Temu threatens domestic retail

Decoding the Heat of Temu

Temu is a cross-border e-commerce platform, founded by PDD Holdings (China), the world's largest online retailer today. Temu has opened a sales feature in Vietnam and is running massive advertising to users. The highlight of Temu compared to other e-commerce platforms is that the product prices are very cheap, thanks to the business model that connects manufacturers and customers directly, eliminating intermediary costs.

Temu runs massive advertising campaigns to Vietnamese users. Illustrative photo

Most of Temu’s products are sourced from Chinese manufacturers, where production costs are low and production is large. Temu’s parent company, PDD Holdings, also has a subsidy strategy, accepting low profits for each product sold, helping to reduce product costs.

According to some consumers who access the Temu e-commerce platform, not only does it regularly have a series of vouchers and promotions to attract buyers, Temu is also capturing the participation of sellers with attractive subsidies. Not only does it have a variety of super cheap products, Temu has a very flexible return and exchange policy. When receiving the goods, if the customer is not satisfied and requests to exchange the goods, Temu will immediately refund the money, even with a notice of free gifts in some cases.

Notably, just a few days after officially selling to Vietnam, on October 22, Temu launched a new strategy by allowing users in Vietnam to register for the Affiliate program. Many social media accounts immediately shared this information, especially the opportunity to easily earn tens of millions, even hundreds of millions of VND from participating in Affiliate Temu.

 

Temu is currently the world's second most popular e-commerce platform with 662.5 million average monthly visits in Q3/2024, behind Amazon with 2.7 billion visits.

One of the main reasons why Temu is able to offer extremely low prices is its unique approach to subsidizing shipping costs. Unlike many other e-commerce platforms, Temu covers the shipping costs for its customers, especially international shipping. This allows buyers to enjoy low prices without hidden fees, making it more attractive than its competitors.

Not only Temu, recently, China has increased cross-border exports using digital platforms and e-commerce including Tiktok shop, Shopee, Lazada... Chinese businesses set up warehouses in border areas or have warehouses right in Vietnam. Therefore, the influx of Chinese e-commerce platforms is making many experts and domestic businesses worry about the "whirlwind" of cheap Chinese goods entering the Vietnamese market.

Carefully assess the impact on the domestic market

On the afternoon of October 23, at a regular press conference, Deputy Minister of Industry and Trade Nguyen Sinh Nhat Tan answered questions about new developments in the Vietnamese e-commerce market before the arrival of a series of Chinese retail platforms such as Temu, Shein, Taobao...

The Ministry of Industry and Trade will carefully assess the impact of Temu on the domestic market. Illustrative photo.

Deputy Minister Nguyen Sinh Nhat Tan said: According to the provisions of Decree 85/2021/ND-CP on e-commerce, e-commerce trading floors operating in Vietnam are required to register. For the Temu floor currently selling goods in Vietnam through e-commerce platforms, the Ministry of Industry and Trade has assigned the Department of E-commerce and Digital Economy to review and assess the impact.

The Deputy Minister of Industry and Trade also said that the emerging e-commerce channel, which has more advantages, needs to have specific solutions for management and the Ministry of Industry and Trade does not distinguish between imported goods through traditional channels or e-commerce channels, all must have a careful assessment of the impact. In case of counterfeit goods, counterfeit goods must be prevented from circulating; if they are dumped goods, they must be handled according to market dumping regulations. If businesses do the real thing, creating products with competitive prices, they must comply with market principles.

"Only when there are thorough assessment results will we consider creating a corridor of standards and technical barriers to protect domestic production. Along with that, we will improve the competitiveness of domestic production and review support policies for domestic enterprises. Currently, the Ministry of Industry and Trade has a general plan on these issues and is implementing many measures to protect domestic production," Deputy Minister Nguyen Sinh Nhat Tan emphasized.

Giving his opinion on the Temu e-commerce platform, Dr. Vu Vinh Phu said that with the advantages of subsidy policies, import taxes, and a professional and modern logistics system, the competitiveness of Chinese goods in terms of price and transportation costs is quite high. Therefore, Vietnamese businesses increasingly have to cope with competitive challenges.

“Domestic enterprises need to increase the competitiveness of goods by improving product quality, improving packaging and labels according to the regulations of partners; forming joint ventures to strengthen the Vietnamese business community, focusing on the domestic market associated with direct export, through e-commerce sites. In addition, the State needs to support the construction of infrastructure: warehouses, traffic and means of transport, applying new and advanced management technology to production and product consumption.” - Dr. Vu Vinh Phu recommended.

Source: https://kinhtedothi.vn/temu-co-de-doa-ban-le-trong-nuoc.html