Temu in Vietnam: E-Commerce Challenges and Opportunities

Temu is a fast-growing name in the e-commerce world. Known for its competitive pricing and attractive offers, it has quickly gained popularity worldwide.

Now, as Temu sets its sights on Vietnam as a strategic market, a key question arises: How can small and medium-sized businesses (SMEs) compete in this new landscape? In this article, we’ll explore Temu’s opportunities, challenges, and strategies for SMEs to grow and succeed.

What is Temu?

Temu is a young but promising e-commerce platform owned by PDD Holdings, the company behind Pinduoduo—one of China’s largest e-commerce sites.

Since its launch in 2022, Temu has rapidly expanded into global markets. In the United States, it competes directly with major players like Amazon and eBay.

With a competitive pricing strategy and a strong logistics network, Temu has made a global impact in a short time.

Today, Temu operates in 79 countries and officially entered the Vietnamese market in October 2024, promising big changes for Vietnam’s e-commerce sector.

The history and growth of Temu

• September 2022: Temu, a rising e-commerce platform, officially launched in the United States with strong backing from Pinduoduo.
• March 2023: Expanded to Australia and New Zealand.
• 2023: Entered several European countries, including France, Germany, Italy, the Netherlands, Spain, and the United Kingdom, with a goal to dominate the Central European market.
• August 2023: Entered the Philippine market, marking the start of its journey in Southeast Asia.
• September 2023: Expanded into Malaysia.
• July 2024: Launched in Thailand.
• October 2024: Officially launched in Brunei and Vietnam.

In less than a year since its debut, Temu reached 100 million active users in the U.S., far surpassing Shein’s 13.7 million and approaching Amazon Prime’s 112 million users.

Temu now operates in 79 countries and aims to reach $60 billion in revenue by 2024. The company’s goal is to become the second-largest e-commerce platform in the U.S., just behind Amazon, and to lead the market in Europe.

Opportunities and challenges for Temu

Opportunities to enter a competitive market

Support from Pinduoduo

Temu benefits from the resources and expertise of Pinduoduo—one of China’s largest e-commerce platforms.

With access to its parent company’s network, infrastructure, and knowledge, Temu is well-positioned to implement a strong development strategy in Vietnam.

Competitive pricing strategy

By offering products at lower prices, Temu can attract a significant segment of price-sensitive consumers, creating a competitive edge over other platforms in Vietnam.

Enhanced brand recognition

Temu’s rapid international expansion, including its entry into the Vietnamese market, helps boost brand recognition and fosters customer loyalty.

Product diversity

Temu offers a wide range of products, from electronics to household items, catering to the varied needs of Vietnamese consumers and attracting a broader customer base.

Group-buying model

The concept of group buying has existed for a long time globally, but few companies have successfully implemented it.

Among them is Pinduoduo, which has solved what giants like Alibaba, JD, and Amazon could not, focusing on optimizing efficiency and quality through purchase rates.

Attractive discounts for sellers

Temu offers competitive discounts and incentives to suppliers, allowing them to reach consumers more easily and increase their market competitiveness.

Temu’s affiliate marketing program also stands out as a key feature.

Challenges in the Vietnamese Market

Lack of operational transparency

Limited transparency can decrease trust among customers and partners, impacting Temu’s reputation.

As of October 2024, Temu had not yet officially registered to operate in Vietnam, leading to concerns among local consumers.

Intensifying competition

Temu faces strong competition from established players like Shopee, Lazada, and TikTok Shop, which already enjoy significant market share and consumer trust in Vietnam.

Regulatory challenges

Vietnamese regulations could complicate Temu’s expansion efforts. For instance, Indonesia recently banned Temu to protect local businesses.

In Vietnam, Article 6 of Decree 81/2018/ND-CP limits the total value of promotional goods and services to 50% of their market value—potentially challenging Temu’s discount-driven strategy.

Concerns about product quality

Since Temu offers products directly from factories to consumers at lower prices, there may be concerns about product quality. These issues can reduce consumer trust and negatively impact Temu’s reputation.

Temu’s Unique Affiliate Discount Policy in Vietnam

Affiliate marketing is a strategy where Temu partners with bloggers, YouTubers, and influencers to promote its products.

Temu’s affiliate discount policy is especially attractive, offering up to 30% in commissions through a “3-in-1, two-tier” incentive program. This policy has sparked intense debate among top e-commerce players in Vietnam.

Đỗ Hữu Hưng, CEO of Accesstrade Vietnam—a leading affiliate marketing company—calls it “unprecedented and highly competitive.”

Compared to similar programs from Shopee, Lazada, and TikTok Shop, Temu’s commission rate for new customers is much higher. As a result, Temu has gained major traction on social media, with over 10,000 new affiliate accounts registered within 24 hours, according to Accesstrade’s CEO.

Strategies for SMEs in Vietnam to Compete with Temu

Enhance customer experience

Effective communication is key to improving customer experience, particularly in retail. Integrating channels such as Facebook Messenger, WhatsApp, Instagram, and Zalo enables businesses to manage and interact with customers seamlessly, fostering engagement and boosting customer satisfaction.

Automation to optimize costs

With the rise of AI and automation tools, businesses can enhance customer engagement efficiently. Automation tools not only update and remind customers promptly but also strengthen brand-consumer connections.

Operating 24/7, these tools allow customers to feel valued and supported while reducing the workload for staff and improving the overall user experience.

Customer data analysis

Utilize detailed reports and data analysis tools to gain deeper insights into customer behavior, enabling timely and precise strategic decisions.

Upgrade online sales channels

Online sales channels, such as social media, websites, and landing pages, play a vital role in reaching target customers.

A blend of flexibility and creativity will enable small and medium-sized businesses not only to survive but also to thrive in Vietnam’s increasingly competitive e-commerce market.

Conclusion

In the fierce competition among e-commerce platforms, Temu has built a strong position with its competitive pricing and advanced technology.

Although challenges remain, Temu is emerging as a formidable competitor to major players like Shopee, Lazada, and TikTok Shop.

Temu’s rapid growth not only meets but exceeds consumer expectations, contributing to the sustainable development of Vietnam’s e-commerce market.