Put Pinduoduo and Southeast Asia together, and many people's first instinct must be: Pinduoduo, which is best at growing and sinking the market, must be won casually.
However, this is not the case.
After the successful launch of Asian pilots in Japan and South Korea, TEMU began its expansion in Southeast Asia almost immediately.
Launched in the Philippines in August 2023 and Malaysia in September of the same year, TEMU has selected the most suitable platform for the growth of these two markets in the fragmented markets of Southeast Asia. These two places have the largest number of Chinese, which makes it easier for Chinese companies to "walk the rivers and lakes", the national economic growth has also gradually matured online consumption habits and corresponding infrastructure, and as the market enters the stage of consumption upgrading, the large gap in middle-level brands means that there are more opportunities for categories.
In TEMU's view, these are all hints at the high success rate of the platform's "porting" of the local area, but the results seem to be unreasonable.
Since its launch in Southeast Asia, there has been no movement on TEMU, and since January this year, rumors of a planned launch in Thailand have waned, and the search volume of the word "temu" in both countries has not fluctuated and has always been at the bottom.
Searches for "temu" in the Philippines and Malaysia, Source: Google Trend
On the other hand, Shopee continues to occupy the top spot in Southeast Asia's e-commerce traffic, and the group behind it, SEA Group, will achieve its first year of profit in 2023 by taking advantage of the improvement of the e-commerce sector, and TikTok Shop on the other side will also fully roll out social media e-commerce in Southeast Asia, successfully overcoming the turmoil after the Indonesian trade ban.
So what happened to Pinduoduo in Southeast Asia?
AGO 其实跟东南亚八字不合?
When Pinduoduo entered Southeast Asia, it suddenly found that in this place where there are many e-commerce players, online consumers in different regions have formed a fixed channel preference.
Moreover, these preferences are very "wild".
According to Momentum's 2023 Southeast Asia E-commerce Platform Report, in terms of GMV metrics, Shopee and Lazada occupy the majority of Southeast Asia's market share, leaving TEMU with a very tight space to fight for.
Source: Momentum
Moreover, perhaps because Shopee and Lazada are backed by Chinese capital, it is not difficult to replicate the routine of Chinese people doing business. For example, the "White Rabbit Milk Candy Perfume" in front of me has even become a "Philippine formula" in the drainage copy, and TEMU's Chinese gene has also become invalid.
Source: Reddit
What's even more surprising is that TEMU's pricing is no longer an advantage in Southeast Asia. Open Shopee, whether it is the products that participate in the one-yuan free shipping for new users, or the overall pricing of the whole line of the same category, all of them are more cost-effective than TEMU.
Yuanyuan, a bikini designer, tried to sell her products to Indonesia and the Philippines in the second half of last year. After half a year of operation, her feeling is that Southeast Asia is still a market that is more suitable for offline rollout.
According to eMarketer, the e-commerce penetration rate in Southeast Asia was only 5% as of last year, and offline shopping and entertainment scenarios have been deeply integrated as the purchase scene is concentrated offline. For example, Shemel from the Philippines mentioned that many families will travel intensively during the holidays, go to the supermarket to buy the supplies they need for the week, and sing karaoke by the way, and rarely take the initiative to shop online.
Even in potential market segments in Southeast Asia such as the Philippines, Indonesia, and Malaysia, the number of local online consumers is not as large as that of Europe and the United States. "I've seen a lot of market reports that confuse 'social media penetration' and 'e-commerce penetration' in order to demonstrate the potential of e-commerce in Southeast Asia, but after actually living in these places, I've found that offline consumption is still the first choice for consumers," Yuan added.
In Vietnam, Malaysia, and Indonesia's non-capital regions, roadside kiosks are also the main place for residents to buy daily necessities. Locals pass by these places and grab a 12-packet of shampoo, laundry detergent, shower gel, coffee, milk powder...... Something like this:
Source: Internet
Such "wild" consumption habits are still very far from the popularization of online shopping.
Similarly, in the Southeast Asian market, Pinduoduo's marketing style has also encountered problems.
TEMU's marketing features have reduced the effect of social fission. Most of the platform's advertising budget is spent on Meta's social media and X (formerly Twitter), a combination that works well in the North American market, but has suffered a discount in Southeast Asia compared to the native social media TikTok.
Kartik, from Jakarta, Indonesia, who is doing local marketing for Chinese companies, believes that TikTok can be both a platform and a private domain.
Many sellers in Southeast Asia already have the volume of overseas distribution and have certain overseas marketing capabilities. After finding that the cost of social media advertising and search engine SEO is getting higher and higher, TikTok's talent resources and organic traffic are more attractive to merchants who want to have more control over marketing and sales regions when product profits are already low.
