates in India like Reliance Industries Limited, should assess Pinduoduo, Temu, SHEIN, and TikTok to identify how these companies are able to design, manufacture and launch apparel so quickly, and also fulfill online orders so quickly.
I strongly advise not ignoring Temu and other Chinese retailers that have targeted the USA. Instead, retailers should learn the Chinese model and use it their advantage by making the model better. It’s not easy to do this but it must be done.
The Chinese have a saying – “Strangle countries with their own system.” The U.S. is a consumption nation and there are lots of throats to choke in retail. The Chinese are coming and they’re coming to win.
One final comment – U.S. retailers should contract the services of firms that are experts in China and India, as both companies will severely impact retail and global supply webs. The ripple effect will be severe in the USA.