Temu's global expansion strategy is currently at a crucial stage, with its market potential and profit prospects remarkable. Morgan Stanley believes that the platform is expected to achieve profitability as early as 2025, with enormous growth potential for GMV, and is expected to reach $130 billion by 2030.
"Chinese concept stocks"$PDD Holdings (PDD.US)$The overseas expansion of "pdd holdings", a widely watched focus in the industry, has been rapidly growing in the global market since Temu, its international business, launched in September 2022, thanks to its low stock price strategy and rich selection of commodities.
Morgan Stanley analysts Eddy Wang and others pointed out in their latest research report that Temu's global expansion strategy is at a critical moment, with its market potential and profit prospects promising. The platform is expected to achieve profitability as early as 2025 and has huge potential for GMV growth, with the possibility of reaching 130 billion US dollars by 2030.
Going beyond the USA, the global layout is becoming more balanced.
Temu is gradually adjusting its global strategy, shifting from its initial focus on the US market to a more balanced global layout. In 2023, Temu went through a radical user acquisition phase in the US market. By 2024, the company's strategic focus in the US has shifted towards improving the variety of products and enhancing user experience, while actively expanding into emerging markets such as Europe and Latin America.
Analysts noted that in May 2024, Temu's monthly active user base (MAU) in Europe has surpassed Amazon and AliExpress, surpassing them by 38% and 82%, respectively. This strong growth momentum is expected to continue into the second half of 2024, bringing more balanced global market layout to Temu.
Huge potential for GMV growth, with the possibility of reaching 130 billion US dollars by 2030.
With the adjustment of its global strategy, Temu's distribution of GMV (total merchandise transaction volume) by region is undergoing significant changes. Analysts predict that the contribution of the US market to Temu's GMV will decrease from over 50% in 2023 to 33% in 2024, and will further decrease to 30% by 2030. At the same time, the European market is expected to become Temu's largest source of GMV, accounting for 37%. The Latin American market will also contribute about 10% of GMV in 2024.
Based on this trend, analysts predict that Temu's GMV will increase from 19 billion US dollars in 2023 to 53 billion US dollars in 2024, and believe that Temu's GMV may reach 130 billion US dollars by 2030. Although growing rapidly, Temu's share of the e-commerce market in each region is relatively small. In 2024, its share in the US market is expected to be less than 2%, and its market share in Europe and Latin America is expected to be less than 4%, reflecting a huge potential for growth.
Profit prospects and optimization of business model to achieve profitability in 2025.
With the promotion of its semi-hosted model and improvement of operating efficiency, Temu's profitability is expected to improve significantly. Analysts predict that Temu may achieve profitability in 2025, and its operating profit may reach 9 billion US dollars by 2030. The improvement of this profitability prospects mainly benefits from the following factors:
Promoting semi-hosted models, expanding the market size that can be serviced and increasing gross margin rates;
Optimizing warehousing and logistics management, improving user experience while reducing operating costs;
More balanced global layout, to disperse market risks and improve overall operating efficiency.
Editor/Somer