5 things Temu can teach e-commerce businesses

Temu’s arrival in the South African digital arena at the end of January has certainly stirred things up, ramping up ad prices, causing bidding wars, and flooding the market with advertising on virtually every conceivable digital platform. Its bombastic arrival and viral expansion has caused virtual grey hairs for many a paid media planner.

The Digital Media Collective’s Caleb Shepard says there are valuable lessons e-commerce operators can learn from Temu’s strategy and behaviours.

Launched in 2022, the Chinese e-commerce retail giant operates on web and mobile via their app and has proven to be a runaway success despite global concerns about supplier and worker exploitation and often sub-standard products. Their might has proven a headache for other major online retail players such as Amazon and Takealot, and independent e-commerce operators have reported a worrying downturn in ad conversions since their arrival in the marketplace.

“Temu’s approach offers several valuable lessons for other e-commerce businesses, with regards to clever acquisition and engagement tactics, aiming to increase their market share and enhance customer engagement. And while it’s an unsettling time, there is a lot of business owners can learn from their entrance into the market,” says Shepard.

1. Data doesn't lie

As one of only five accredited Shopify Expert Partners in Southern Africa, a Google Expert Partner and Meta Business Partner, specialist data analysis is crucial to TDMC’s business offering. Shepard explains that accessing insights within your business is imperative, as is using insights to make data-driven decisions. Sound insights allow for promoting of new channels using improved bidding strategies or re-engaging customers where they have dropped out of the sales funnel. “With so much advertising noise out there, it’s essential to be monitoring trends on both your own and competitor sites, or using an agency who has the ability to do so,” he says.

2. Build your brand

“Temu’s approach has been heavily focused on acquisition and sales and less on brand building, and our advice to our customers is to sit tight and not divert from their own brand building strategy,” says Shepard. With this in mind, he recommends intensifying connecting with customers with strong content campaigns that reignite a love for and connection with your brand. “If people fall in love with your brand again, then they're going to shop from you,” says Shepard. “I recently attended a Google event where the Head of Creative for Google in sub-Saharan Africa, Artwell Nwaila, shared something so valuable. He said, ‘70% of campaign performance is due to creative’ – that’s a pretty powerful indictment.”

3. First-party data + free channels

Shepard advises that brands consistently concentrate on building first-party data as a means of targeting customers in a non-auction environment. “E-mail and SMS are virtually free channels where you don’t have to compete with other brands and where your customer is on the other end of the line,” he says. These environments are going to become even more vital in the e-commerce customer experience. “The beauty is that these channels allow for personalised customer interaction, more precise targeting, enhanced customer loyalty and ultimately better performance for your business.”

4. Focusing on core categories

Temu’s enormous offering of more than 100 categories (and counting) is rather daunting for e-commerce businesses, no matter their size. Shepard offers sound and succinct advice: “Businesses need to box smart and accept that with brands like Temu bidding in the ad arena, it’s just not possible to be competitive in all categories. We suggest moving budgets from less profitable categories and focusing on the most profitable categories, supported with powerful content.”

5. Incentivise the customer

Temu has been described as being “as addictive as sugar”. The app mirrors many online gaming strategies and uses engagement tactics like rewards, challenges, and “too good to be true” incentives, creating an interactive shopping experience that keeps customers returning and engaged. While the noise around their offering isn’t necessarily sustainable, Shepard suggests e-commerce operators create urgency with the likes of discounts, loyalty rewards and exclusive deals to reward their repeat customers. “Follow up with excellent and accessible after-sales service and you’re offering something that Temu never can – a relationship built on trust and reflecting the best that a bricks-and-mortar store offers with superior online capabilities.”