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EP318 - Temu Deep Dive with Earnest Analytics

EP318 - Temu Deep Dive with Earnest Analytics

Update: 2024-03-15
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EP318 - Temu Deep Dive with Earnest Analytics 

Episode Summary:

In this episode, Jason "Retailgeek" Goldberg and Scot Wingo dive deep Temu, the online marketplace operated by the Chinese e-commerce company PDD Holdings, that has become the fastest growing retailer in history.

Joining us on the episode is Michael Maloof is the Head of Marketing for Earnest Analytics. Earnest works with world-class data partners to acquires, anonymize, and productize insight about the entire U.S. Economy. They have posted numerous insights about Temu in the US this year:

In this episode we cover who Temu is, how big they have become, who their customers are and what retailers they are likely impacting, their go to market strategy (and especially their marketing spend), the controversy around their use of the Global Postal Treaty, and some of their potential risks. We also explore where they could go next. If you're in the commerce space, you'll want to make sure you are up to speed on Temu.

Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.

Episode 318 of the Jason & Scot show was recorded on Wednesday, March 13th, 2024.

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

Transcript

Jason:
[0:23 ] Welcome to the Jason and Scott show. This is episode 318 being recorded on Wednesday, March 13th, 2024.
I'm your host, Jason “Retailgeek” Goldberg. And as usual, I'm here with your co-host, Scott Wingo.

Scot:
[0:39 ] Hey, Jason, and welcome back, Jason and Scott show listeners.
Jason, one of the topics that is coming up a lot this year, we talked a lot at a lot in our recap and our preview is Temu.
By many measures, people think they're one of the fastest growing e-commerce companies in history.
If you watch the Super Bowl, I think they spent $8 trillion on ads there.
So we want to do a deep dive into this and cover a number of topics.
We want to talk about a little background around Temu.
What's it mean for U.S. retailers? And, you know, it's a Chinese company.
Does it even matter? If yes, why?
Because Temu isn't public and they are a Chinese company, they don't really disclose any information.
So we wanted to bring on a guest that is basically a Temu expert.
So we looked around and we found Michael Maloof.
He is the head of marketing at Ernest Analytics.
Ernest works with world-class data partners to acquire, anonymize, and productize insights about the U.S. economy.
They have posted lots of articles. This is how we found Michael.
I think you know him as well from the trade show circuit.
So he's going to help us do this deep dive into what's going on at Temu.
Welcome to the show, Michael. Michael?

Michael:
[1:59 ] Yeah, thanks so much for having me on the show. Big fan of your annual predictions and the work you guys do.
So I'm head of marketing at Earnest Analytics. We're the leading credit card retail pricing and healthcare claims data provider for investors and retailers.
Before Earnest, I was actually a tech and telco analyst over at Goldman.
The two credit card data sets we work with now, Orion and Vela, are probably the most pertinent to my conversations about the consumer economy and certainly this conversation today about TMU.
They sourced respectively from a large account aggregator, like a budgeting app, and part of a POS system in the US.
And Ernest essentially takes these massive and messy data sets, normalizes structures, and then puts them onto our platform so everyone from portfolio managers to marketers can see this third-party data.
For example, you'd see market share, competitive benchmarking, customer behavior, revenue predictions, and macro trends for thousands of companies, including TMU.

Scot:
[3:03 ] Awesome. Thanks, Michael. And then, so which sector did you cover when you were an analyst at Goldman Sachs?

Michael:
[3:08 ] Tech and telco. So anything in the tech space, we had a few marketplaces in there, telecom companies.
It's been a while though. Ernest has been my home now for seven years.

Scot:
[3:20 ] Okay. Was this in the Anthony Noto era you were there?

Michael:
[3:23 ] This was in the vera rossi era she was my my lead where we recovered uh latin american tech and telco.

Scot:
[3:30 ] Very cool awesome yeah they did goldman did the channelizer ipo so i get to know the team there pretty well awesome well before we jump into the data which we're excited to kind of hear what you have to share here jason i know this has become a very hot topic in your world you you You spoke on it at NRF.
In your day job, you're getting tons of questions about this.
I think you're booked out solid with Tmoo briefings.
So those people pay big money for it, and our listeners don't pay.
Give us the free version of your backgrounder on Tmoo.

Jason:
[4:05 ] Yeah, thanks, Scott. And I'm sure we'll spice in some other tidbits as we go, but I'll try to give a concise bullet. it.
Temu is a subsidiary of a company that used to be called Pinduoduo in China.
It's now called PDD Holdings, which is infinitely easier to spell, by the way.
And PDD Holdings is one of the largest e-commerce companies in China.
On a market cap basis, they keep flip-flopping with Alibaba.
So they're super competitive.
They're way north of like $400 billion in GMV in China and had a really interesting trajectory, but a couple of years ago, they launched Tmoo into first UK and then US, now 49 other markets as a new retail concept.
And so a couple of things I'd want folks to know before we dive in with Michael, first of all, the name is a loose English acronym for team up price down.
So I always pronounce Tmoo as in team.

[5:08 ] There are multiple pronunciations out there, even from Tmoo employees.
So I'm not sure there's an official pronunciation.
In the United States, they launched in September of 2022.
So they're about 18 months old now. And most folks were not familiar with them until, a surprise, three months after launching, they bought a Super Bowl ad.
So they became familiar to millions of Americans with the Shop Like a Billionaire ad that ran in the Super Bowl in 2023.
And then as Scott alluded to, they bought five ads in the Super Bowl this year.
So they haven't disclosed what they paid.
A normal 30-second spot in the Super Bowl costs about $7 million.
They ran four ads during the Super Bowl and one during the postgame.
So estimates are in the kind of $20 to $30 million that they spent just on that ad.
There's a bunch of estimates for how big they are in the U.S.
I'm eager to hear what Michael thinks, but his old rivals at Morgan Stanley have them at about $16 billion in GMV in the U.S.
But more interesting, Morgan Stanley estimates they're going to be $32 billion by 2030.
So you think about a retail company that launched in September of 2022, and then in the first year, business sold $16 billion worth of stuff.
That's the fastest growing retailer of all times.
We do know from other sources that they get more traffic every year than Target.

[6:36 ] They've been the most downloaded shopping apps on the Android and Apple app stores since they were born.
So they've kind of owned the top of that list.
And a couple other little interesting things. They are a marketplace.
They have invented a model they call next generation manufacturing.
So they're a marketplace.
It's all three-piece sellers that are selling goods on Temu.
But unlike traditional Western-based marketplaces, Temu does a lot more of the work, of listing the products and fulfilling the products for the factory.
So they may, if you're a factory, they say the only thing you need is a cellular internet connection, and they provide you all the infr

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EP318 - Temu Deep Dive with Earnest Analytics

EP318 - Temu Deep Dive with Earnest Analytics

Jason "Retailgeek" Goldberg & Scot Wingo