The cross-border e-commerce platform Temu under pdd holdings is accelerating its layout in Southeast Asia, according to the Science and Technology Innovation Board Daily on October 16th (Reporter: Xu Cihao).

It is reported that Temu recently entered the markets of Vietnam and Brunei. Since embarking on the Southeast Asian market journey in August last year, the Philippines became its first stop for overseas expansion, followed by the successful opening of the Malaysia site in September of the same year.

In July of this year, Temu opened its site in Thailand. Currently, Temu's footprint in Southeast Asia has expanded to five countries, with only Indonesia, Singapore, and other leading markets remaining untapped.

However, the competitive situation for Temu in Vietnam is not optimistic. The e-commerce channel development consulting and analysis company YouNetECI's report on the e-commerce platform sales for the second quarter of 2024 in Vietnam shows that Shopee, TikTok Shop, Lazada and other platforms hold market shares of 71.4%, 22%, and 5.9% respectively, and generally adopt a low stock price strategy.

Analyst Xiao Danyun from EqualOcean mentioned to the Science and Technology Innovation Board Daily that the success of the low stock price strategy is not just about being 'cheap', but also requires coordination in various aspects such as logistics, service, policy compliance, and local operations.

"Taking Shopee and Lazada as examples, their success is not only due to low-priced products, but also to rapid responsiveness to market demands, optimization of user experience, and the ability to improve operational efficiency by utilizing local resources. It is evident that Temu's development in the Southeast Asian market still needs to focus on these aspects to better adapt to this competitive market environment."

Entering Vietnam and Brunei, adopting a fully-managed model.

According to the Southeast Asia e-commerce report published by the Singaporean technology website OpenGovAsia, Vietnam and Thailand have become the fastest-growing e-commerce markets in the Southeast Asian region.

Among them, the e-commerce market in Vietnam has maintained an average annual growth rate between 16% and 30% over the past four years. Its Gross Merchandise Volume (GMV) has grown by as much as 52.9% year-on-year, followed closely by Thailand at a growth rate of 34.1%. Currently, Vietnam has surpassed the Philippines to become the third largest e-commerce market in Southeast Asia, undoubtedly prompting Temu's entry into Vietnam.

The reporter noted that in order to quickly tap into the market, Temu continued to use previous low-price and freight subsidy support strategies when launching the Vietnam site initially, including providing a 90-day free return service and discounts of up to 90% on product promotions.

In addition, discount promotions remain Temu's expansion method when entering new markets. For example, the launch of discount activities in the Vietnam site includes discounts of 70,000 Vietnamese dong for every 750,000 spent, 170,000 discounts for every 1,250,000 spent, and 250,000 discounts for every 1,850,000 spent.

According to Li Li (pseudonym), a business development manager at Temu, revealed to the Science and Technology Innovation Board Daily, the Vietnamese market adopts a fully managed model where merchants do not need to pay service fees or commissions to join the platform, but the platform will mark up and sell based on the merchants' quotes.

Li Li also emphasized that currently Temu implements a fully managed model throughout the entire Southeast Asian region, while a semi-managed model is only available in markets such as the USA, Canada, Mexico, Australia, New Zealand, Japan, and Europe.

The reporter learned that in the fully managed model, the e-commerce platform will be responsible for all aspects of store operations, warehousing, distribution, and after-sales, while merchants only need to focus on providing goods, mainly light and high cost-effective categories such as 3C accessories, fashion clothing, etc.

Regarding platform activities, Li Li stated that Temu also advertises on Google and mainstream platforms to generate traffic.

Currently, the first version of the Vietnam site is basic, only supporting English, accepting credit card payments only, and only integrating two logistics companies (Ninja Van and Best). On the merchant side, Temu has not yet introduced any support policies.

However, previously it took 5 to 20 days for Temu to deliver to Malaysia and the Philippines, but with the geographical advantage of bordering China, after the opening of the Vietnam site, the delivery time has been shortened to 4 to 7 days, significantly improving the speed.

