Kubotemu – We are all Addicted To Cheap Stuff

Kubotemu: The first time I opened the app for the popular Chinese shopping site Temu, I was greeted with a pop-up: I can spin the wheel to win $200. The spinner is down to “1 more chance”. I rolled again, and this time I won $200. But wait, there’s more – if I sign up in the next 10 minutes, I could win a whopping $300. Cold cash in my wallet? Well, no: a $300 ticket, which, at Temu, can buy you a selection of home goods, luxury electronics, clothing — really, anything you can think of.

This carnival arena is the opening game of the Encounter; This is what the company hopes will win you over and keep you coming back. Such promotional offers and games are too bold to attract attention — or kill reluctant shoppers altogether. The loud and obnoxious intro is also the first hint of what Temu has to offer: an exhausting circus of cheap stuff. Wireless earphones for $6.80. The ear cleaner (fits into the small hole) is only 98 cents. 14 piece food chopper for $15.49. Danish Biscuit Hair Comb for $2.49. It’s a virtual aisle of virtual aisles of fun, gimmicks, gimmicks and gag gifts, mixed with Spencer’s Etsy and Dollar General.

About a year ago, kubotemu was gone. It launched in September 2022 but quickly rose to the top of the App Store charts, thanks in large part to numerous social media ads featuring not one, but two, expensive Super Bowl ads. The company’s non-parallel slogan: “Buy Like a Billion.” As of May, Temu, which is sold in 48 countries, had more than 100 million active users in the United States, according to app industry analysis site Business of Apps.

Like Amazon, the site sells seemingly endless products, but Amazon has revolutionized shopping, especially for customers who have a clear idea of what they want to buy (often essential items that are the cheapest on the site or difficult. Source at other places) , Dating increases the ability to motivate people to buy. It emphasizes that you understand how to indulge all your interests on the Internet.

Earlier this year, John Herman of New York Magazine wondered if Dating was the future of shopping; Amazon’s retail race to the bottom seems like a foregone conclusion.

Kubotemu

Kubotemu: How did Temu find its market in the US?

With so many weird things on the site, it’s hard to know exactly who kubotemu’s customers are. In a cursory browse, I saw five ankle boots for $2.69 and a nice little poker card for just 39 cents. “Every day on our platform is like Black Friday,” a Temu spokesperson told Vox in an email.

“The thing about cheap stuff is that the barrier to entry is very low,” says Wendy Woloson, a historian of consumer culture at Rutgers University and author of Crap: A History of Cheap Stuff in America. kubotemu offers affordable goods while feeding “our desire for innovation,” Voloson said. If a product isn’t as good as you expected, it’s not a big deal. “We want to stimulate something – and in the act of shopping.”

This explains the company’s slogan, “spend like a millionaire” – encouraging customers to buy what they want without worrying about the price, like the rich. Don’t forget that betting on roulette wheel games and mass marketable items is the opposite of rich marketing. The very wealthy seek exclusive, rare, rare items that are handpicked by the buyer. What TEMU gives us is “like a custom-made grocery store,” Voloson said. It is a misconception that only a few have been selected for you, even tens of thousands of products have been mass produced.

And while his words attract millionaires, kubotemu’s core customers are on tight budgets. Between September 2022 and August 2023, the largest share of U.S. sales – nearly 40 percent – will come from households earning less than $40,000 a year, according to a study by market research firm YipitData. Of the major retailers studied, only Walmart, Dollar General and Family Dollar had a greater share of sales from homes under $40k, and Walmart beat TEMU by a mere fraction. (By contrast, less than 20 percent of H&M’s sales come from this income group.) Google Trends data shows that the most-searched Dating states Mississippi, West Virginia, Arkansas, Kentucky and Alabama have the highest poverty rates in the country.

In a Deutsche Bank Research survey of American consumers, nearly a third said they would buy less at Walmart and Amazon than at kubotemu. This is not a direct threat to Dollar General; Yipitdata shows that the average spend for Dollar General remained about the same for customers before and after Temu’s discovery. Shane’s spending, on the other hand, has declined.

