A note issued today by Bernstein reports that Temu has overtaken Amazon in terms of global monthly active users (MAUs). This is massive as whilst average spend is undoubtedly lower, Temu are rapidly gearing up and moving to a local inventory model where goods will have higher ASPs and faster delivery.
The note also cites Temu as achieving over $50 billion in gross merchandise value (GMV) in 2024, and projected to push GMV to $70-80 billion by 2025. Interestingly the route to profitability also could be quick as the massive spend we’ve seen in the past couple of years on user acquisition can be slowed or halted now the marketplace MAUs is established.
Temu has a huge overlap of customers with Amazon and Walmart in the US – mainly because just about everyone already shops on those two platforms.
Bernstein note that Amazon retains significant advantages on perceived quality and speed of fulfilment. Over time they expect Temu and peers to increasingly focus more on product quality as they ramp up local sourcing and this is already happening with perhaps as much as half of Temu’s US GMV coming from local merchants.
The real opportunities for Temu are now the balance between costly incentives, somewhat slower delivery times than Amazon (although these will become less important as local fulfilment ramps up), reducing buyers incentives, and quite frankly raising selling prices, which on Temu are set by the platform based on sellers’ ask price rather than by the seller themselves.
With a huge customer base, user acquisition spend will inevitably be ramped down in favour of extracting larger and more frequent spend from their existing customers.
What’s really interesting is where this spend will come from, and it could quite likely not be from the larger marketplaces like Amazon and Walmart, but consumers diverting offline spend to Temu.