Currently, Temu has achieved initial success in the global market. According to data analysis platforms Statista and AppMagic, as of now, Temu's global downloads have exceeded 0.735 billion times, with monthly visits in the first quarter of 2024 surpassing 0.5 billion times. In addition, in May, June, and July 2024, Temu's monthly downloads exceeded 50 million, three times the downloads of international e-commerce giant Amazon.

The journey of cross-border e-commerce in Southeast Asia is not easy.

EqualOcean analyst Xiao Danyun said in an interview with the Star Daily that PDD Holdings' success in China is largely due to its social media marketing and traffic guidance strategy.

However, in the Southeast Asian market, local consumers have established relatively fixed preferences for shopping channels, and their social media usage habits differ significantly from those in the North American market. For example, TikTok has a significant influence in the Southeast Asian region, and PDD Holdings' current investment in this area is clearly insufficient, leading to a significant discount in its social viral effects.

Xiao Danyun further pointed out that the Southeast Asian e-commerce market is relatively fragmented, online consumer habits are not yet mature, e-commerce penetration rate is still low, and offline shopping still dominates. At the same time, protection policies for local small and medium-sized enterprises in Southeast Asian countries also pose limitations on the expansion of foreign platforms like Temu.

Taking Indonesia as an example, according to local media Antara News, the Indonesian Ministry of Communication and Information has banned access to the Chinese online shopping platform Temu in Indonesia to protect domestic micro, small, and medium-sized enterprises from the impact of foreign platforms.

Indonesian Minister of Communication and Information Budi Arie Setiadi stated that the decision to block Temu is based on the increasingly serious threat posed by foreign products to domestic small and medium-sized enterprises.

Currently, TEMU can still be found and downloaded in Indonesia through the Google Play Store or its website. However, users cannot select Indonesia as the destination country in the application settings.

Previously, platforms like SHEIN and TikTok Shop have been shunned by Indonesia.

Previously, benefiting from the "small exemption" policy, cross-border e-commerce platforms focusing on small parcel transactions, including TEMU, AliExpress, TikTok Shop, and SHEIN, were able to dominate the global market with extremely high cost performance advantages.

Recently, the small exemption policies in multiple countries and regions have been tightened.

In the Southeast Asian market, starting from January 1 this year, Malaysia has revoked the "small exemption" and begun imposing a 10% low commodity tax on imported goods valued at less than 500 Ringgit (about 816 RMB).

Thailand has stipulated that starting from July 5, imported goods valued below 1500 Baht (about 312 RMB) will no longer enjoy tax exemption, and all low-priced imported goods will be subject to a 7% value-added tax.

As for Vietnam, there are plans to remove the tax exemption policy for small import parcels worth less than 1 million Vietnamese Dong (about 287 RMB). It is reported that Vietnam originally planned to impose a value-added tax on imported goods worth below 2 million Vietnamese Dong from May this year, and the proposal submitted by the Vietnamese Minister of Finance in June requested a 10% value-added tax on cross-border e-commerce small parcels, without seemingly defining a tax-exempt threshold.

The contraction of the low-value exemption policy will inevitably lead to cost increases for platforms and merchants relying on cross-border small parcel delivery models, directly affecting the fully managed models of platforms like Temu, SHEIN, and other 'Four Little Dragons of China's cross-border' service, as well as independent sellers for cross-border delivery.

Due to differences in the policy environments between Southeast Asian countries and the Chinese market, cross-border e-commerce platforms represented by Temu evidently cannot directly replicate domestic experience and the successful low-price strategy validated in European and American markets to the Southeast Asian market.

Wu Jian, the operations director of Vietnam's Panshi Investment Consulting Co., told the Star Daily that although low-priced goods have broad development potential in the Southeast Asian market, veteran e-commerce platforms like Lazada, Shopee have been deeply cultivating for many years, have complete logistics systems, and extremely efficient logistics.

In his view, as a latecomer, Temu not only has to compete with these strong rivals in the low-priced goods sector, but also has to overcome the payment habits of Southeast Asian consumers who prefer platform interface payments and cash on delivery. "Temu mainly relies on international mainstream credit card payments, which undoubtedly increases the difficulty of its market expansion in Southeast Asia, where credit card coverage and usage rates are not high."