Consumption nation: Here’s what American retailers can learn from booming Chinese shopping app Temu
US retailers beware. Riding high with Temu, the Chinese are coming and they’re coming to win.
That’s the view of Brittain Ladd, a supply chain consultant and former Amazon executive.
In a LinkedIn post, he said: “The Holy Grail of retail is social commerce. What Temu refers to as “Team up, price down.” Put simply, it’s the process of friends and family teaming up to purchase the same products (buying in bulk) to receive a discount from the manufacturer.”
He added: “I’ve researched the concept of social commerce since 2004 when Facebook was launched.”
“Had Facebook offered their users the ability to shop online, buy in bulk, use auctions to bid on pricing, and use its social media to post about their retail activity, Facebook could have become Amazon’s biggest threat.”
Team buying is hugely popular in China and Pinduoduo, who owns Temu, has excelled in this area.
“The goal of Temu is to convert US shoppers to use team buying. Unlike China, I think Temu will struggle to achieve their goal,” Ladd commented.
“US retailers can succeed at team buying, they only need to use the following model. For example, Amazon can design and launch company-specific team buying, not consumer team buying.”
“It can create a programme whereby every Tesla employee who makes a purchase on Amazon receives an additional discount. If Tesla employees “team up” to make a purchase on Amazon, the savings are increased. How many Tesla employees are also Prime members?”
Ladd also believes that Kroger can design and launch company specific team buying programmes for groceries that can easily be expanded to entice consumers to team up. Amazon, Walmart and other grocery retailers can offer similar programmes.”
“These retailers can leverage team buying and online auctions to disrupt themselves to grow market share and increase revenue and profits.
US retailers, and large conglomerates in India like Reliance Industries, should assess Pinduoduo, Temu, SHEIN, and TikTok to identify how these companies are able to design, manufacture and launch apparel so quickly, and also fulfil online orders so quickly.
Ladd concluded: “I strongly advise not ignoring Temu and other Chinese retailers that have targeted the USA. Instead, retailers should learn the Chinese model and use it their advantage by making the model better. It’s not easy to do this but it must be done.”
“The Chinese have a saying - “Strangle countries with their own system.” The US is a consumption nation and there are lots of throats to choke in retail. The Chinese are coming and they’re coming to win.”
“One final comment - US retailers should contract the services of firms that are experts in China and India, as both companies will severely impact retail and global supply webs. The ripple effect will be severe in the USA.”
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