When contacted by Vox, a Temu spokesperson repeatedly emphasized the possibility of space for home and entertainment appliances such as pickleball sets and even musical instruments. “With many households facing higher costs of living, Temu is a place where they can get ahead,” the spokesperson said in an email.

But the bottom barrel price on the cover doesn’t tell the whole Temu story. Big discounts are strategic. Rui Ma, a technology analyst at Tech Buzz China, said Temu’s price is slightly higher than big discount chains like Dollar General and it’s not cheaper than Amazon. “They’ll do this crazy cheap thing, then they’ll give you your money back on another item that’s “very comparable, or sometimes higher, than Amazon,” he says. Waterless aromatherapy diffusers on Temu sell for $79.98 for $67.98 at the time of its release, it was more expensive than most of Amazon’s hits. The discount, at the moment, exists to drive traffic – to motivate customers to keep coming back and looking for the next deal.

If you find yourself endlessly wandering around kubotemu for hours, this is what it’s for. Meet puts more emphasis on making personalized recommendations based on a combination of user behaviors – you can tell it’s pretty excited about it. At the start of my kubotemu foray, I clicked on a dull pair of cowboy boots to wear indoors. Next thing I know, I’m given all cows: a cow-print thermos, a cow-zibitz (the little thing you stick on your Crocs), cow hooves, and a cow-shaped blanket. . . .

This is kind of not surprising. “They’re trying to find things that aren’t sold on Amazon right now,” Ma said.

The Chinese salesman immediately recommended me American clothes of course, including informal items like a Morgan Wallen tee, a sweatshirt with “T.S. 1989 print”, and some New York-specific clothes, such as crew neck sweats with “BROOKLYN” and “Union Made” and ” Ro Denim” in lower case (dubious statement) and wax. for two thousand years of your life | Together, it’s an entertaining potpourri that tries to elicit the response: wow, I didn’t know I needed that.

I really don’t like it. But much of modern e-commerce is focused on building this traffic. Temu’s collection of junk items might remind you in some ways of Wish, another great, gamified, algorithm-driven marketplace for discounted items that’s one of the top apps. especially. Dating stands out as an online shopping destination for busy Americans looking for affordable and unique products that may not be available on Amazon. And it has deep philanthropists determined to see it succeed.

Kubotemu: How successful is Temu?

As of June 2023, kubotemu’s monthly gross merchandise volume (GMV) — the total value of its sales — will be $1 billion, according to Business of Apps. This is not surprising when compared to Amazon’s annual GMV of around $477 billion, but we are looking at a company that has not yet reached its first birthday. Launched in 2008, Shane had annual revenue of around $610 million in 2016, based on data from Business of Apps; It didn’t really explode in popularity until the pandemic.

How can an up-and-coming marketer grow so quickly? Because it can sell stomachs at very low prices, thanks to PDD Holdings, a large Chinese e-commerce company that also owns Pinduoduo, one of China’s most popular e-commerce websites. PDD is listed on the Nasdaq, and has the same market share as Verizon. “This is the international expansion of a 155 billion dollar company,” Ma said. Among the various Internet retail sectors in China, where online shopping is much larger than in the United States, PDD is currently the third largest, but will soon try to overtake its competitors, mainly because of foreign Push Morgan Stanley from Temu .

For PDD, building a multi-billion dollar business is simple: have billions to start with and be ready to spend.

According to Wired, Temu loses about $30 per order. Contacted for comment, Temu said the figure was out of date, but declined to provide a current estimate. Chinese news site 36kr said the company is now losing 30 to 35 percent on every US order. The losses are substantial, but not by much, due to the strong pressure of thousands of third-party sellers working with thousands of third-party sellers to maintain prices.

Unlike Amazon, which sells most of its products directly, Temu is a completely third-party marketplace: an online platform that actually matches sellers with customer requests. The attraction for sellers is that Temu provides all the knowledge and marketing needed to get products in front of customers. It’s also easier to start selling on Meet than Amazon, which has stricter requirements for sellers to join their marketplace. However, dealers who work with TEMU also report discounted prices – so dealers become unprofitable.

