Temu poses a threat to domestic retail.

Decoding Temu's popularity

Temu is a cross-border e-commerce platform founded by PDD Holdings (China), currently the world's largest online retailer. Temu has launched its sales feature in Vietnam and is running extensive advertising campaigns targeting users. Temu's standout feature compared to other e-commerce platforms is its very low product prices, thanks to a business model that directly connects manufacturers and customers, eliminating intermediary costs.

Temu is running a massive advertising campaign targeting Vietnamese users. (Illustrative image)

Most of Temu's products come from Chinese manufacturers, where production costs are low and production scale is large. Temu's parent company, PDD Holdings, also employs subsidy strategies, accepting lower profit margins on each product sold, thus reducing product costs.

According to some consumers who have accessed the Temu e-commerce platform, Temu not only frequently offers numerous vouchers and promotions to attract buyers, but is also winning over sellers with attractive price subsidies. Besides a wide variety of super-cheap items, Temu has a very flexible return and exchange policy. If customers are not satisfied with their order and request an exchange, Temu will refund the money immediately, and in some cases even offer a free replacement.

Notably, just a few days after officially launching its products in Vietnam on October 22nd, Temu introduced a new strategy: allowing users in Vietnam to register for its affiliate marketing program. Many social media accounts immediately shared this information widely, especially highlighting the opportunity to easily earn tens of millions, even hundreds of millions of VND, by participating in the Temu Affiliate program.

 

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

One of the main reasons Temu can offer such 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 for international deliveries. This allows buyers to enjoy low prices without hidden fees, making it more attractive than its competitors.

Besides Temu, China has recently increased cross-border exports through digital platforms and e-commerce, including TikTok, Shopee, and Lazada. Chinese businesses are setting up warehouses in border areas or even within Vietnam. Therefore, the influx of Chinese e-commerce platforms is causing concern among many domestic experts and businesses about a potential "flood" of cheap Chinese goods into the Vietnamese market.

Carefully assess the impact on the domestic market.

On the afternoon of October 23rd, at the regular press conference, Deputy Minister of Industry and Trade Nguyen Sinh Nhat Tan answered questions about the latest developments in the Vietnamese e-commerce market following the influx of numerous Chinese retail platforms such as Temu, Shein, and Taobao…

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

Deputy Minister Nguyen Sinh Nhat Tan stated that, according to Decree 85/2021/ND-CP on e-commerce, e-commerce platforms operating in Vietnam are required to register. Regarding Temu, which is 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 its impact.

The Deputy Minister of Industry and Trade also stated that, particularly in the emerging e-commerce channel which has advantages, specific solutions are needed for management. The Ministry of Industry and Trade does not differentiate between goods imported through traditional channels or e-commerce channels; all goods must undergo thorough impact assessments. Counterfeit or imitation goods must be prevented from circulating; if goods are dumped, they must be dealt with according to market dumping regulations. However, if businesses produce genuine products with competitive prices, they must adhere to market principles.

"Only after a thorough assessment is complete will we consider creating a framework of standards and technical barriers to protect domestic production. Along with that, we need to enhance the competitiveness of domestic production and review support policies for domestic businesses. 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.

Regarding the Temu e-commerce platform, Dr. Vu Vinh Phu stated that, with advantages in subsidy policies, import taxes, and a professional and modern logistics system, Chinese goods have a significant competitive advantage in terms of price and shipping costs. Therefore, Vietnamese businesses are increasingly having to cope with competitive challenges.

“Domestic businesses need to increase the competitiveness of their goods by improving product quality, innovating packaging and labeling according to partner regulations; forming joint ventures and partnerships to create a strong Vietnamese business community, focusing on the domestic market while also exporting directly through e-commerce platforms. In addition, the State needs to support the development of infrastructure: warehouses, transportation, and delivery vehicles, and introduce new, advanced management technologies into production and product consumption,” recommended Dr. Vu Vinh Phu.

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