The company's e-commerce operation team has not evaluated the possibility of doing TEMU, but in the end, because "Shopee and Lazada are easier to set up differential pricing for drainage and other products, and these platforms and TikTok are now open to live shopping functions, these TEMU can't do it at present, and we feel that entering TEMU has changed too much from the original way of doing things", and finally did not settle in.
Kartik also added that Temu, which is not veiled to its white-label nature, is not "raw" enough and can easily affect shipments in Southeast Asia. So her final conclusion is that TEMU has not yet taken the important factors to the extreme in Southeast Asia, and it is difficult to compete for consumers from other e-commerce companies.
Finally, a user is officially recognized as a new user in TEMU, and he needs to successfully make a purchase or complete a credit card binding.
TEMU's mainstream payment methods are mainly international credit cards and PayPal, but the credit card coverage rate in Southeast Asia is not as high as in China, Japan and South Korea, and it is unlikely to exceed North America; on the other hand, Shopee supports street payment in Southeast Asia, Lazada can pay cash on delivery, which is more in line with local consumption habits.
The secret of the "extremely low price" fails
While the gameplay and growth routines have not worked, the secret of low prices also seems to have failed.
Looking at Southeast Asia, low-cost e-commerce can no longer be called temu characteristics.
Shopee new user one-yuan special, live shopping + free shipping payday activities
Click on the women's apparel section of Shopee Philippines, there are clothes with free shipping of one peso everywhere, and the highest unit price of products of the same category that does not participate in the event is difficult to exceed 120 pesos (more than 2 US dollars), while the unit price of the same category of TEMU is about 160-200 pesos, which is not advantageous at all.
TEMU prices for women's clothing in the Philippines
Even overseas users in North America have reported that TEMU seems to be gradually abandoning the low-cost route, and the unit price is more expensive than before.
Whether it is North America or China, Japan and South Korea, the common feature of these regions is that they have completed consumption upgrades, but due to temporary economic problems that have led to consumption downgrades, TEMU's low prices are more attractive to consumers in the sinking markets in these regions, but in Southeast Asia, many markets are experiencing consumption upgrades, and as a supply chain shift, local goods are cheap enough.
Bob, a Chinese who is engaged in the supply chain in Malaysia, said that Shopee's pricing has gradually decreased recently, "Shopee's low-price promotion seems to be the platform has increased subsidies, but participating in marketing has actually compressed the profit margins of sellers, and the platform has also raised commissions in the Philippines and Malaysia since March 20 this year." "Merchants who have noticed this situation are now trying to increase the average order value, and TEMU is unlikely to be their preferred platform.
The timeliness and cost of local logistics are also problems that are difficult for e-commerce companies in Southeast Asia to solve quickly.
The address system, road planning, and transportation will greatly reduce the logistics speed in Southeast Asia, and the speed of the international logistics system from China to Southeast Asia is far less than that of local logistics. Comparing the average delivery time of many local e-commerce companies, Shopee and Lazada's delivery networks have guaranteed delivery in 3-5 days, we tried using TikTok Shop to do two live shopping with 5 days, and TEMU in Southeast Asia can only achieve an average delivery time of one week.
Not to mention that many countries in Southeast Asia are indeed tightening their trade policies.
Most of the pallets of TEMU fully managed merchants are located in China, and although the shipment volume of the Southeast Asia site is relatively small, the volume of parcels is enough to attract additional attention from Southeast Asian customs. It is difficult to say how long the airline small package direct hair game can last, and from the pilot market of the semi-managed model that tries to solve this problem, TEMU obviously does not focus on Southeast Asia in the follow-up.
Do catfish, OK, whack-a-mole, won't?
As a result, Pinduoduo, which has blitzed all the way around the world, has encountered a very special situation in Southeast Asia: its "low-price strategy + social fission + traffic marketing" has failed here.
However, at present, it seems that Pinduoduo is not focusing on solving the problems of the Southeast Asian market.
Some e-commerce traders once believed that TEMU's passivity in Southeast Asia was more like a strategy. Initially launched in Southeast Asia, it is not so much to invest resources to open up new markets, but more to emphasize traffic dividends and attract more fully managed sellers to settle in.
From a platform perspective, TEMU's easier path is to seize the consumption power of developed markets and go all out to hit the $30 billion GMV target.
But there are also sellers who have expressed different opinions, TEMU is not unintentional to bet on the Southeast Asian market, after all, Southeast Asia has always been more in line with the industry's impression of the sinking market, and the disappearance of the platform in Southeast Asia is only because of "miscalculation"——
In the European and American markets, and even the Chinese market at the beginning, Pinduoduo is easy to become a "catfish" that stirs up the market, and it has only one "big boss" to fight, either Alibaba or Amazon;
As Pinduoduo grows by leaps and bounds, the company is rapidly changing from a challenger to a challenger, and for it, what is happening today in the Southeast Asian market will only become more and more in the future, and how to solve this new challenge may be the decisive factor that will really define the company's future.