How Temu Makes Money From $10 Smartwatches From China

It is February 12, 2023, the Super Bowl Philadelphia Eagles against Kansas City Chiefs and a record 200 million people to watch this moment. Wait no that's too far, rewind the tmu app and buy like a billion right there pause wait what is Teemu? Okay, let's back up. It's February 12, 2023, the Super Bowl, and timu, a shopping app that launched just five months ago,

makes

its television debut on one of the biggest advertising nights of the year, promising bargain basement prices and opportunity to shop like a billionaire with not one but two salespeople. ads totaling $14 million, the Super Bowl ad catapulted the emerging shopping app into the mainstream with app downloads increasing to 45 and daily active users of 20 just one day later at the end of the first quarter, timu had amassed 19 million downloads by 2023.

I'm sure you've seen this site. Teemu's proper shopping app, Timo, has become the most downloaded shopping app in the United States. Teemu is an aggressively cheaper promotion programmed to sell you useless things and it's totally addictive, the company says it can happen. about those cost savings for American consumers wish.com AliExpress, the others started a decade ago were like Myspace Paving the way for Facebook or Blackberry Paving the way for an iPhone, but where did timu come from? How do you make

money

selling very cheap products? And how did a relatively new shopping platform end up at the center of a political storm targeting Chinese e-commerce?

If you watch the Super Bowl commercial, decide to download the app, and you'll probably see something like this: spinning wheels, countdown clocks with 100 coupons. 25 off 50 off for less than 99 cents, act now, hurry fast and even without those discounts you start to notice things are cheap, like really cheap 90 headphones, 10 designer home items for pennies on the dollar, well, it's a smartwatch 10, let's go ahead and add that. to cart is really socialized extreme discounts with mega variety gamified and socialized to generate traffic, but the most important thing is to build an enrolled base and get consumers to download your app.

Timo is an online bargain shopping marketplace similar to individual Amazon sellers that list products via site, but at heavily discounted prices Based in Boston, the team quietly launched in the summer of 2022 and within a few weeks The app was already topping the Apple App Store charts, surpassing Amazon Walmart and even Xi'an. This is all thanks to a huge advertising budget with a focus on social media in January alone, timu bought 8,900 ads on meta platforms and this is all part of a broader user acquisition strategy because right now the team is not worried about sales, you're worried about you, they're paying big rewards and referral fees for you and me and every other consumer to bring someone to the site to download the app and make that first purchase.

You could traverse the social sphere and you will find people recruiting others to earn up to a hundred dollars a day. referral fees or if you are an influencer you can earn up to five thousand dollars a month. The idea is that once you get people on the site, they stop browsing, they lock in these different types of devices and gadgets and things that are offered to them. They see the low prices and they think, let's give it a try and what Timu has found is that once people have tried it, they keep coming back and buying more and some people become quite addicted to Teemu and it's very easy to buy and it's very It's easy to do it in a pretty thoughtless way because you're not spending hundreds and thousands of dollars on things, the individual prices are pretty low, so a lot of people order in very high volumes according to some estimates that Timo is projected to make. spending $1.4 billion on advertising in North America in 2023 alone in hopes of increasing its user base by approximately 100 million people.

The value of a monetizable daily active user, we call it maju in the industry, we are between $236 and $726 per active user per year in top-line revenue and they are acquiring these customers at a fraction of the cost of what Amazon or anyone else person had to pay to get them, which again begs the question where timu came from and how it came about Get all this

money

right, if you haven't heard of Timu, you've probably heard of its parent company, the Chinese e-commerce company Pendodo , which went public on the NASDAQ this morning, one of China's big three e-commerce sites with a market cap of over. $100 billion timu is the retailer's first big push into the overseas market where competitors jd.com and Alibaba already have a footprint penduo Duo used its already established strategy and logistics network to quickly get Teemo off the ground, which It means that although Timu is based in the US, their products actually come from distributors in China, they have an advantage in the supply chain that was built from the success of Pin Duo Duo in China, which started out representing farmers, producers and rural agricultural suppliers and extended to all small ones.

Trader in China and now they have extended it to North America. China is really Timu's lynchpin and strategy. Many of the products sold at Timu are made in China and shipped directly from China to the US, so labor costs are comparable. Manufacturing in the US and elsewhere is really low, so Timu was able to keep those prices very low for customers, so the 10 Smart Watch is likely coming from a factory somewhere in China and just like than other Chinese e-commerce sites. that allows timu to sell items at extremely low prices the sales are very generic things, they are not very well known brands, so again it keeps the prices very, very low because you are not paying for brands, but the same reputation risks that affect other Chinese retailers like Sheen could find the Teemo rated and, when it came to gear, your problems just went federal, so you downloaded the app, spun the wheel down through discounts, ordered your smartwatch 10 and now you wait for your watch to come from a factory in China, but there are a couple. setbacks, not all Chinese manufacturers can sell products in the US, there is actually a genocide spreading against the poor population in a place called Xinjiang province in the northwest corner of China. 23 million Uyghurs are having their cultural identity erased.

More than 2 million are in concentration camps, as a consequence of this, we passed something called the Uyghur forced labor prevention law because one of the things that is happening along with the genocide is that hundreds of thousands of Uyghurs are being pressured to work in factories manufacturing all types of products, there are countless products entering the United States in violation of the law and a report recently released by the US House of Representatives found cases of items on the Timu website that are sold or manufactured with materials from the Xinjiang region of China in direct violation of US import laws.

