What lies behind the success of the Chinese e-commerce Temu?
Temu wants to “change the way the world shops”. The Chinese company is making record numbers. But there are those who suspect he is hiding something. All the details
A virtual “flea market” where you can “shop like a billionaire”? This is the challenge of Temu, a Chinese company controlled by PDD Holdings which, as the Financial Times writes, wants nothing less than "to change the way the world shops". This is how he is doing it in an in-depth analysis by the financial newspaper which also highlights the all-Chinese fragilities of a company defined as opaque.
Temu conquers the world
This oriental Amazon, which has already landed in 49 countries just two years after its launch, now aims to expand the number of consumers through the use of an AI system that intercepts and predicts their preferences. The purchased products then leave directly from the company's warehouses and are delivered free of charge.
Record numbers
The Temu phenomenon must be taken seriously because its twin Pinduoduo already dominates in China with more than 870 million active users who can purchase goods from 13 million small merchants, for a total turnover equal to a third of all courier trade in China. Village.
The result is that PDD now rivals Alibaba on the stock market in terms of capitalization having reached 162 billion.
The latest quarterly report of 9.4 billion is not only double that of the previous year but has pushed Alibaba founder Jack Ma to urge Alibaba's current executives to "reform".
These are mind-boggling numbers that contradict all the assumptions on the link between e-commerce and logistics that the PDD creature challenges with just 13,000 employees and therefore a tiny fraction of those of Amazon (1.5 million).
The secret
Behind the success but also the problems of this phenomenon company there is an extensive outsourcing process that even includes the servers. And this is not the only peculiarity of a company whose employees use pseudonyms.
But the real secret of Pinduoduo's success is that platform where AI algorithms carry out microtargeting that entices users to buy.
And everyone remembers that 2021 when the experiment finally produced its first quarterly profit after losing more than four billion dollars in the previous three years.
And it is since that August three years ago that the new executive has thrown himself into a new adventure: agritech, which sees PDD now collaborating with universities and institutions in research projects, albeit still in an embryonic state.
The Mystery of Temu
But right here begins the mystery of a company which, despite its size, boasts just 150 million in physical assets and whose operations defined by the FT as "opaque" are causing some perplexity among Stars and Stripes investors.
Contacted by the City newspaper, a PDD spokesperson denies any irregularity in the management of the accounts, but the spokesperson remains silent, explaining that the company does not communicate them to "individual media".
What's going on out there?
Outside China, the Temu phenomenon is being looked at with interest but also with concern: e-Bay and the US chain Five Below declare that they have not suffered any consequences in their business, but someone in America is asking questions.
The one raised by the Ft is serious. With such a streamlined and non-transparent structure, how will it avoid the risk of money laundering and fake traders who always try to carry out false transactions or sell counterfeit goods on those platforms?
Wall Street carries on
But on Wall Street, 53 out of 56 analysts interviewed by the FT recommend their clients buy PDD shares and therefore seem willing to swallow everything about that Chinese black hole.
A black hole also admitted by one of the most important investors in the company, called Hyden Capital and in a memo he wrote that PDD suffers from a certain "lack of transparency".
But after recognizing the problem, the investor clarifies: “it doesn't mean that just because a company doesn't reveal its data to investors it doesn't have their interests at heart.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/temu-espansione-e-commerce-conti/ on Mon, 01 Apr 2024 06:33:29 +0000.