Market movers

Pinduoduo is seeking new sales

Chinese ultra-fast fashion clothing brand SheIn sold $16 billion worth of goods in the first half of the year, up more than half year-on-year. The privately-held company – which has struck a chord with Gen-Z consumers around the world with its low-priced apparel – is on track to meet its target of $30 billion in revenues for the year.

Its success has attracted imitators, of course, with Pinduoduo the latest to try its luck in the fast fashion sector. The Chinese media is reporting that the domestic e-commerce giant quietly launched a SheIn-style app this month. Called Temu (which seems to stand for ‘Team Up, Price Down’), it apes SheIn as a cross-border platform targeting shoppers outside China.

Perhaps in a bid to differentiate itself from SheIn, which mainly focuses on fast fashion, beauty, and lifestyle products, Temu is positioning itself more as a general marketplace for lower-priced household goods and other daily necessities. This is a market where its parent Pinduoduo has experience in China, where it chose to compete with Alibaba on the basis of lower-priced goods sourced directly from factories, cutting out a layer of wholesaler and middleman costs.

While many shoppers gave Temu a 5-star rating, some complained that the selection of merchandise is too limited. Compared with SheIn, Temu’s shelves are bare and the app is much less shopper-friendly, says NetEase.

Pinduoduo makes up for some of the lack of choice with hard-to-beat prices. Much of the women’s apparel is priced under $10, with some items as low as $1. The number one bestseller is a pair of sandals that cost just $3.99, while the cheapest item is a hair clip priced at just $0.09.

In general, prices on Temu are 20% to 30% lower than SheIn for comparable items, says Time News.

Shoppers were pleased with some of the bargains on offer. “Temu’s pricing is like giving away money. It makes me feel like I’m shopping in China again,” a Chinese national studying in the United States gushed.

Pinduoduo is on a promotional drive for vendors to use Temu, offering registration and referral fee waivers for small and medium-sized merchants. It provides fulfilment services to its vendor base too, such as packing orders and arranging shipments, once the goods are transported to its warehouses.

Nevertheless, some of the vendors on Temu are annoyed at the way the platform retains the right to set final retail prices. One disgruntled vendor reckons this means most manufacturers will prefer to sell their goods to overseas shoppers through other channels, like Amazon. Only companies desperate to clear their inventory will give Temu their business, he said.

Others are more supportive of the newcomer, including Chen Hui, who is also a seller on AliExpress, Alibaba’s cross-border e-commerce platform. “There is no harm in developing one more sales channel. If the platform takes off, you might make a fortune,” he told Time News, adding that some of his counterparts in cross-border sales are getting thousands of orders a day.

The move to expand its reach overseas might suggest that Pinduoduo is looking to spread some of its regulatory risk, after an extended crackdown on ‘platform’ companies in the domestic market. Weaker demand because of a slowing economy is another factor.

In the meantime, some of SheIn’s investors may be wondering if it has reached peak valuation after an extraordinary period of growth. Several shareholders are said to be considering offloading their stakes in the privately held company, which is said to have reached a valuation of at $100 billion in the last round of fundraising in April, or more than fellow fast fashion stars H&M and Zara combined. Investors include Tiger Global Management, IDG Capital and Sequoia Capital China.

Reports in the South China Morning Post cited nervousness from SheIn’s shareholders that sales growth is going to slow and that criticism of the company’s environmental credentials could derail its IPO timeline. A few investors (unnamed in the article) are thinking of selling their stakes, although finding a figure that buyers and sellers agree on is a challenge, the newspaper said.

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