Temu Founder Actually Shopping Like a Billionaire: Has Amazon Worried
Interesting story from Bloomberg last week reported that the former Googler and Pinduoduo founder, Colin Huang.
Started Pinduoduo in 2015 selling extremely cheap products with incredible promotions. Grew quickly and became his net worth became $71.5B in 2021 at COVID's peak. From there it came crumbling down 87% in a year.
But the company created the Temu brand to expand out of China, and expand it has. Now Mr. Huang is China's richest person according to the Bloomberg Billionaire's Index. Jack Ma is 5th - who everyone knows in the West. But hardly anyone knows PDD or Colin Huang.
The goal of Temu? Essentially good deals. In a 2018 interview, the founder stated: "The goal is not to be cheap, but to make users feel like they got a good deal."
The downside of Temu continues to be how they treat employees and suppliers (Bloomberg reports that employees must work 11 a.m. to 11 p.m., six days a week, plus overtime).
Ouch.
On the supplier front, global marketplaces have never been given a gold star for treating suppliers well. Also given that Temu is in the EU, it is under regulation by an entity which isn't exactly seen as friendly to big tech companies.
I note that many in the industry seem to expect Temu will just go away, it will spend itself out of existence like Wish. I do not share the same view.
The difference? Wish raised $1.6B. PDD has $33.3B cash on hand. Obviously Wework proved you can spend any amount of money if you try REAL HARD, but to think a deal-oriented site needs that much capital even with advertising costs is a stretch in my mind.
Temu's market is white-label goods. Items you don't care what the name is. Incidentally, 77% of product searches on Amazon are unbranded. Not to say that much of Amazon is white-label goods, but especially in an increasingly unaffordable America (child care, healthcare, college, real estate) the value trend is not going away. Consumers are cheap, and getting cheaper.
So if you think that a somewhat trusted Temu isn't at least some threat to Amazon you are kidding yourself. In a world where missing 5% of your growth is a big deal, that's all it would take for Amazon to lose share. Combined with loss of first eCommerce searches from social shopping platforms, all is not completely rosy in the Amazon universe.
