TEMU's Business Models and Threat to Amazon?

TEMU’s Real Strategy & Their Plans for Europe

TEMU often gets dismissed as another low-quality marketplace like AliExpress or Wish, but it’s playing a much smarter game behind the scenes, and their impact on Europe could be huge.

• Smart logistics: TEMU has factories store unsold products in their warehouses, which means they’re reducing inventory risk and keeping operations lean.

• Fast European expansion: They’re aggressively moving into Europe with a unique model that bypasses traditional retail, setting the stage for rapid growth.

• Playing the long game: Like Amazon in its early days, TEMU is willing to take losses now to bring in big brands later. This could reshape the marketplace landscape in Europe.

• Shifting strategy? TEMU might eventually switch to a third-party marketplace model to attract big-name European and U.S. brands, moving away from controlling prices themselves.

TEMU’s parent company, PDD Holdings, recently saw its stock drop by almost 29%. Here’s why some see this as a golden opportunity:

• Revenue miss, but big profits: PDD missed its Q2 revenue target, but their operating profit surged by 156%, proving they’re still growing.

• Market overreaction? Analysts believe the stock sell-off was overdone, especially with PDD’s ongoing international expansion.

• Tough competition: PDD is up against big names like JD.com, Alibaba, and Amazon, but they’re holding their own, especially as they ramp up in Europe.

Video platforms can threaten Amazon in product discovery

Amazon still dominates the e-commerce space, holding about 40% of the US market and 30-35% in major European countries like Germany and the UK. But with rapid changes in online shopping trends, where are the threats, and what’s next for Amazon?

⚠️ Threats Amazon Faces

Amazon is still the king of e-commerce, but TikTok is starting to shake things up. Here’s why it matters:

• TikTok’s on the rise: A huge chunk of Gen Z (43%!) now starts their product searches on TikTok, not Amazon or Google.

• Going viral wins: TikTok can turn a product into an overnight sensation, something Amazon’s slower, review-based system just can’t do as quickly.

• Lower costs for brands: TikTok charges lower fees than Amazon, making it attractive for brands trying to maximize their margins.

• Amazon fights back: Even though TikTok is winning in discovery, Amazon’s still unbeatable when it comes to conversions (10% vs. 1-2% on Shopify) and their world-class logistics.

• What’s next? Amazon is evolving, offering tools like “Buy with Prime” so brands can use Prime shipping outside of Amazon.

Allegro - Big Wins at Home, Big Losses Abroad

Allegro is killing it in Poland but struggling with its expansion into Central and Eastern Europe. Here’s a quick snapshot:

• Poland’s booming: Allegro’s Q2 EBITDA hit 180M EUR, a 30% jump compared to last year.

• Expansion struggles: Since buying MALL Group, Allegro has lost over 1B EUR as they try to break into new markets.

• Looking ahead: Projections show Allegro will continue to crush it in Poland (~150M EUR profit), but they’re still losing big (~20M EUR) in their expansion efforts.

• What if…? Would Allegro have been better off expanding organically instead of spending big on acquisitions?