Latest / Let's talk Marketplace / Temu's Next Move: Copying Amazon's Most Controversial Playbook? (China Commerce Update with Ed, Part 1) #LTM161

Transcript

Temu's Next Move: Copying Amazon's Most Controversial Playbook? (China Commerce Update with Ed, Part 1) #LTM161 · Let's talk Marketplace

• 0:00
  Within maybe a year, Temu is selling the same products that you are selling for 80% of the quality at 50% of the price.
• 0:13
  Let's Talk Marketplace.
• 0:14
  The Marketplace podcast with Ingrid Lomar and Vana Friedrich.
• 0:21
  Hello and welcome back, everyone to let's Talk Marketplace.
• 0:24
  I'm Ingrid, as always your host for today, not with me today is Valerie because she's off holidaying in the Toscana and hopefully eating lots of great Italian food as she wanted to.
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  But you don't have to listen to me just by myself because I brought along a good old friend who has been on the show for several times.
• 0:42
  I think it's your fourth visit now, Ed.
• 0:44
  Something like that, yeah.
• 0:45
  Something like that, Yeah, I think so.
• 0:46
  This was the fourth one and everyone who has been listening to us beforehand probably came across one of the episodes with Ed because they are always the ones that are most watched after, I think.
• 0:57
  Oh, wow.
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  Yeah, it's always.
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  Yeah, I think you are.
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  Your episodes are all of them inside the top five.
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  It can't, can't be my face.
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  It cannot be my face.
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  But it's a podcast, you know, that's fine.
• 1:10
  Yeah.
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  So wherever you are with me, we are talking about China commerce.
• 1:13
  And that is today again, our topic.
• 1:16
  So today I think I asked you back because we met at the K5 conference in June in Berlin and I listened to your talk.
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  It's always nice because now that we have known each other for a while, you always come up to me and tell me beforehand if you're going to say something new or if the talk is something that I heard
• 1:34
  before.
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  And then in that case you came to me and said like that, that's new, we have to come.
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  So I did.
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  And yeah, and I think it's.
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  It was absolutely worth it because you were telling interesting new things about TEMU and what they are working on.
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  And that is something that I would like to dive into today.
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  But before we do that, maybe I don't think I need to introduce you very much, Ed.
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  But I'll say this, you are special on China commerce.
• 1:59
  You are great at karaoke and you are a skilled travel companion for everyone who wants to go to China.
• 2:06
  So maybe tell us a bit about that because you're planning the next tours already.
• 2:11
  Yeah, so, so.
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  So like you said, there's basically three things I do.
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  I write these reports for China, digital, digital, retail report.
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  Those normally turn into keynotes like the ones you've seen at K5.
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  And then all of these keynotes that I do turn into content for the study tours that we do in October, I'm going to do two new tours with K5, the fourth tour I'm doing with them and with the
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  Norwegian Virke, also a retail organization, to take them to China.
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  And then we normally have.
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  In the morning I give a masterclass on a certain topic and in the afternoon we go and visit companies or sites that are related to that, to that topic.
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  So that could be quick commerce, that could be live commerce.
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  So people get both the theory so they understand what they actually see in the afternoo.
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  And then on top of that we have all kinds of cultural things so people can also get to know the culture a bit better.
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  Okay, yeah, so that is.
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  And it's normally a week, is it?
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  Yeah, it's a full week.
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  Yeah, that's still something on my bucket list.
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  But not this year because I think you're full already, aren't you?
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  I think that K5 has one or two seats left, but they're probably going to fill up this week.
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  So I don't know when this is airing, but the closing date for sign up is September 1st.
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  Yeah.
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  So then maybe for the next one.
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  Yeah.
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  But for today now, I wanted to do two things actually with you because it is our summer episode and I always take a bit more time for topics when we do our bigger summer deep dives.
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  And today I thought every time we have been talking together about China commerce, we always came to the end of the episode and was like, okay, there's so much story left, there's so much things to do that we
• 3:57
  could still talk about and we don't have any time anymore.
