E-Commerce Newcomer Temu Offers Bargains to Inflation-Wary Households

Rising prices for everything from cereal to toilet paper are eating into household budgets, forcing many consumers to think twice about spending on non-essential purchases.

Rae, 27, a single mother of two living in Philadelphia, has had to give up on small luxuries like getting a new dress because other expenses like gas and utility bills are eating into her budget. She began shopping on a new online marketplace called Temu, attracted by its wide variety of dresses, many of them are priced under $10.

“Shopping on Temu has really helped me to save on my household expenses, and yet I don’t feel like I’m missing out because the products are all so competitively priced,” said Rae, who declined to give her full name because she did not want her neighbors and co-workers to know about her financial situation.  

Temu began operations in September and is a sister company of Nasdaq-listed Pinduoduo (Nasdaq:PDD), which is one of the largest e-commerce platforms with almost 900 million active users. The launch of Temu’s website and mobile apps attracted massive media coverage when they went live on Sept. 1.  

“No matter the occasion, you can always count on Temu to have just the right things to brighten your life and help you live the way you want to live,” according to its website, which featured a bright orange logo and slogan “Team Up, Price Down.”

Temu’s website features listings for products from multiple categories, from clothing to household items. A casual browsing of the site turned up listings for a girl’s patterned dress for $3.95, a Halloween-themed necklace for $0.49, and a pair of women’s running shoes for $4.99. 

The e-commerce site can offer such low prices because it shares the same extensive network of global suppliers and manufacturers as Pinduoduo, which works with more than 11 million merchants and manufacturers around the world, according to the company. Temu also saves on transportation and storage costs by shipping directly from merchant to consumer, passing on the cost savings to the buyers, it said.  

It is offering a limited time promotion of free shipping on all items purchased on its website temu.com.

It is probably no coincidence that Temu has chosen this time to enter the market with a no-frills, value-for-money proposition.

Inflation hit a four-decade high in June and remains high, spurred by rising food and gas prices. A new Gallup poll found a majority of Americans saying inflation is causing them financial strain.

Fifty-six percentage of Americans said that rising prices caused hardships for their families, up from 49% in January. The increase in money problems was most widespread among middle-class households, with 63% of those surveyed noting hardship from rising prices, compared with 46% in November. Even upper-income households are not spared, with 40% of high earners expressing concern at inflation, up from 28% in November.

With US households in belt-tightening mode, Temu’s timing may turn out to be inspired. In the meantime, a gold rhinestone butterfly buckle belt for $1.43, anyone?