The Rise and Role of Temu in Apparel Street Fight

The Rise and Role of Temu in Apparel

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Can the fast fashion apparel segment grow any faster? It is doing exactly that thanks to Chinese retailer Temu.

According to various sources, Temu has spent up to $3 billion in advertising outside of Asia-Pacific since 2022, and its profile and app adoption among American consumers has been turbo-charged by online ad spending across Meta and Google. Additionally, Temu seems to have proven that a strategy of reach and frequency is not dead, and neither is TV advertising. Temu bought no fewer than three 30-second spots in the Super Bowl in February at $7 million a pop.

“Temu has been omnipresent in digital ads over the last year and even purchased multiple Super Bowl ads, but it has a lot of ground to cover before it can rival Amazon or Walmart,” said Mark Ballard, Director of Research at Tinuiti. “Our 2024 Apparel Marketing Study shows that 4% of shoppers are most likely to complete an apparel purchase on Temu, compared to 33% for Amazon and 14% for Walmart.”

And like its arch U.S. rivals Amazon and Walmart, Temu just opened its marketplace to third-party sellers in the U.S., except all of those sellers are Chinese who have inventory here that is readily available.

Tinuiti, which is among the largest independent performance-marketing agencies across Streaming TV, Google, Meta, and Amazon, released the report on the apparel industry. Its “2024 Apparel Marketing Study,” reveals that 30% of higher-income consumers ($200k annual salary) said they expect to buy more apparel products online, compared to 24% who expect to buy more in physical stores.

However, younger and presumably less well-heeled shoppers such as Gen Z, are embracing the low price points and convenience of Temu. The Tinuiti report revealed that 52% of Gen Z respondents said they purchased at least one apparel item from Temu, compared to just 21% of Baby Boomers.

The highest percentage of respondents (48% of whom were baby boomers) said they tend to start their searches for apparel on a company’s website or app, which makes hyperlocal targeting a breeze for Temu whose app boasts 100 million U.S. users, according to Statista.

About 32% of Gen Z responded similarly and had the highest percentage (23 percent) of those who use social-media platforms to begin their apparel searches, while only 2% of boomers start on social media.

Among Gen Z, 58% recalled seeing a new apparel product on social media that they later purchased in the past year. Among respondents who said they discover new apparel products on social media, 28% said they do so most often on Facebook. That rate falls to just 6% among Gen Z, however, who were much more likely to pick TikTok.

“Gen Z has been the most likely generation to buy apparel products from Temu with 52% of our respondents having done so,” Ballard said. “It’s not clear that Gen Z is overly satisfied with the quality of Temu though, with just 65% saying they were satisfied, compared to 74% of older generations. Instead, Gen Z has likely been more willing than older generations to make the tradeoff between quality and price. In fact, we found that 38% of Gen Z was buying cheaper apparel brands because of inflation, compared to 24% of older generations.”

As for whether Amazon and Walmart should be shaking in their boots by the rise of Temu, Ballard doesn’t think so just yet.

“Temu isn’t an existential threat to Amazon or Walmart, but they’re likely taking some sales away,” he said. “They’re likely to have better luck leaning into having better quality products and faster shipping times than Temu.”

In March 2024, Tinuiti surveyed 1,000 U.S. adults who regularly shop for apparel online and in physical stores across across generations and income levels.

Kathleen Sampey