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  So today I thought let's just do a two parter.
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  You know, that's.
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  Yeah, just give us the time that we need to really dive into the many, many topics you have.
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  And for our first part, you were talking at KFIRED conference about something that really caught my interest and that was a new private label program of temu.
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  I noted it down as Amazon Basics in China Commerce.
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  That is probably much too simplified.
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  But that is something that stuck in my mind and I thought, okay, I really need to talk with you about that in more detail.
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  And in part two, I'd like to talk about more about what is actually happening in China and the great shifts in E commerce and especially quick commerce that are happening there that we might not be aware of so
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  much.
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  But for the first part.
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  Yeah, let's get into temu.
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  So yeah, what is that about?
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  Let's first start.
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  How did you find this?
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  Is that already happening just in China or in Europe.
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  So what is this new program that you were talking about?
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  So it's, it's actually something that already started like one or two years ago, TEMU started noticing that, okay, it was quite easy to sell inexpensive goods to the United States in Europe, but they also started noticing that people
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  were getting more critical about the quality of the goods.
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  And there was also more and more movements requiring more compliance with local regulations.
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  Already in 2024, they started to look at upgrading the quality of the goods they were selling on the platform.
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  Now after that in 2025, you also got the de minimis in the US that was cancelled.
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  Before that, you could import packages into the US for free under $800, just like we had €150 in Europe that canceled in May last year.
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  So that also meant that TEMU had to scrap a lot of the very cheap goods from, from their assortment because it wouldn't make sense anymore if you would have to pay import tax on top of that.
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  But they also did is they, they moved into fulfillment from local warehouses to solve that problem.
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  So there's something that's also taking place in Europe now.
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  So, but another thing that they did is they, they realized that there was sort of a ceiling to the strategy that I had been following.
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  As I explained on a previous podcast, they started out with a fully managed model where they basically say to a factory, just put the goods in our warehouse and we'll take care of the logistics and the pricing, etc.
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  Etc.
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  And we'll pay you the wholesale price that we agreed on.
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  But they try to also to improve their own profitability.
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  They, they try to move into a semi managed model where they basically say to the factories or the merchants, you are responsible for the logistics.
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  So we don't do that anymore.
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  You are responsible for the logistics.
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  And they primarily targeted merchants that were already selling, for instance on Amazon because they already had goods in local warehouses abroad.
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  It was even possible for these merchants to sell to ship TEMU orders from a fulfillment by an Amazon warehouse.
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  But they also found that there were not a lot of merchants from the fully managed model that wanted to join that semi managed model because there's a lot of risk involved.
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  You need to ship goods across the sea takes about six, six weeks, six to eight weeks.
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  You need to put them in a foreign warehouse and you don't have real certainty that they will actually sell.
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  So a lot of the smaller merchants in China that weren't doing cross border E commerce already didn't want to join that so Temu started to get into the ceiling of what was possible with these two models.
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  Then they also, of course, started the local to local business where they try to convince local brands to also join their platform.
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  But just as happened with other platforms like AliExpress, not a lot of brands are willing to be among what they would sometimes call Chinese junk.
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  They would find that dangerous for their own perceived quality perception.
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  So all of these models were running into sort of like a ceiling.
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  So what Temu then decided to do is, and I think the first mention of that was in December last year.
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  They said, we're going to create a new Pinduoduo.
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  So Pinduoduo being the mother company behind Temu, so the actual Chinese platform, the Chinese version of Temu, is called Pinduoduo.
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  It was very unclear at the time what they actually meant.
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  Now it has become clear that it doesn't mean that they are creating a third platform.
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  So Pindu Pinduoduo Temu and what they then call new Pinduoduo.
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  But they were going into a new strategy where they were starting to create their own private labels and that should create a new growth path for, for Pinduoduo PDD holdings, where they will create private labels that they will
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  sell both primarily first on Temu, but later also on the Pinduodu domestic platform.
