2024 Global Digital Shopping index

Temu Ad Spend Places It Among Largest Online Advertisers in US

Temu, eCommerce, retail

Temu reportedly spent $3 billion in 2023 on online advertising in the United States for its eCommerce marketplace.

This move by Temu, which was introduced to the U.S. by Shanghai-based eCommerce giant PDD Holdings in September 2022, positions it as one of the largest online advertisers in the country, the Financial Times (FT) reported Tuesday (Jan. 30).

Despite its high-spending strategy, concerns have been raised by analysts regarding the sustainability of Temu’s approach, according to the report. Although Temu offers affordable goods shipped from China and has gained popularity, it captured only 1% of the U.S. eCommerce market in 2023.

Analysts have also questioned Temu’s ability to convert site visits into sales, with a noticeable decline in the proportion of site visits resulting in purchases towards the end of 2023, the report said.

Reuters reported in November that Temu saw 4.5% of monthly visits result in sales, while rival Amazon sees 56% of monthly visits lead to purchases. 

Nevertheless, Temu has built up a user base of 70 million monthly active users in the U.S., per the report, which cited data from a company presentation on Tuesday. 

The company recognizes the importance of refining its marketing strategy for each market, according to the report.

Additionally, Temu aims to reduce its delivery times, the report said. Currently, it takes Temu between one to three weeks to ship packages from China to the U.S., or four to nine days with express delivery, while customers of rival Amazon often receive their orders within two days.

The launch of Temu in the U.S. marked the first major overseas expansion of PDD Holdings’ eCommerce company Pinduoduo. The company sells products like clothing, pet supplies, and home and garden items.

In China, Pinduoduo is the biggest online marketplace for agricultural products and has attracted sellers from all categories, particularly low-priced daily necessities and home products.

In February 2023, five months after Temu’s launch in the U.S., the company debuted a pair of Super Bowl ads that promoted its online shopping app. 

PDD Holding told Bloomberg at the time: “Through the largest stage possible, we want to share with our consumers that they can shop with a sense of freedom because of the price we offer.”

On Jan. 23, it was reported that Temu has attracted a significant number of baby boomer and Generation X shoppers in the U.S., contrary to its reputation as a platform for younger consumers.