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Anyone who spends time on Instagram or Facebook knows this phenomenon: After just a few minutes, the orange giant appears in the feed. It’s not Migros, it’s the Chinese shopping app Temu.
This costs users a lot of frustration. And this is costing Temu’s parent company, PDD Holdings, an enormous amount of money. The “Wall Street Journal” recently investigated how much the Chinese cheap guy spends for his appearances on Instagram and Facebook meta portals. According to the US newspaper, Temu will become the most important advertising customer on Instagram and Facebook in 2023, with a spending of close to $ 2 billion; Temu is among the five most important ads in the Google search engine.
This article was first published on the paid service of handelszeitung.ch. Blick+ users have exclusive access as part of their subscription. You can find more exciting articles at www.handelszeitung.ch.
This article was first published on the paid service of handelszeitung.ch. Blick+ users have exclusive access as part of their subscription. You can find more exciting articles at www.handelszeitung.ch.
“It’s crazy how sales are skyrocketing.”
One of those who has been following the Chinese shopping app for a long time is David Morant, co-owner of Winterthur e-commerce consultancy Carpathia. “Online Switzerland has never seen anything like Temu,” says Morant. “It’s absolutely crazy that China sales have skyrocketed since inception.”
Until now, Zalando’s entry into the market has been seen as a legendary sales boost for online business in Switzerland. The online fashion retailer from Berlin entered the Swiss rankings with 160 million francs in 2012, its first Swiss fiscal year. According to Morant, Temu achieved twice as much success in his first year in Switzerland. The e-commerce professional has now corrected the initial classification of 300 million francs in sales: “We have increased our initial forecast,” says Morant, “Temu is likely to reach sales of 350 million francs in this country in 2023.”
350 million francs – this is about the same as the Migros.ch online store. An amount that the Swiss orange giant only achieved after many years of establishing the market. Temu found success in Switzerland in its first year. Morant describes what makes the Chinese so strong in Switzerland: “Market-specific customer focus, very low prices, strong presence on social media, the possibility of paying with Twint.”
It seems Temu has quickly assimilated into Switzerland’s online shopping scene. In particular, the payment option via Twint guarantees a certain level of trust that other providers still need to earn.
Strong growth in small parcels from Asia
Although the quality of products from Temu is often questionable, the business of Chinese shippers is in full swing. Bernhard Egger also says this. The managing director of Handelsverband.swiss recently presented the latest data on online consumption in Switzerland, based on data from market researchers Swiss Post and GFK. “The small-volume share of foreign parcels has increased significantly in 2023,” says Egger, and we attribute this to Chinese shopping platforms Temu and Shein.”
In the first decade of the new millennium, Swiss online customers made their first purchases from Chinese e-commerce retailers, initially from Aliexpress and later from Wish. Swiss consumers were attracted by very low prices, but delivery times were often long. This has changed dramatically with Temu and Shein, Egger says: “Compared to Aliexpress, they deliver much faster, partly because they occupy entire cargo jets that fly to Geneva and Zurich several times a week.”
Shopping apps in China block Swiss sales
Who is Temu (pronounced “Ti-Mu”) who is stealing sales with her raw product line, which ranges from home appliances to electronic accessories, from fashion to gadgets of all kinds? “From our observations, with other Chinese online retailers like Aliexpress, we continue to see sales of around 400 million francs in Switzerland,” says Morant. Temu is more likely to capture market share from local players such as hardware stores, online universalists and electronics retailers.
Shein, along with Temu and Aliexpress players, is also making a name for himself in Switzerland. Morant says the Chinese fast fashion retailer is also growing strongly: “We estimated sales in Switzerland would be 65 million francs in 2022, a figure that will almost triple to just over 150 million francs in 2023.” While Wish has won over consumers, it is still in the top 100 of the most popular shopping apps on Apple’s Swiss App Store and is still expected to do well with sales of several million francs.
The four Chinese players whose sales in Switzerland Morant calculates very conservatively are likely to have sales of a billion francs in that country.
As Chinese shopping apps become more integrated into consumer habits in Switzerland, their influence in that country is likely to continue to grow. Not among an audience that values sustainable production and perfectly traceable supply chains, but rather among young people who have a small budget and want to buy as much fashion and electronic gadgets as possible with their shopping dollars.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