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  So that's basically what, what is the story behind this emergence now?
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  And I mentioned that they called it nu Pinduoduo in the beginning.
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  Now it's called Shin Pinmu, where xin means is Chinese for nu.
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  And then pin is from Pinduoduo and mu is from Temu.
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  So it's like nu pindodo, nu Temu.
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  What a fascinating discussion, isn't it?
• 9:24
  But before we continue, a very quick.
• 9:26
  Break because our Marketplace Universe webinar fall is about to start and we've got four free sessions lined up for you to help you sharpen your marketplace game this autumn.
• 9:35
  So also very, very interesting, starting on September 17th, our deep dive into TikTok Shop for Brands.
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  Max Borianek, head of TikTok Shop Germany, and Florin Bayern, co founder of Bedrop, break down how to tap into a network now reaching 200 million people across Europe every month, and how to get started in time for peak
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• 10:02
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  Germany, Czechia, Slovakia, Poland, Austria, Italy, France, Spain and the Netherlands.
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  And Etienne Sahin of FTT Distribution is also there to show us how that actually looks from a seller perspective across who is active across all of them.
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  Next on October 13th, Marketplace Seller Trends with Channel Engine.
• 10:31
  Valerie and Joris Steins will dig the findings of the Marketplace Shopping behavior report of 2025, where and how you can best reach your Marketplace customers according to great data.
• 10:43
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• 10:49
  That's the continuation of last year's massively successful session.
• 10:53
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• 10:55
  We look at how you can expand successfully into this highly interesting but also highly competitive market.
• 11:02
  So four sessions packed with Marketplace know how and all completely free for you.
• 11:07
  All you have to do is register.
• 11:09
  The links are in the show notes or on marketplace universe.com webinars okay, thanks.
• 11:15
  For listening and back to the episode.
• 11:21
  So I think we need to step back, take a step back here because what you said about TEMU running into sort of a ceiling where they are, where they cannot develop their existing strategy further and further the way
• 11:36
  they want.
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  That is something that is hard to grasp from a European standpoint.
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  When you look at the growth figures of TIMU around here, where they're still like in every country, they are growing by at least 20 to 30% each year.
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  So that does really look like a ceiling here.
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  How do you come to this conclusion that you think that they are reaching the end of their natural strategy at the moment?
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  Yeah.
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  So one thing that we have to keep in mind is that in Europe, they, of course, they started almost a year later than in the United States.
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  So we're a bit behind.
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  And that was mostly Western Europe.
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  So in more recent years, they've also been launching in Eastern Europe and other countries around the world.
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  They're even trying in Southeast Asia, but it's very difficult there because they don't have the same price advantage in Southeast Asia as they have in Western markets.
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  They are still growing, but it's also based on adding new markets.
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  But it, it also is based correctly on having higher penetration and having people buy more.
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  But they also found out that retention is also, for instance, a problem for them.
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  It's quite easy to get people to place their first order, but it's a whole different story to retain these people and have them buy more and more.
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  And especially if people are not very satisfied about the quality, you need to fix that, that bottleneck, basically.
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  Now, on top of that, the, the other thing is that since they cannot really grow the semi managed model as fast as they want to.
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  They are still sort of depending on the fully managed model a lot.
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  Now the fully managed model used to be run by sending packages from China by air freight to Europe.
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  Now because of the cancellation of the tax exemption of €150, that is now becoming a very, very expensive method because consumers now have to pay €3 per product category in the package.
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  So what Temu, just like they did in the United States has been doing is opening up warehouses either run by themselves or run by logistical service providers.
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  So what they do is they ship the goods, especially goods that have already proven to be successful by air freight.
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  They ship those goods to the US and European markets and then fulfill it from these warehouses.
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  But there's of course there's also a limit to the number of warehouses that you can open and continuing to, to be profitable.
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  So it's not like they, they completely stopped growing, but they, they realize that there's a ceiling to that.