According to kubotemu, the reason he offers low prices is because of the efficiency of his supply chain: he says he has cut out all the middlemen and can offer wholesale prices. “Our goal is to strengthen global supply chains, ensuring fair access for all to the world’s most valuable products,” a Temu spokesperson told Vox.

This is kubotemu mockery. For years, Chinese manufacturers have approached Amazon to sell on third-party marketplaces, starting in 2000. Third-party sellers are responsible for 60 percent of Amazon’s sales. Amazon now, and almost half of its Sellers are responsible in China. “Amazon is teaching them how to sell in the U.S. because Amazon’s market is their market,” said John Deighton, a Harvard Business School professor emeritus who specializes in consumer behavior and sales. Now, he said, Chinese companies, including Temu, are gathering direct control, cutting Amazon’s supply chain and cutting costs.

Temu’s use of third-party vendors has raised questions about its supply chain ethics. In June, the Chinese Communist Party’s US Select Committee issued an interim report saying there was an “extreme risk” that forced labor was being used in the Temu supply chain – where in the United States Uyghurs are prohibited under the Forced Labor Prevention Act. Take action.

In a statement the company sent to Vox, Temu said it “always prioritizes compliance with rules and regulations,” and “current standards and practices for compliance with US laws on forced labor are major USE-Commerce platforms such as Amazon, eBay, and Etsy. .

The company told Vox that the allegations are completely unfounded. It did not specifically ask whether traders are monitored to ensure no forced labor is used or whether to ban traders from Xinjiang province, which the government and human rights groups say hosts Chinese labor camps.

Driving Temu’s success with bargain sales is another big factor that sets it apart from Amazon: slow shipping. Appointment Orders can take several weeks to reach US customers, at a snail’s pace for those accustomed to Amazon’s speed. But this slow delivery allows Temu to avoid import taxes that would otherwise be a barrier, and may be passed on to the customer. Every customer order is shipped directly from the factory to the customer, so retailers don’t need to maintain large inventories of goods stored in fulfillment centers in the United States to ship quickly. By not claiming bulk items, sellers avoid current US laws that require them to charge for items over $800. US lawmakers also argued that Temu’s use of the exemption allowed him to effectively avoid customs controls. (In response to specific questions about customs charges, the company repeated its initial statement.)

It’s a blessing that TEMU doesn’t have a listing on US shores, at this time. “But if they’re going to compete with Amazon — and Amazon is bigger now — they have to,” Dayton said.

It’s not a game, it’s a difference (and an algorithm).

Much of the initial discussion about Temu focused on its shopping experience. There are wheels to be spun, as I see it, and “wheel of fortune” contests that award prizes; There are also fishing and farming minigames. While some claim to have earned thousands in rewards for playing Dating games, it’s unclear if this time-consuming feature actually increases sales. “I don’t think it helps,” said Ma. Already, he said, some of the games offered by kubotemu in the app have declined.

Dating doesn’t really require slot machines and Animal Crossing-style accessories. It turns the shopping experience into a kind of hunt. You dig into your heart’s desire and find a deal. Shopping is a game.

That’s what makes the American consumer so attractive — our willingness to buy cheap stuff we might not need.

This is what drives most of the modern economy, and of course a lot of online shopping. E-commerce companies like Temu offer volume estimates and minimize the cost of making something cheap – labor exploitation, environmental pollution – as if the item came out of thin air.

Whether kubotemu’s reputation will remain published. Similar to Temu, online Chinese direct seller Wish had its time, but soon led to complaints about defective products, misleading photos, fake goods and more. He is trying to build this reputation, but the current price of one share is part of his season in early 2021, when it exceeds $ 900.

TEMU’s success or failure will depend on many factors: its ability to avoid Wish’s mistakes, how long PDD is willing to subsidize the company’s costs, if it is too focused on TEMU’s temporary growth, and kubotemu aggressive approach to it. ready happy customer.

The basic model of selling cheaper Chinese-made goods directly to American consumers, however, is one that promises to last. Taylor Swift spinners, coupons and looted paraphernalia may be our focus now, set aside for another year, when the next shiny carnival rolls into town on the cheap.

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