Global online shopping platform Temu is already moving up the ranks in the US Apple Store.
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Hours after Super Bowl viewers were inundated with ads from discount retailer Temu, a formerly buzzy online dollar store was acquired at a price that shows the difficulty of sustaining e-commerce growth.
Wantwhich was valued at $14 billion at the time of its initial public offering in 2020, said on Monday it will be acquired by Singapore's Qoo10 for $173 million in cash, 99% below its peak price.
Founded in 2010 and based in San Francisco, Wish made its name with ultra-cheap products sold primarily by Chinese manufacturers. Co-founder Peter Szulczewski bet that buyers would be willing to accept delivery times of weeks in exchange for bargain prices.
Temu's marketing blitz, which covered Facebook and Instagram well before Sunday's Super Bowl, is also familiar to anyone who's followed Wish. The company spent heavily on Facebook platforms to attract buyers and struck a deal to put its logo on Los Angeles Lakers jerseys.
But the company was losing money and last November, after removing Szulczewski as its chief executive, said it was exploring strategic alternatives.
Qoo10 will now take on Temu and Shein, both of whom originate from China and still have strong ties to the world's second-largest economy. TikTok, owned by China's ByteDance, also launched an online marketplace in the United States last year. Companies have shown that they are willing to spend big to attract buyers, as well as lose money on sales of cheap products by offering free shipping and deep discounts.
Its ad spend provided a big boost to Meta's revenue, but hurt retailers like handmade goods provider Etsy, which acknowledged last year that Temu and Shein are “taking a little bit of share away from everyone.”
During and shortly after the Super Bowl, Temu ran several “shop like a billionaire” ads and touted $15 million in giveaways. For the second year in a row, brands shelled out approximately $7 million for 30 seconds of in-game advertising.
Temu is estimated to have spent between $600 million and $1.4 billion on ads during the first nine months of 2023, Stifel analysts wrote in a note last November. The firm projects that Temu had an average of 70 million monthly active users during the same period last year.
Temu, which launched in late 2022, has a lot of money thanks to its parent company, PDD Holdings. Founded in 2012, Shein began aggressively advertising on social media in the past two years.
Wish's new owner may join the party as enthusiasm wanes. Analysts at Morgan Stanley wrote in a note late last month that the number of U.S. households shopping on Temu continues to fall, while web traffic and app usage data “also show stagnation/moderation in acceptance since October, including during the period vacation”.
LOOK: Temu sees fewer new users after Super Bowl