Temu expands its discounted online store for shoppers in Europe

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Online shopping trends have been growing rapidly across Europe. With the majority of the population having access to the internet, the percentage of consumers buying products and good online have been on a consistent increase over the last five years. Clothing, shoes, and accessories are among the most commonly bought products online in the region.

In the United Kingdom, the largest e-commerce market in Europe, consumers have increased their online spending compared to the pre-pandemic period. According to a report from the Office for National Statistics, internet revenues made up 27% of all retail sales in January 2023 in the United Kingdom. This is significantly higher compared to the 19% recorded in February 2020.

Over the next five years, shoppers are expected to further increase the frequency of their online purchases in the United Kingdom and other European countries. This will further drive the internet revenue share in terms of all the retail sales. To capitalize on the current market trends and position themselves to capitalize on future growth, global e-commerce marketplaces are expanding their presence in European markets.

• Temu, the Boston-based e-commerce marketplace owned by PDD Holdings in China, announced the launch of its services in six European countries in April 2023. The firm has commenced operations in France, Germany, Italy, the Netherlands, Spain, and the United Kingdom.

Temu first launched its operations in the United States in September 2022 and quickly become one of the most popular online retailers in the North American market. The platform topped the Apple App Store rankings beating the likes of Amazon and Walmart in the United States. With tens of millions of users purchasing products from home goods to apparel to electronics, Temu has been expanding its geographical presence worldwide over the last few months.

Since launching in the United States, the firm had commenced operations in Canada, Australia, and New Zealand, and now Temu is seeking to capture shoppers across Europe. Like Shein, Temu has built its business model around the idea of offering low-priced products to consumers. With inflation hitting a multi-year high in North America, Temu gained widespread traction among shoppers who were looking for discounted offerings.

Alongside its low-priced strategy, Temu also announced that it will exempt merchants from commission and guarantee fees in the two Oceanian countries. In Europe, PayNXT360 expects Temu to adopt the same strategy that has allowed the firm to gain increasing traction in its existing markets. Consequently, the budget-conscious nature of consumers amid the current macroeconomic environment is likely to aid the growth of Temu in European markets as well over the next few quarters.

Buyer retention will remain one of the biggest challenges for Temu in Europe, as it takes on incumbents in the local retail industry, all of which have a loyal customer base and established trust. While the current macroeconomic environment and being an all-category online superstore might work in favor of Temu, its connection with China can hinder the rapid growth trajectory.

• Although Temu has not been implicated yet, PDD Holdings - the parent firm of Temu - has been accused of spying on users. These allegations were cited in a US Congress report that also raised flags about the rapid growth achieved by Temu in the North American market. Going forward, the allegations on PDD Holdings are expected to attract further scrutiny, which might potentially lead to Temu.

Despite this, Temu has not stopped expanding its presence worldwide. To boost buyer retention the firm is emphasizing rapid delivery in the European markets, thereby seeking competitive advantage over other players in the region.

Amid the growing competition in Europe, other online retailers are also launching new offerings to grow their gross merchandise volume. Amazon, in April 2023, launched the European Expansion Accelerator (EEA) to help sellers in expanding their businesses to nine European Union stores. With this new and innovative offering, listing products in all of these marketplaces will become more accessible for sellers in Europe, ultimately providing customers with a broader range of options and access to millions of additional products.

As the European e-commerce industry continues to grow and the competitive landscape expands further over the next few quarters, PayNXT360 expects more such innovative offerings to be launched by online retailers in the region. The presence of Temu, currently in six European markets, will aid further competition and innovation. Going forward, PayNXT360 expects Temu to launch its services and operations in more European markets.

To know more and gain a deeper understanding of the B2C E-Commerce market in Europe, click here.