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  Now on top of that, what they also are facing in the domestic market at home is that they also are facing a ceiling to people from the first and second tier cities, like the biggest cities in China where
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  you have the most affluent consumers, they have difficulty in growing with the more developed affluent consumers.
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  So they also realize like, we need to have a better quality also to, to hook these consumers to our platform and not just have people from lower tier cities and rural areas that are much more price sensitive buy
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  on our platform.
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  So that's basically the situation that they're in.
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  They see both domestically and internationally that they are sort of reaching a growth ceiling and they need a new growth path.
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  Now that is something that, yeah, you really don't realize if you look at the situation from Europe here, because here we just look at them and their growth numbers and go like, oh, this is uncontrollable, this is growing
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  in any way and we can't find a way to stop it.
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  And what you are telling us now is that there might be a natural ceiling to this, that they are having to find ways around.
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  I find that an interesting perspective.
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  It's just that I wouldn't have thought that the first way around this problem is private label.
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  Basically.
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  How is that going to help?
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  Because I mean, when we think about private label, we think about, I don't know, branded garlic presses produced in China.
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  That's what private label is in our minds.
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  So what is private label in for?
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  For Xinping Mu?
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  Yeah, so what, what Pinduoduo did is they took a look at some, several other Companies in the market, they looked at companies like Costco that have a high level of private label.
• 15:49
  They might have looked at at Aldi that I think has 95% private label in their SKUs in China.
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  Not that they're going to do the same types of product products.
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  For now they at Amazon, also with Amazon Basics as you already mentioned.
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  But they also specifically have been looking at two companies.
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  One is Shein.
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  Now you probably know that Shein has this model where they sort of design something, make a low quantity of that and then test it and then if it's successful, they scale up.
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  They've been looking at that, that model and they sort of want to do a variation on that.
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  Another company that they have been watching is JD.com now something that we don't know here, but what JD is doing in China.
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  JD is very well integrated into supply chain.
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  And JD in China has their own private label as well.
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  Jingzhou, it basically means made by Jingdong.
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  Made by JD So certain product categories like laptops, but also in some clothing categories look quite broad.
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  Jingdong is making their own private label products to give consumers an alternative like it's better than white label.
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  And we need to keep in mind that most of the stuff that Pinduoduo and Temu have been selling are white label products.
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  So the promise is that with these new private labels, they will be better in quality than the white label products, but they will be cheaper than the well known brands.
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  So they want to find sort of a path in the middle which also allows them to have a higher margin but also at the same time have better control over the quality because they will be just like Shein
• 17:22
  does with all of their women's apparel factories, they will have a higher level of control over these companies.
• 17:29
  What they will also do is in a process that's called C2M, consumer to manufacturer, they will use all of the data that they are generating on the Pinduoduo platform in China and the Temu platform worldwide to distill what
• 17:43
  consumers actually want and to see what their preferences are.
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  And they will use that data to basically tell these factories that they will be working in under the Shinpinwu division.
• 17:54
  Guys, this is the product that you need to make, this is the volume.
• 17:57
  And we can give you a certain guarantee of volume, which is a reason that some of these factories will be willing to work with Temu and Pinduoduo on this.
• 18:07
  Just like a lot of factories prefer to work with Shein because they can get maybe not the highest price, but they can get a certain volume during the year.
• 18:18
  So that's basically the reason why they are doing this.
• 18:21
  Having more control, having a better margin and also at the same time giving the people that are already on their platform a better alternative than those white label products, but cheaper than well known brands.
• 18:34
  That's an interesting point of view here because what you're saying is they are going for private label because that ensues more quality than you would have if you just, you know, let merchants from anywhere get on the platform
• 18:47
  and sell the white label stuff.
• 18:48
  There again, something that you would not normally think about because I mean, while Aldi and all the other big companies in Europe that are having their own private label brands, they have okay ish cur quality if you buy.
• 19:03
  I don't know your drill from the Aldi private label.
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  But of course quality is not the main point here.
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  The price is the main point.
