Temu, the cross-border e-commerce platform of Chinese PDD Holdings (owner of Pinduoduo), has caused a great stir in Southeast Asia’s e-commerce landscape after its launch in Thailand in mid  July. The platform has achieved remarkable success in Western markets, especially in the US, where it became the most downloaded app, surpassing Amazon, and has reached 70 markets worldwide within just 24 months.

By directly connecting manufacturers and wholesalers – mainly in China – to customers around the world, Temu offers a unique value proposition of low prices through its cross-border model, as highlighted by its tagline “shop like a billionaire”. In this article we discuss whether Temu, which is now present in three markets in Southeast Asia, is likely to become a major force in the region’s e-commerce space in the coming years.

Temu has entered Southeast Asia, but are its deals good enough to sway consumers?

The recent launch in Thailand marks Temu’s third foray into Southeast Asia, following launches in the Philippines and Malaysia last year. One early indication of its momentum in Thailand comes from Thailand Post, which has reported “[a] volume decline by 20-50% per day from July”. The company added that their “logistics activities for TikTok fell by 50% from July to [August]”.

With Temu’s entry into Thailand, and rumored ambitions to expand across the region, it becomes crucial to assess how it stacks up against established players like Shopee, Lazada, and TikTok Shop, allowing us to consider the potential long-term impact Temu might have on the local e-commerce landscape. Will it cannibalize existing cross-border offerings, drive further growth in the market, or fail to take off?

Temu’s assortment is primarily unbranded Chinese-made goods, with branded items making up just 12% of its product selection

A significant part of the assortment on platforms like Shopee and Lazada comes from official (so-called ‘Mall’ status) shops, operated by brands or authorized resellers. This guarantees product authenticity and easy returns and refunds. Temu, however, does not follow this model, instead favoring a largely unbranded assortment. While Temu does feature a ‘blue check mark’ verification for authorized sellers or direct shipments from brand manufacturers, a study of 1,000 products reveals that only 12% of its assortment falls into this category.

Temu is known for deep discounts, but a study of its branded assortment reveals a more nuanced picture

Temu advertises discounts of up to 90%, but how does that claim stack up against other platforms in terms of actual pricing? To investigate, we compared the prices of identical branded products across Temu, Shopee, Lazada, and TikTok Shop to assess how Temu’s pricing measures up against its competitors.

Despite the current branded products being mostly limited to electronics and gadgets, rather than FMCG or fashion, our initial study benchmarking price competitiveness revealed that 3 out of 5 products on Temu were priced higher than on Shopee, Lazada, or TikTok Shop. In some cases, the high discount percentages on Temu resulted from higher list prices that made the discounts appear more attractive. Temu does offer appealing subsidies on top, including generous first-order incentives, vouchers, and free shipping. But it remains a big question mark to what extent this strategy is sustainable.

Temu’s unbranded portfolio also faces significant pricing competition from incumbents

Comparing unbranded assortment is more difficult than branded products, but understanding this part of Temu’s offering is critical. To test prices across platforms, we looked for identical products through image search and by comparing product specifications, and compared the prices of 5 products across platforms by choosing the cheapest listing that had at least 1 unit sold.

Even for this group, Temu was the cheapest among Shopee, Lazada, and TikTok Shop for only 2 of the 5 selected reference products. For some of these, the other platforms were also shipping directly from China, suggesting that Temu’s cost advantage in connecting the manufacturer to the buyer may not be structural.

Nothing new: The cross-border model has long been used by incumbents offering affordable Chinese goods

Temu’s success is largely attributed to its cross-border model, but this model is not unique in Southeast Asia. For example, according to some sources it constitutes around 30% of the total e-commerce in Thailand (Cube’s estimate is lower, at approximately 10-20%). In addition to platforms like AliExpress, Amazon, and Shein, regional platforms such as Shopee and Lazada also offer cross-border shipments from overseas, with many goods originating from China. Although Temu emphasizes its economies of scale, this approach may not be differentiated enough to disrupt the market. As highlighted above, most similar products are already available on existing platforms, making it challenging to shift customer loyalty.

Southeast Asian consumers are already accustomed to low-priced Chinese goods. To attract them to its platform, Temu appears to be going even lower than incumbents by offering additional discount coupons and special deals. This strategy is creating big waves in the short term – not just among consumers, but also among industry stakeholders. The company has been on the receiving end of some negative PR such as this recent Bangkok Post article that called upon” “the Thai government to take more measures to curb the flood of Chinese products, in particular non-standard and illegal cross-border products.”

While it’s too early to gauge Temu’s long-term impact on the e-commerce market in Thailand and the rest of the region, sellers — whether big brands, SMEs or local resellers — may need to get ready for another chapter in Southeast Asia’s e-commerce price wars. If Temu can maintain strong incentives and a consistent low-price strategy, it has the potential to change the dynamics of regional e-commerce just when all 3 of the big platforms – Shopee, Lazada, and TikTok Shop – have shifted their focus increasingly towards profitability. Local sellers of low-cost Chinese goods platforms will need to find a way to differentiate their offerings and focus on unique value propositions beyond just price. And the platforms themselves will need to start spending more on marketing and promotions once again to maintain their market shares in the face of another new aggressive competitor.