Reuters: Temu versus Dollar Stores

December 6, 2023

Temu has 14% of the U.S. discount retail market

Reuters reached out to Running Point and its chief investment officer, Michael Ashley Schulman, CFA for commentary on Temu versus the dollar stores as the new online phenom takes huge market share away from them. Reporters Arriana McLymore and Granth Vanaik in an article titled, “Chinese e-commerce platform Temu drawing shoppers from US dollar stores,” detail the environment.

The article was also picked up by CNBC, The Economic Times, South China Morning Post, Benzinga, MSN, CB Insights, JRJ (China), VietBF, iNews and Business News (Greece), RetailGeek, XM (Cyprus), FashionNetwork, AOL, Inside Retail Asia, MarketScreener, Placera, Börsvärlden, Vous Magazine, Sohu (China), Charged Retail, Yahoo Finance, Street Insider, SRN News, and, amongst others.

Temu is a growing thorn in the side of dollar stores

Temu’s market share started small, but it is a rapidly growing thorn in the side of Dollar General and Dollar Tree Stores. For budget conscious shoppers that can wait one, two, or three weeks, the online discount shopping saves on gas as well as car wear and tear going to and from the store.

Viral with consumers

Since its launch in September 2022, Temu has gone viral with consumers through a combination of savvy advertising (including two Super Bowl spots in early 2023), strong influencer marketing with videos and livestreams, and using a referral reward system for new customers acquisition.

Temu’s share of the discount retail market has quickly grown to 14% according to Earnest Analytics.

The dollar stores will have a challenging time reworking their infrastructure and supply chain delivery for the online world as effectively and as cheaply as Temu. They will also face hurdles vitally attracting young hip shoppers to their online site and apps.

Impact and sustainability questions

On the downside, Temu’s fast fashion products and long-distance shipments may be contrary to environmental and sustainability trends which show up high in consumer surveys but sometimes less so in actual purchase decisions.

Millennials and Gen Z are the key

Millennials and Gen Z blend their diverse identities within their social and fan communities and are much more likely to do so with a novel and fresh brand like Temu then with older staid dollar store names. Temu has tapped into the discovery psychology of consumer behavior much like the old Filene’s Basement; people love to discover a find, especially one that seems fashion forward as opposed to unwanted close-out.

Bigger picture, Temu and SHEIN also create a marginal threat to Amazon, Shopify, eBay, Etsy, and Walmart online. Their low-cost delivery system that benefits from tariff and trade law, is hard to beat.

Article quotes are below:

“Temu has the advantage of novelty and excitement that is hard to re-create for staid low-end discount retail brands,” said Michael Ashley Schulman, CFA chief investment officer at Running Point Capital Advisors.

“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,” Running Point‘s Schulman said.

Temu vs Dollar Stores
Temu vs Dollar Stores — Graphics and AI graphics by

All online shopping companies capture as much data as they can; it is a matter of who, what, where, how, why, and when.

Michael Ashley Schulman 😉

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