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Temu Is Losing Millions of Dollars to Send You Cheap Socks
- keiferwiseman 3y agoI know this isn’t an ad for Temu, but it makes me curious about it. I assumed it was a Slicker AliExpress.
- blamarvt 3y agoIt kind of is an ad for Temu. Please don’t check it out. Temu is internet cancer. It needs to be cut out.
- teamonkey 3y agoIs there anything that makes it worse than AliExpress, eBay or Amazon?
- sottol 3y agoThey are very much (ab-)using the old get-you-hooked-by-loosing-money-then-slowly-crank-up-the-prices-til-it-hurts-when-you-have-a-monopoly trick? The others were never as aggressive in their quest for monopolies and made it on some other merit. Not to say the others are much better, but Temu will have to make that money back somehow, eventually. Basically price-dumping to destroy the competition and gain market share.
- darwinwhy 3y agoI somehow doubt they're going to destroy Amazon anytime soon. The market they're in reminds me more of Blue Apron/Hellofresh than Uber/Lyft. May as well take advantage their funders' bad bet before the river.
- Scoundreller 3y agoDon't need to "destroy" Amazon to be successful. Just need a few percent of sales. What I've noticed from Aliexpress reviews is that a lot of reviews are from places that don't have much of an Amazon footprint (e.g. Russia, E. Europe, Mid east). The other thing is that ship-from-China circumvents a lot of duties that can be hefty on some goods. And sometimes sales taxes (not in USA anymore, but still true elsewhere).
- deleted 3y ago[deleted]
- AtlasBarfed 3y agoWill it make Amazon nervous? Then I kind of like it... Also, is wish.com the same thing as temu, or basically the same thing? I mean, there's some tungsten ring for 50 cents on it that like another poster I might buy that and 20$ of other things just to see what actually arrives.
- Scoundreller 3y agoTungsten rings are a bad idea if your ring needs to be cut off. If you ever injure your hand/fingers wearing one, remove all rings immediately, but especially a tungsten or other hard metal ring.
- SamLL 3y agoFYI a tungsten carbide ring, although it cannot realistically be cut off your finger, is brittle, and can easily and safely be snapped with a pair of locking pliers (locking to avoid clamping down on your finger). You may be thinking of titanium rings which are not removable in this fashion and thus are less safe.
- Scoundreller 3y agoah, good to know. That method and another (not as great, but maybe more at hand method) here: https://www.youtube.com/watch?v=eKxUYvKR-jw https://www.youtube.com/watch?v=eKxUYvKR-jw and a more proper (and $$$) method: https://www.youtube.com/watch?v=MqupCjkNqUk https://www.youtube.com/watch?v=MqupCjkNqUk
- alephnerd 3y ago> Slicker AliExpress Kinda. It's Chinese owner Pinduoduo is competing at the low value market with Alibaba, while JD is competing with Alibaba on the higher value market. Pinduoduo is going through the hypergrowth expansion phase right now to compete with Alibaba now that they have become complacent after Jack Ma did some scummy stuff at Ant Group.
- ericjmorey 3y agoJD?
- dragontamer 3y agoIt worked for Jet.com. Then again, Jet.com existed when 0% interest rates were a thing. I don't think repeating that strategy in a 5.25%+ interest rate market will have the same effect. ------- On the other hand, China has what? 15+% unemployment right now? Chinese companies must be dumping goods in an effort to survive, even if it's below profit levels. Maybe TEMU can exist in this market from the Chinese / low cost supply side perspective.
- alephnerd 3y agoThey raised around $1b in the secondary market on top of their IPO in 2018 raising around $1.6B and generate around $4-5B a quarter in revenue. They have a massive amount of cash on hand to allow them to execute their global expansion > Chinese companies must be dumping goods in an effort to survive, even if it's below profit levels The youth unemployment figure is largely due to a lack of white collar jobs, which is unrelated to industrial capacity. Low value manufacturing is still chugging along, and this is where PDD/Temu really shines - by providing a better marketplace UX for these kinds of manufacturers to sell globally. Medium value manufacturing would never sell via PDD/Temu, instead acting as a white label manufacturer or B2B.