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  So I find that interesting.
• 19:14
  Wouldn't it be easier to, I don't know, control the merchants that are selling on Temu and Pindodo just a bit tighter, a bit better and to ensure quality that way?
• 19:25
  Yeah, that's basically what they've been doing for, for years.
• 19:28
  They actually have like a very tight penalty system.
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  So if a consumer receives a product and complains about it, then the merchants need to pay two and a half times the consumer price as a penalty.
• 19:44
  And sometimes what Temu and Pindodo even do is they don't just do that for that specific order, but if there are a couple of complaints, they do that for the whole batch that has been delivered at their warehouse.
• 19:56
  So there's quite a lot of manufacturers that have seen all of their margin evaporate when there's too many complaints.
• 20:03
  So this is a way that they are trying to sort of get control over over the quality of the products being sold.
• 20:10
  But at the same time they also have an auction like system that the manufacturer with the lowest price gets the orders.
• 20:17
  Quite difficult to keep the right balance out of these two.
• 20:20
  Plus the fact that if a consumer complains it's okay that you can fee the manufacturer, but the complaint is already there, so.
• 20:29
  And the consumer is already dissatisfied so you might lose them and you might not win them back.
• 20:36
  It's something that they have, like I said, Since May 2024 been focusing on more, but they still think that they can do better.
• 20:44
  And Sinpin MU division is one of the ways that they are planning to do that.
• 20:48
  Interesting.
• 20:49
  So how fast is moving Sinpinmu though?
• 20:53
  Have you already seen Sinpinmu branded items in Europe as well or is that just, you know, on the move now and just being created?
• 21:03
  Yeah.
• 21:04
  So this, the SIN Pinmu division was announced in March and by that time they were already testing a couple of things.
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  So basically what they do is as Pinduodu and temu they already have like a big pool of manufacturers that they work with.
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  Now they select a certain number of these manufacturers, especially the ones that have already been OEMs original equipment manufacturers.
• 21:29
  So basically factories that have already been producing for well known brands so they have the knowledge to make quality products.
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  Or they might be ODMs original design manufacturers.
• 21:40
  That's basically a factory that also designs their own products but then lets another brand slap their label on it.
• 21:47
  But those that are specifically been selling to the Chinese market and don't have a lot of experience in going abroad.
• 21:54
  But these two types of companies have a better quality profile basically.
• 22:01
  So that's what what they are looking for.
• 22:02
  Now on top of that they also have certain requirements from those companies.
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  They basically tell these companies like you need to be willing to let us determine what the product is going to be.
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  You need to link up with our systems.
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  So we in return will give give you a certain like, like volume throughout the year but you basically will have to follow our leads.
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  So most of the very big manufacturers or brand manufacturers will not want to do that.
• 22:29
  But the small and medium sized ones, they will want to do that because like I said it will give them certain volume.
• 22:35
  So they've been making a selection from these different companies.
• 22:39
  Then what they did is they have started to test some of the products still as a white label product, just putting it among the white label goods that are available on TEMU and see what the response is, see
• 22:51
  if there's any quality complaints.
• 22:53
  So they are basically moving out now from that phase and just this weekend I found out that they've launched their first private label which is called if I'm not mistaken, B Movo.
• 23:04
  B Moovo.
• 23:06
  Like I say always you can leave it up to the Chinese to come up with crazy strange brand names.
• 23:12
  But this is the first one, B Moovo and it's mainly bed linen bad goods but also some, some T shirts with also some IP prints on them like the Powerpuff Girls, Batman.
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  That's the first brand that they have launched.
• 23:28
  They will probably create a couple of different brands under the Shinpinwu label.
• 23:33
  I don't expect them to put Shin Pinwu on the products themselves as a label but they will probably create different brands for different product categories because one Thing that they've said is they will start in apparel and stuff
• 23:46
  like handbags and things like that.
• 23:47
  But they are planning to do this for all of the major product categories.
