Chinese E-Commerce platform Temu attracting customers from US dollar stores

According to the most recent market share statistics, Temu, the rapidly expanding Chinese e-commerce site. That sells $10 clothes and $4 home furnishings, is effectively competing with Dollar General. The industry ruler, and other U.S. dollar retailers.

According to statistical analysis company Earnest Analytics. Temu held around 17% of the market share in the US for cheap retailers as of last month. This is in contrast to the dollar chains Five Below (8%), Dollar General (43%), and Dollar Tree (28%).

Temu opened for business in the United States in September 2022 and gained popularity fast by leveraging social media influencers to promote its products. As superior to those found in regular retailers and at lower prices.

According to Michael Maloof, director of marketing at Earnest Analytics. “Temu poses a greater threat to brick-and-mortar discount stores like the dollar stores than other e-commerce sites. Because of its affordable rates on everyday necessities and household commodities.”

Temu offers comparable holiday décor, containers for storage, and toys as Dollar Stores, in addition to selling clothing such as $12 gowns and $20 sneakers. As it grows abroad, analysts predict that it will bring in over sixteen billion dollars in revenue this year.

Michael Ashley Schulman, the chief investment officer of Running Point Capital Advisors. Stated that Temu has an edge over stodgy low-end cheap grocery store. Brands since it possesses freshness and excitement, which is difficult to replicate.

Inquiries for comments about the research were not answered by Temu, Dollar General, Dollar Tree, or Five Below. Due to their comparatively smaller internet presences & diverse client bases, U.S. dollar retailers have previously stated that they do not believe Temu will have an impact on their revenue.

Although consumers who purchase basics like food, drinks, and detergent continue to frequent dollar shops. Businesses are facing a shift in demand from consumers in addition to operational difficulties.

The current year, Dollar General has lowered its yearly profit projection by three times as cost-conscious consumers have switched from purchasing more higher-margin consumable items to lower-margin items.

Although dollar store chains are slashing prices to get clear of extra inventory and, like many other businesses, are also suffering from retail theft, their margins have also decreased.

Based in the state of Tennessee, Earnest Analytics reports that Dollar General’s has had the biggest decrease in share of the market when compared to its competitors. Its market share dropped from over 57% as of January to 43% in Nov. Between January and November, Dollar Tree’s share fell by almost four percentage points, from 32% to 28%.

Temu is profiting on consumers’ weariness over high costs and inflation. According to libertarian economist Peter Earle of the American Association for Research on Economics. The parent business of Temu, PDD Group, said that sales for the quarter ending September 30 increased by 94% to 68.84 billion yuan ($9.62 billion).

Temu works with a network of low-cost clothing, household products, and electronics producers in China. Manufacturers and retailers on Temu use a trade exception that permits shipments under $800 to enter the United States. Duty-free to provide goods directly to Temu consumers.

“Temu with their ‘shop like a billionaire’ slogan has mastered gamification and rewards to make online shopping fun, easy, and cheaper than the dollar stores,” Schulman of Running Point stated.