- dragontamer 3y agoYou've got my argument backwards. Unemployment is good for manufacturing. Unemployment means that factories have their pick of workers and are free to fire low performers. This tends to lead to better performance for export driven economies (and TEMU is an exporter). ------- High interest rates is bad for companies with (presumably) short term money losing / dumping strategies. It means that everyone's runway is proportionally less. $2.6 Billion in raised money means that the company needs to make $136 Million in profits PER YEAR to be comparable to a risk-free money market fund like VMFXX. The more money you raise, the more money you have to make to be comparable to the risk-free rate. It's a loadstone above and beyond. Jet.com had basically $0 vs MMFs because risk-free MMFs had nearly no money growth in 2016. --------- If your investors are willing to dump $2 Billion before turning a profit, your runway is far longer at 0% interest rates than at 5.25% interest rates.
- adoxyz 3y agoI really don't get the appeal of Temu. I checked it out a while back and it's literally the lowest quality garbage at the lowest price possible. I was curious enough to see what I'd receive if I bought anything from them and spent like $10 on 7-8 products. They did arrive within 2 weeks but were absolute garbage that went straight into the recycling bin. Am I missing something?
- andrewia 3y agoSome stuff, like electronics, can be petty decent from unbranded sellers. And some people are broke and need the cheapest clothes money can buy, regardless of the quality.
- rhaway84773 3y agoAmazon sells most of the same stuff. The appeal is that if you buy cheap stuff from Amazon you can get it for cheaper on Temu but have to wait 2 weeks instead of 2 days.
- noncoml 3y agoAmazon 2 days? I haven’t seen that since before the pandemic
- Scoundreller 3y agoWhere? I'm in southern Ontario Canada, and my orders usually take 2-3 days and I'm not even using Prime. Turns out there's no value in holding something in a warehouse when you have it ordered. I think all Prime gets you is: 1. if the product is in a distant warehouse, Amazon will bring it over by plane instead of rail/truck. 2. Your orders are de-prioritized if they're over-subscribed (e.g. Christmas holidays, pandemic online shopping, Prime day)
- pessimizer 3y agoMy last three Amazon orders took between something like a week and a half and three weeks. They probably were actually my last three Amazon orders. I'd rather go to the store.
- Scoundreller 3y agoBut they are turning currency-controlled Chinese Yuan/Renminbi into US$. Surely that's worth losing a few percent on each sale? Anyways, just bought some bike lights from there for the first time that were cheaper than aliexpress (I buy quite a few to donate to my bike co-op). Got a too-good-to-refuse offer at payment window for 150 6" zip ties for CAD$1.79. Impressed that they offer a $5 credit if my order arrives after 11 calendar days. Wouldn't touch the app though.
- rsynnott 3y agoSo this is a pre-existing thing burning some money to enter a new market. This seems… normal? Presumably if all goes well, they’ll build a US distribution/fulfilment network, costs fall, all is well. The relationships with suppliers just sound industry-normal, tbh; Amazon, big supermarket chains etc also have a reputation for being very aggressive on supplier pricing.
- bmitc 3y agoEveryone is talking about the economics but ignoring the possibility that the goal of Temu is not strictly revenue and profit.
- dragontamer 3y agoI mean, this is a Venture Capitalist forum of discussion, is it not? The focus on ycombinator / Hacker News is almost always going to be on business models and profits? What are other reasons for TEMU to be doing its actions? We've definitely seen dumping before in terms of a business strategy so its a thing we're familiar with, at least from a US-lens / perspective.
- NoPicklez 3y agoPerhaps this person is thinking from a surveillance aspect
- deepfriedchokes 3y agoWhat’s the goal then?
- didntknowya 3y agoidk, selling services/goods below cost is kinda the playbook most SV startups use so nothing new here.