• 23:52
  So a few weeks before you saw me speak at K5, I was actually speaking at the global DIY conference with all of the audience was filled with people that are making all kinds of power tools and that kind
• 24:06
  of stuff.
• 24:06
  And most of them gets produced in China I guess.
• 24:09
  Gets produced in China.
• 24:10
  And of course they've never been very worried about temu, although they've also been making some of the, or selling some of that stuff.
• 24:17
  But I said well you should expect that within maybe a year TEMU is selling the same products that you are selling for 80% of the quality at 50% of the price.
• 24:29
  Now that's an estimation.
• 24:30
  The same factories and yeah, quite often.
• 24:33
  If they are using, which they often do, if they are using OEMs, original equipment manufacturers, then the same factory might be making these TEMU Simpimu products maybe at not exactly the same quality level.
• 24:46
  Maybe a part that is normally in a metal casing is now in a plastic casing or whatever.
• 24:52
  So, but, but still at a price point where that 20% extra quality doesn't matter that much anymore for the consumer.
• 25:00
  And I said to the, to the, the audience and then you, you're going to have a real problem.
• 25:04
  So that was because they, they, they had never looked at TEMU as a big threat but, but they were completely shocked and seemingly.
• 25:13
  Yeah, how was the reaction?
• 25:15
  I mean because that is really one of the industries that should be most worried about this.
• 25:20
  Yeah, correct.
• 25:21
  Because it's going to be high value products as well and there's going to be a big price difference.
• 25:28
  So I've heard later from some people that I know that were in the audience that this was the talk of the day and people were completely shocked by this because like I said the, the perception of TEMU is
• 25:41
  like this platform for cheap Chinese junk.
• 25:44
  Well that, that's phase one.
• 25:46
  That is how they got a foot between the door and got people to buy.
• 25:50
  But now they're going into another phase where it's much more about becoming an all round one stop shop for higher quality than they've been selling to people.
• 25:59
  Still they will have to communicate this shift to the consumer as well.
• 26:05
  And I think that might be more difficult than they think because they are now strictly in the heads of consumers at least in Europe and I guess in US it's the same.
• 26:14
  They are strictly in the, in the bucket for you know, cheap and maybe junk, not that some, not something that you would go for if you look for high quality, but you know, steep and just cheap and sort
• 26:27
  of okayish.
• 26:28
  And are they, how are they moving to get out of that bucket?
• 26:33
  It's a very good question.
• 26:34
  So as far as the plans for communication are concerned, I haven't seen anything mentioned.
• 26:40
  Now in May I publish the first report on Xin pinmu.
• 26:43
  In two weeks I will publish the next report which will go much deeper in how they are setting up the supply chain.
• 26:50
  I haven't seen much information about how they are going to plan to communicate this and so far they keep it very like under the radar.
• 26:57
  They're still really in a testing phase.
• 26:59
  One thing that they can do and one thing that has also been described as a possible risk when they start Shinpin Mu is that they will be diverting traffic to these brands and to these.
• 27:12
  So just like people would buy search engine advertising, TEMU will now primarily then start promoting their own private labels.
• 27:21
  Now the potential problem is that those merchants that are not making Shin Pinwu products but are still selling on the fully managed model might see the traffic to their products disappear.
• 27:32
  And the merchants that are selling in the semi managed model that need to put these goods in foreign warehouses and quite often nowadays also need to pay for advertising on temu.
• 27:42
  So there is already search engineering advertising for, for the semi managed model.
• 27:46
  They might need to even pay more advertising money to remain visible.
• 27:52
  So, so that's the main thing that I've seen so far that it's.
• 27:55
  It's mostly going to be about making their own private label products just more visible than the white label alternatives.
• 28:03
  Interesting.
• 28:03
  But I coming back to what first came into my mind when I heard your talk like that's a Chinese Amazon Basics.
• 28:10
  What I find interesting is I've been following Amazon's move into private label and also move out of that strategy.
• 28:18
  Over the last years.
• 28:19
  There was a big push for Amazon Basics I think.
