Pinduoduo’s Temu offers SEA something unique, but gaining a foothold will be hard

Temu, an ecommerce platform affiliated with Chinese tech company Pinduoduo, entered Southeast Asia first via the Philippines on August 26, then Malaysia on September 8. This adds another competitor that incumbents Shopee and Lazada have to square off against.

The platform has a different business model to the incumbents here, being a cross-border ecommerce play. Rather than host a marketplace for local merchants, Temu runs on a consignment basis with merchants in China.

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This was something another new entrant, TikTok Shop, reportedly tried to do in Indonesia. But TikTok Shop appeared to have backtracked in response to concerns from an Indonesia government minister. It is also likely to be curtailed by new rules to separate social media and ecommerce in Indonesia.

What sets Temu apart? There’s the longer shipping times customers will have to endure to get their product.

There are also differences in shoppers. Incumbents attract those that shop with a purpose, said Willy Chang, partner at consultancy firm Bain & Company.

However, “Temu generally offers highly affordable products and deep discounts and recommends users a set of products – usually focused on discovery of new items that may spark their interest,” he added. Branded products are also generally not as available on Temu compared to regional rivals Shopee and Lazada.

Avoiding the main prize

While TikTok has been hamstrung in Indonesia, the country remains the main battleground for ecommerce marketplaces.

Temu has avoided Indonesia for now, as the government is looking to protect its local merchants from cross-border ecommerce. The Philippines and Malaysia were chosen as entry markets due to the majority of those populations understanding English and cross-border ecommerce, according to consultancy firm Momentum Works.

But Singapore lacks the scale that Temu might want, even if the market has the highest purchasing power in Southeast Asia. Temu initially considered launching in the region before deciding on the US because the average order values here were too low, said Chen Weihan, insights lead at Momentum Works.

“I don’t think [Singapore] is a key focus based on how Temu is expanding, they just want to get a bit from everywhere, because ultimately their prized market is still the US and all the other more affluent and bigger western markets,” said Chen.

Image credit: Timmy Loen

Competition among ecommerce platforms in the region will likely turn fierce, with discounts and free shipping becoming possible sweeteners to keep customers. But such tactics are unlikely to do as well as before, added Chen, while noting that Temu has the deeper pockets of Pinduoduo to rely on.