They are American companies. and others who actually follow the law ensure their products do not come from Xinjiang now find themselves at a real competitive disadvantage relative to fast fashion companies that do not follow the law, most retailers and e-commerce marketplaces online they have policies. In effect, that directly prohibits the sale of products from the Xinjiang region, but the US government found that Teemu only had vague, repetitive language without directly mentioning Xinjiang when pressed. The team's defense was a team that is not the importer of record, meaning they are a marketplace that doesn't make the products, they just sell them, yeah, that's not going to work.

I mean, they have 80,000 suppliers and they're basically pointing the finger at them saying it's up to them to control this situation, but you know, that's not going to work. and it goes further, remember those ultra cheap prices, there are customs control laws where products under 800 that are shipped directly from China to residential homes escape all tariffs and duties and really don't have much information about their place of origin. so they can also circumvent laws banning products from Xinjiang, to put it in perspective, other companies like hm and gaap spent hundreds of millions of dollars on import duties at US borders in 2022.

Xi'an paid nothing combined They accounted for 30 to 50 percent of all Minimus shipments to the US, that is, approximately 600,000 packages each day, avoiding Customs, paying no import duties and passing unnoticed. CBP is already under a lot of stress regarding package inspection. which are 800 and up and then when you have this explosion of packets below 800 coupled with the fact that they don't have the data that would otherwise be necessary to perform a specific inspection regime, you basically make it almost impossible for the CBP do their job, this also puts other companies at a clear disadvantage when those tariffs or duties don't exist, those products end up looking much cheaper than other products, so not only do taxpayers lose the duties, but you know the American companies and others that are doing the right thing are potentially losing business, not only companies like Teemu and Shin take advantage of this role, but it is directly related to the rapid success of these types of companies.

If the decrement rule were changed, it would cause a huge problem in the team's news operations that would be very destructive for Teemu because what it would mean is that the Apostles would have to come to the US and go through entire customs processes. , which would cost a little more and, more importantly, take a lot more time. get to the end user or they would have to build some warehouse capacity in the US because that has a cost attached to it and it starts to undermine some of that low cost model, which is really important for those low prices and not just the federal government concerned about

temu

some states have taken action on the app itself citing cybersecurity concerns earlier this year Montana banned the app on government devices along with Tick Tock WeChat and Telegram in a statement Montana Governor Greg Gianforte Timu said along with several other apps are linked to citing foreign adversaries and cited the fact that Teamu's parent company, Pindou, is based in Shanghai, China, and those fears are not unfounded.

Pindu o'doul came under increased scrutiny this year when it was removed from the Google Play Store in March after versions of some of the apps were found to contain malware, according to a US government report that malware was used to Exploit vulnerabilities in Android phones, accessing users' text messages, changing settings, viewing data from other apps, and even blocking users from deleting the app completely, so beg the question what it's doing. Teemu with your data, so let's recap: you downloaded the app, you reviewed hundreds of listings, you decided to take a chance on a 10 smartwatch, then it is manufactured by a team of suppliers and you ship it to a Tina warehouse in China, the warehouse and ships the watch from China to the US paying a total of zero dollars in Customs, decent shipping via the US Postal Service to your destination and all of this happens in about a week, so yeah, of course We actually bought a Temu 10 smartwatch, it took about a week to ship it from China to us here in New Jersey and yes, it really only cost about ten dollars.

First impressions of the case, it looks and feels like an Apple case and we know this from the ads we saw for the original watch, that was the look this company was trying to replicate, but the watch face looks similar. much like other smart watches on the market, the ring on the side and the buttons are almost identical to the ones you On an Apple Watch you would find that the watch straps are also rubber, very similar to those on Apple watches, the only Important difference visible is the charging port, although it has a circular charging port, it requires a two-prong charger and the charger itself was very cheaply made. the watch also turned on immediately the apps also looked almost identical the honeycomb effect is very similar to the current operating system on apple watches overall the watch seems to emulate an apple watch almost perfectly even the icons for some of the apps internally They were almost identical overall, it's a pretty good dupe if I was looking for a smartwatch and didn't care about the quality.

I would probably give this to most people on the street. SimplyIt looks like an Apple watch. Every application needs a killer. The right application, the best application here is these big mega variety discounts, that's what attracts them, but they have married product sales with social media and they are starting to take advantage of the existing social network in North America, but they will create their own social network when they launch payments for teens like they did with pinduodo and Team China's payments are the viral catalyst to grow this to a billion users Beyond China, remember earlier when we said Team doesn't care about sales, cares about you, say marketing and e-commerce experts.

It's no mistake that teemo spent so much money adding a user base that many suspect timo is preparing to launch social shopping here in the US, a wildly successful shopping model that penduo Duo uses in China, pindoujou , and China actually takes it to another level, they use group purchasing where you can team up with friends and family to get quantity discounts, known as teaming, at a reduced price. This aspect of social commerce is what allowed them to grow to number three, reaching almost a billion users in China, in the US, Kimu has not. still launched the team's purchasing capability, but you can see them laying the groundwork to do so thanks to their social marketing experts, so as timu continues to grow and expand its user base, it could be preparing to change the purchasing experience for us retailers, but American consumers will. bites the potential for social shopping is definitely there and it will grow but it won't reach the scale that it has in China, it's a different type of consumer, it's a different type of market, but I certainly think it's a sensible thing for Timo to add and even if Timo continues to grow its user base can survive regulatory and legal scrutiny to continue operating. 92 percent of us say we will trust a recommendation from a friend or family member and that's what social marketing does, regardless of whether Teemu is owned by a Chinese company.

It is irrelevant because you are actually buying first thanks to the trust and recommendation of a friend or family member based on a socialized promotion and, in addition, we will give you 20 dollars for each one you bring abroad.