• 28:23
  What was that?
• 28:24
  20, 18, 19, something around that where it seemed like Amazon would be taking over nearly every category with their basic products.
• 28:34
  Starting out with batteries of course, which are still one of the main sellers, but slowly taking over other areas as well.
• 28:40
  And I remember lots of European brands were being really concerned about that.
• 28:46
  And after a few years Amazon sort of trickled out of this strategy.
• 28:52
  It was never really clear why they removed that, but they stopped pushing so much into this private labor campaign and just focusing on the products that were working really well, like the batteries and going completely off from other
• 29:06
  categories.
• 29:07
  For example, if I remember correctly, that was then they had a push for yeah, home and living products and they moved out of those as well.
• 29:14
  So I'm just wondering is this, is Pinduoduo taking this route into private label as a, I don't know, last resort?
• 29:26
  Because their main strategy of pushing TEMU is not working the way they want it to, are they?
• 29:32
  I don't know, is that something like the holy grail to them that they're really going for now, this private label, is that just something they're trying out and might ditch just as fast as Amazon did?
• 29:43
  At least in the categories that are not working out.
• 29:45
  Yep.
• 29:45
  So.
• 29:46
  So in the first report that I did on Shinpinwu in May, there's actually a section where it evaluates where Temu evaluated what Amazon has done.
• 29:55
  And one of the things that came out of that was also that risk that if they put too much traffic on their own products that they might lose the merchants automatic and if they lose other merchants then they
• 30:08
  don't have.
• 30:09
  They cannot catch up as quickly with shinpinmu.
• 30:13
  So it's not that Shinpinwu is completely going to replace it.
• 30:16
  I think the estimations that I've seen is that they aim in the short term for it to become 10% of their GMV.
• 30:23
  So 90% will still be from the other models that they are already operating.
• 30:29
  So they also won't divert all of the traffic to the their own products, but they will probably have a priority in traffic distribution.
• 30:39
  So I think that also what is a big difference is that of course Amazon mostly operates as a marketplace.
• 30:46
  So there all of the merchants will have to pay for fulfillment by Amazon, will have to pay for advertising, will have to pay commission, etc, etc.
• 30:53
  Whereas with Temu, of course with the fully managed and semi managed model, it's more like a consignment.
• 30:59
  It's not Besides those merchants that are in the semi managed model paying for search engine advertising for all of the other merchants, TEMU is basically doing all the work for them.
• 31:11
  So they don't need any of the knowledge for cross border commerce.
• 31:15
  They only have to ship it either to a foreign warehouse or to the Temu warehouse in China.
• 31:21
  So it's a slightly different situation that has maybe a different type of lock in.
• 31:27
  And then remember that when Amazon was doing Amazon Basics there was a lot of comments from other brands saying okay, you have all of the data on my sales and you're now figuring out how to copy, how to
• 31:41
  make copies of my products and then selling those Instead, So.
• 31:44
  Well, while there is the same risk also with Shinpinwu, I think it might be on a different level than.
• 31:50
  As far as I know, that was one of the major reasons why Amazon Basics was never really rolled out the way they might be.
• 31:57
  Yeah.
• 31:57
  Because of the pushback.
• 31:58
  That's really interesting because.
• 31:59
  Yeah, the models are different here because for Amazon a merchant is much more profitable than for temu.
• 32:06
  Is it because they are taking money from them at every point of their.
• 32:11
  Yeah.
• 32:12
  Their journey on the platform.
• 32:13
  While when a merchant is on temu, he's mostly producing costs for temu.
• 32:18
  Yeah, well, I mean, interesting.
• 32:21
  The common estimation is that about about 50 to 55% if you are selling on Amazon prime, your product needs to be in a fulfillment by Amazon warehouse and then about 50, 55% of the sales price actually ends up
• 32:35
  in the pockets of Amazon.
• 32:36
  Yeah.
• 32:37
  So.
• 32:37
  And the rest is then the gross margin for the merchants.
