Every day US customers of PDD Holdings’ world low cost e-commerce platform Temu fell by 58% in Might, based on market intelligence agency Sensor Tower, considered one of many headwinds the e-retailer is dealing with amid a US-China commerce struggle.
Temu determined to slash advert spending within the US and shift its order achievement technique after the White Home on Might 2 ended the apply referred to as “de minimis” — which allowed Chinese language corporations to ship low-value packages to america tariff-free.
Temu, together with fast-fashion big Shein, had utilized that provision for years to drop-ship gadgets straight from suppliers in China to shoppers within the US, maintaining costs low.
Each Temu and Shein have suffered a pointy drop in gross sales development and buyer development charges since US President Trump introduced sweeping commerce tariffs, based on information collected by consultancy Bain & Firm, however Temu’s traits have been worse than its rival.
Tariffs pressured each platforms to boost costs, however Shein has been in a position to improve the amount of cash spent per buyer in comparison with a yr in the past, the information confirmed, whereas Temu has struggled.
Temu didn’t reply to a request for touch upon the drop in US every day customers or the headwinds it faces within the US market.
Engagement on Temu has dropped considerably following the tip of the exemption, Morgan Stanley fairness analyst Simeon Gutman stated in a Might observe.
“While the tariff environment is uncertain, if the status quo remains for an extended period, we believe Temu’s competitive threat will continue to weaken,” Gutman stated.
Final week, PDD’s first-quarter earnings fell brief of development estimates and executives advised analysts on a post-earnings name that tariffs had created important stress for its retailers.
They reiterated Temu’s earlier pledge to maintain costs secure and work with retailers throughout areas, referring to a shift to a neighborhood achievement mannequin introduced in the beginning of Might.
Temu’s earlier enterprise mannequin gave retailers accountability for ordering and supplying their merchandise whereas the China-based firm managed a lot of the logistics, pricing and advertising.
Now, Temu’s retailers “can ship individual orders from China to Temu-partnered US warehouses but they would need to address tariffs and customs charges and paper work,” based on a observe from analysts at HSBC. Temu continues to deal with fulfilling orders near customers, setting costs and on-line operations.
In final week’s observe, HSBC stated that Temu’s development in non-US markets has picked up, with non-US customers rising to 90% of its 405 million world month-to-month lively customers within the second quarter.
“New user uptick grew swiftest in less affluent markets,” analysts wrote.
