The Chinese e-commerce giant Pinduoduo’s shopping app Temu has been dominating the U.S. app stores recently. The mobile shopping app dominated the U.S. App Store in September and has maintained its dominance in subsequent months, most notably as the top free app on Google Play since December 29, 2022. Moreover, on January 3, Temu again took the top spot in the iOS App Store, and it hasn’t relinquished that position since.
Temu’s rapid expansion can be attributed, at least in part, to its incentive structure, which incentivizes users to spread the app to their social networks in exchange for free merchandise. Temu appears to be responsible for a sizable portion of the company’s new installations.
According to data from app intelligence firm Sensor Tower, the United States was already Temu’s largest market when TechCrunch covered its meteoric rise in November, with a little more than 5 million instals. Currently, the company claims that there were 5 million U.S. downloads of the app in the month of January alone, up 19% from the 4.2 million downloads recorded during the 22 days between December 10 and December 31. Sensor Tower claims that there have been 19 million total instals of Temu across the App Store and Google Play, with over 18 million of those instals occurring in the United States alone.
As a result of this development, Temu is now generating more daily instals than its competitor Shein. The company reported that in October, Temu saw an average of 43,000 daily instals in the United States, while Shein saw an average of about 62,000. Temu saw an increase to 185,000 daily instals in November, while Shein saw an increase to 70,000 instals, and last month, Temu saw an increase to 187,000 daily instals, while Shein saw an increase to approximately 62,000.
The meteoric rise of the shopping app is reminiscent of the meteoric rise of the video entertainment platform TikTok, which, after years of outsized growth, became the most downloaded app in the world in 2021. As of the year 2020, Sensor Tower estimated that the video app, along with its Chinese counterpart Douyin, had surpassed 2 billion cumulative downloads. A total of 4.1 billion downloads have been made of the various TikTok apps.
Similar to Temu, TikTok’s early expansion was fuelled by advertising. Using Facebook, Instagram, and Snapchat’s native advertising platforms, the video app rapidly expanded its user base in the United States and around the world. For instance, TikTok is rumoured to have spent $1 billion on advertising in 2018, making it Snap’s largest advertiser in that time period.
TikTok’s ability to tailor recommendations in its For You feed is a direct result of the company’s early investment in user acquisition. TikTok quickly became one of the most time-consuming apps due to the investment made in an algorithm that learned to predict what kinds of videos would be most popular. Young people started watching TikTok at a higher rate than YouTube starting in the year 2020. And earlier this month, data from Insider Intelligence showed that total TikTok users in the U.S. were spending an average of 55.8 minutes per day on the app, compared to only 47.5 minutes on YouTube (including YouTube TV).
Temu’s numbers pale in comparison to TikTok’s, but the two apps seem to be employing parallel strategies for expansion. The business spends extensively on marketing in order to attract customers, and then uses those customers’ information to tailor their future purchases to their individual preferences. To encourage users to explore what’s popular, Temu includes a feature similar to Facebook’s For You page. Under the heading “Selected for You,” you’ll find the content featured on this page. Temu’s homepage features shop and product recommendations informed by user data and usage in addition to gamification elements.
However, it does not appear that social media is the primary driver of the app’s expansion. Despite having close to 250 million views, the Temu hashtag (#temu) on TikTok pales in comparison to the 120.5 billion views that the hashtag “dogs” has received. (Or, to put that another way, #shein has 48.3 billion views.) That points to traditional digital advertising as the driving force behind Temu’s success, rather than Gen Z-centric viral videos or influencer marketing.
For example, this month alone, Temu has reportedly placed 8,900 ads across all of Meta’s channels, as compiled by Meta’s ad archive. Advertisements tout the sales and deep discounts available at Temu, including necklaces for $5, shirts for $4, and shoes for $13. Temu’s “Top Free” ranking on the App Store, which is driven in large part by the number of downloads and download velocity, appears to have been sustained in part by these advertisements.
However, just because Temu’s app has a lot of downloads doesn’t mean it will have a lot of regular users. Furthermore, this does not guarantee that these users will remain engaged with the app beyond their initial period of exploration. Even so, data.ai’s year-end “State of Mobile” report ranked Temu as the top “Breakout” shopping app in the U.S. by downloads in 2022. “Breakout” apps are those that have experienced significant growth from the previous year on both iOS and Google Play, as determined by Data.ai.
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Temu’s growth has been so rapid that it prevented it from cracking the Top 10 apps in 2022 list for either the United States or the rest of the world. This is true whether you look at downloads, consumer spending, or monthly active users. Instead, social media and streaming apps, as well as dating apps like Bumble and Tinder, dominated those spots. Only one retail app made it onto these lists: Amazon, which was the seventh most used app in the world and the eighth most downloaded app in the United States.
But other discount shopping apps saw similar growth before failing as consumers realised that, in fact, $2 shirts and jeans were deals that were too good to be true, suggesting that Temu’s marketing investment may not pay off as well as TikTok’s did. During the rise of Amazon and the rise of the modern e-shopper, Wish infamously stumbled as customers became dissatisfied with long delivery times, fake listings, missing orders, and poor customer service.
Temu currently has a 4.7-star rating in the U.S. App Store; however, since businesses can get away with more and more fake reviews, these ratings have less value. If you read the reviews carefully, you will see that they are very similar to the complaints about Wish that you have read before. Temu appears more likely to follow Wish than TikTok, no matter how much money it spends, unless these problems are resolved.