• 32:39
  So that's, that's also why you quite often see that merchants on Amazon are offloading surplus stock on Temu because.
• 32:47
  Yeah, it's.
• 32:48
  They might get even less on Tibo as a gross margin but.
• 32:51
  But they don't have to pay for all of those different.
• 32:54
  The costs.
• 32:55
  Yeah, that's.
• 32:56
  That's interesting.
• 32:58
  Yeah.
• 32:58
  Okay.
• 32:59
  I mean that also already brings us to the end of the first half hour, but I think that was a really interesting look on what is happening here, especially if we consider what that means for.
• 33:11
  Yeah.
• 33:11
  European brands that are producing in OEM factories because I mean they're already not having a lot of fun with temu.
• 33:17
  But that might be even worse as soon as that takes off, if they get the communication side.
• 33:23
  Right.
• 33:23
  I still think that is something that.
• 33:25
  That Chinese companies might be underestimating that you still have to get the consumer to.
• 33:31
  Yeah.
• 33:31
  To.
• 33:31
  To go the shift with you.
• 33:33
  Yeah.
• 33:34
  And.
• 33:34
  And if I might add a couple of things, I mean most of us here in Europe, we are looking at TEMU as temu.
• 33:41
  We a lot of people are lacking knowledge about the company behind it, Pinduoduo.
• 33:46
  Now Pinduoduo is the second biggest E commerce company in, in China and they've taken all of that market share from Alibaba in just maybe like six years time.
• 33:56
  Six, eight years time.
• 33:58
  Also Pinduoduo is actually the.
• 34:01
  They have a brand called Dudo Mai Tsai where they deliver groceries and FMCG to people at pickup points.
• 34:10
  You order it today, it gets delivered tomorrow.
• 34:12
  It's called community group buying.
• 34:14
  By doing that, they are the biggest grocery seller in China.
• 34:18
  They have more than 300 billion renminbi in GMV every year.
• 34:24
  So they are bigger than the biggest supermarket chain in China.
• 34:27
  So and then you have Temu, which is probably heading quite fast to, to become number two in, in the world.
• 34:33
  So and then they have several other initiatives as well.
• 34:36
  But there is an enormous company behind this.
• 34:39
  So you, you, have you ever been to Shanghai?
• 34:43
  No, not yet.
• 34:43
  No.
• 34:44
  You need to come the next time.
• 34:45
  But if you are in Shanghai, you stand, you stand on the Bund where you have all of the colonial buildings from the, the English Concession time.
• 34:53
  And you look across the river and you look at Pudong, the famous Pudong skyline.
• 34:58
  And one of the buildings that you see on the left is the DSB bank, used to be the DSB Tower.
• 35:04
  Pinduodu has bought that whole 19 floor tower to house their Sinpinmu division.
• 35:11
  So it shows you how enormously serious they are about these things.
• 35:15
  And I always say that they are, are so agile and they are so aggressive that when they set their mind to do something they normally succeed.
• 35:26
  So.
• 35:26
  And that's something that we always should keep in mind when we look behind Temu to the company that actually behind it.
• 35:33
  Yeah, absolutely.
• 35:34
  Now that was leading us nicely into the second part of our episode that we wanted to.
• 35:39
  Because in that case we want to talk about more about the things that are happening in China especially in the area of quick commerce and, and supermarket delivery.
• 35:47
  Commerce that is being huge and blowing up and yeah, Ed loves to talk about it and I think too many people too, too little people in Europe just listen to it because that is so out of our experience
• 36:00
  that yeah, we might be underestimating something there.
• 36:04
  So that is something that I would like to take.
• 36:06
  Yeah.
• 36:07
  Some more interest in in the next part.
• 36:09
  So if you have been listening to this one, this part, please make sure to tune in again next week.
• 36:14
  Week and we'll see you there.
• 36:20
  You listen to let's Talk Marketplace, the Marketplace podcast with Ingrid Lommer and Valerie Dichtel.