Marketplace Briefing: Temu jumps in App Store rankings as U.S. ad spend rebounds after tariff-driven pause
This is the latest installment of the Marketplace Briefing, a weekly Modern Retail+ column about the ever-changing e-commerce marketplace landscape. More from the series →
Temu, the bargain-driven e-commerce site, has once again surged to the top of Apple’s App Store rankings in the U.S., weeks after it resumed digital ad spending following a months-long pause triggered by sky-high tariffs on Chinese goods.
In April, Temu cut nearly all of its ad spend in the U.S. after the de minimis exemption, which previously allowed many low-value Chinese imports to enter the country duty-free, was eliminated, and tariffs spiked to as high as 145% on some categories. According to data that marketing performance agency Tinuiti shared with Modern Retail at the time, Temu historically accounted for around 19% of Google Shopping ad impressions, but that figure fell to zero on April 12. That number remained at or below 10% in the following days. Shein, the Chinese fast-fashion company, also slashed its ad spend in the U.S. around the same time.
“There was no point in acquiring customers when you had lost your value proposition,” according to independent analyst Joe Kaziukėnas.
But tariffs have eased since then. Temu and Shein have both ramped up diversification efforts, including growing their sales in Europe, where trade rules are currently less stringent. In the U.S., Temu has quietly resumed advertising on major platforms like Meta and Google. As of Wednesday, Meta’s ad library tool shows Temu running 1,100 active Meta ads — The Information previously reported that the number dropped to as low as four ads on the service in mid-April. Currently, Temu’s parent WhaleCo Inc., a subsidiary of PDD Holdings, has 700 active Google ads in the U.S., up from six in mid-April, according to the search giant’s ad transparency tool.
As a result, Temu has returned to the top of the App Store charts. As of Wednesday, Temu ranks third in the most-downloaded shopping apps chat. On Monday, it held the second-highest spot. Currently, Shein holds the second-highest rank.
That momentum is reflected in website and app usage as well. Daily visits to Temu.com are up 97.3% so far in July compared to June — though still down 56.5% from their March peak, according to data from consumer research firm Similarweb. Daily active users on the app also rose 17.2% month over month in July, but remain 49.5% below March levels. Combined app downloads for iOS and Android are up 75% in July from the previous month, suggesting that recent web traffic — likely fueled by Temu’s ad push during Amazon’s Prime Day event — successfully converted new users into app installs, a Similarweb company spokesperson told Modern Retail in an email.
As Kaziukėnas put it, “De minimis is dead, but Temu and Shein aren’t. They are back weaker, but still back.”
Tariffs take a toll
Temu has built its U.S. business on ultra-cheap goods shipped directly from China, drawing in American shoppers with ultra-low prices, like $2 gadgets and $5 dresses. The Chinese online retailer has been on a marketing blitz ever since it debuted its “Shop like a billionaire” marketing campaign at last year’s Super Bowl. That strategy helped push Temu to the top of Apple’s list of most-downloaded free apps in the U.S.
But the company hit a rough patch in April after President Donald Trump enacted sweeping tariffs on Chinese imports, causing duties to spike as high as 145% on some products. In response, Temu shifted its advertising focus to overseas markets like Europe, where trade restrictions are more lenient. As a result, its ranking in Apple’s App Store fell from the top 10 to No. 69, according to Sensor Tower, CNBC reported at the time.
As the trade war escalated, Temu publicly announced plans to raise prices. “Due to recent changes in global trade rules and tariffs, our operating expenses have gone up,” the company wrote on its site. “To keep offering the products you love without compromising on quality, we will be making price adjustments starting April 25, 2025.”
CNBC later reported that customer demand for Temu, as well as Shein, slowed considerably in the U.S. amid Trump’s trade war.
Some sellers still see growth
Despite the turbulence, some U.S. sellers remain bullish on Temu’s long-term potential.
Tim Hinsley, svp of retail sales at Alliance Entertainment, said the company’s toy and collectibles distributor, Popmarket — which sells DVDs, CDs and collectibles like Funko Pop figurines across marketplaces like Amazon and Walmart — continued to gain traction on Temu even during the ad pullback. It’s now the company’s fastest-growing marketplace.
“Temu is in our top five now for our third-party marketplaces,” Hinsley said in an interview. “That kind of growth in one year is quite extraordinary. We haven’t really seen another marketplace grow like that in more than a decade.”
Popmarket has sold over 150,000 items on Temu in just a few months since joining the platform at the end of last year. Currently, about 20% of its 300,000-item catalog is listed on Temu, with plans to ramp up in time for the holidays. “The sooner the better,” Hinsley said.
Despite Temu’s brief U.S. slowdown, Popmarket didn’t see much impact on its sales. That’s partly because the company qualifies as a “local” seller — shipping from the U.S. rather than China — and because much of its inventory is exempt from tariffs. Temu began highlighting local sellers over China-based listings in February, as Modern Retail first reported.
“Most CDs and DVDs are made in the U.S. or Mexico,” Hinsley said. “The tariffs didn’t really spike for us. And a lot of the collectibles we’ve been selling, we already had in stock.”
Temu shoppers generally tend to purchase the lower-priced Popmarket products compared with shoppers on Amazon, Walmart and other online marketplaces, Hinsley said.
Looking ahead, Popmarket is betting big on Temu this holiday season. Hinsley said the company aims to list “as much of [its catalog] as possible” on Temu before the end of the year.
“This is essentially our first holiday with Temu,” he said. “We’re excited because we don’t really know what’s going to happen. We’ll see if the Temu shopper is a holiday shopper.”
What I’m reading
- President Donald Trump met with Jeff Bezos at the White House last week, per CNBC, citing people familiar with the matter.
- The Verge reported that Amazon is acquiring Bee, an AI wearables startup. The deal, for an undisclosed amount, has yet to close, according to Amazon.
- An analysis by The Wall Street Journal discovered price hikes on 1,200 low-cost goods, while rivals such as Walmart lowered prices.