Temu is trying to court more premium brands to its marketplace
Temu is positioning itself as a marketplace for more than just $2.25 sandals and $11.97 cameras as it looks to challenge Amazon as the next everything store.
Last week, more than 70 footwear brands from around the world gathered at the Park Lane Hotel in Manhattan — just steps away from The Plaza and directly across the street from Central Park. Shoe brands, which included the likes of Minnetonka, Katy Perry Collection and NeroGiardini, set up showrooms in hotel rooms spread across five floors, displaying samples of their wares for buyers to come and peruse at a bi-annual event known as the Footwear Show New York Expo.
Representatives from one surprising company made the rounds from hotel room to hotel room: Chinese e-commerce upstart Temu.
Temu, which China-founded PDD Holdings owns, sponsored the three-day expo’s daily morning coffee and tea breakfast, according to Phyllis Rein, president of Footwear Show New York Expo. In exchange for providing the event’s refreshments, Temu got to use the venue as an opportunity to network with established and emerging brands as the fast-growing e-commerce company looks to sign up more merchants to its platform.
Temu set up coffee and tea on a fold-out table on each floor that included brochures about Temu’s marketplace. The brochures encouraged brands to “start selling on Temu” and featured QR codes that, when scanned, redirected to Temu’s online store registration application page. For about the past six months, Temu has been recruiting U.S. sellers to join its fast-growing discount site, and last month, the marketplace opened up so any American brand or individual seller can register to sell on Temu, Modern Retail previously reported.
But Temu isn’t just trying to add new sellers. Although the company is best known as a place to buy ultra-cheap knock-offs, two brands that separately spoke to Temu representatives during the expo were told that Temu is trying to broaden its appeal and grow beyond low-cost goods by adding more higher-priced items to its product assortment.
“They mentioned that one of the things Temu is trying to do is expand into upper tiers a little bit more,” said one brand employee, who requested anonymity discussing private matters. “Everybody’s thing now is to grow, so if they already have the entry-level stuff on lock, the only way to expand is to go up.”
An employee for another brand who spoke to Modern Retail anonymously was also told that Temu is trying to branch out beyond low-cost goods. “They want to sell everything,” the person said. “Once you can do that, it changes your customers’ image of the Temu brand.”
When reached for comment, Temu did not directly confirm or comment on the extent to which this is a focus of its overall growth strategy, but a company spokesperson said in an emailed statement that Temu “strive[s] to meet diverse consumer needs by offering a wide range of products that balance quality and affordability.”
To illustrate, the spokesperson’s statement included a link to a $300 espresso machine, apparently a relative newcomer to Temu’s marketplace, as it earned its first review in May of this year. The spokesperson also linked to a $2,200 massage chair, which appears to be even newer, as its earliest review is dated from September 2024. Both ship from local warehouses, a strategy that has become a core focus of Temu’s as it looks to compete with Amazon, which dominates 40% of e-commerce sales in the U.S.
Shipping merchandise directly from local U.S. warehouses “allows us to diversify our offerings further, catering to various budgets and preferences while maintaining our focus on providing value,” the spokesperson concluded.
Temu’s desire to broaden its appeal is a strategy other Chinese-backed marketplaces, including Shein and TikTok Shop, have explored, as well. Last year, The Wall Street Journal reported that fast-fashion retailer Shein was luring luxury brands like Stuart Weitzman and Paul Smith to sell products on its marketplace. Earlier this year, TikTok Shop launched a luxury resale category. Even the so-called “Everything Store” known as Amazon, which once struggled to recruit high-end brands to its marketplace, now sells prestige labels, including Estée Lauder and Oscar de la Renta.
The strategy also mirrors that of Temu’s overseas counterpart, Pinduoduo, which, in 2019, looked to grow beyond cheap goods by subsidizing discounts for high-end products such as the iPhone.
One of the brand reps who spoke to Temu said the e-commerce platform, which is known for its addictive gamification and discovery elements, is leaning on its growing popularity with U.S. consumers to get shoppers to spend more. “Temu customers tend to spend over 20 minutes on their site, whereas Amazon customers are more like 10 to 12 minutes,” the person said, citing data the Temu representative shared with them.
The fact that Temu sponsored the expo is, in and of itself, a signal that the company wants to raise its price points, according to FSNYE’s Rein. “There aren’t any low-end products here,” she said, referring to the brands that participated in the footwear expo. “Everything is moderately priced to luxury.”
A search for “shoes” on Temu’s website shows that the most expensive pair costs $186. Only ten pairs are priced above $100. The cheapest pair, excluding slippers and sandals, appear to be sneakers for $7.49.
Temu has started to become a familiar face at conferences, particularly ones geared toward Amazon merchants, who generate $140 billion in sales a year for the e-commerce giant. In October, Temu was a sponsor at Innovate, a conference for Amazon sellers in New York City. In September, Temu employees hosted a happy hour aimed at merchants attending Amazon’s annual seller conference in Seattle.
As far as Amazon merchants are concerned, Temu’s aggressive recruitment campaign has started to pay off. Five of the top 25 biggest Amazon sellers, according to Marketplace Pulse, now sell on Temu. Still, U.S. merchants represent less than 1% of Temu’s estimated 300,000 total sellers.
Temu needs to diversify if it wants to reach more shoppers in the U.S., according to Sky Canaves, a retail analyst at eMarketer. “Temu wants to be more sticky and meet more of its consumers’ needs by offering a wider array of products with faster delivery, and it can only do this by recruiting more sellers that have inventory in the U.S.,” she said.
This mission is all the more crucial given that the de minimis exception, a trade rule that helps retailers like Temu bypass import duties and taxes, is on the verge of being overhauled.
“This would help offset the risk of the de minimis import duty loophole being closed,” Canaves said.
But it remains to be seen whether Temu will be able to fully shed its flea market reputation. Brands’ reception to Temu’s presence at the expo was mixed.
One emerging shoe brand that spoke to Temu said it plans to list its shoe products, which are priced around $60 per pair, on Temu sometime next year. Temu’s high growth and low fees are too compelling to ignore, a brand representative said. In contrast, Amazon’s fees are too high, especially for new sellers, the person added.
A representative of a premium Italian leather shoe brand, however, was less enthusiastic about Temu’s value proposition. “We don’t work in the fast-fashion space,” they said.