Global online shopping platform Temu is already moving up the ranks in the US Apple Store.
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Hours after Super Bowl viewers were inundated with ads from discount retailer Temu, an online dollar store that once had similar buzz was acquired at a price that shows the difficulty of maintaining e-commerce growth.
Wishwhich was valued at $14 billion at the time of its 2020 IPO, announced on Monday its acquisition by Singapore’s Qoo10 for $173 million in cash, 99% less than its record price.
Founded in 2010 and based in San Francisco, Wish has made a name for itself with ultra-cheap products sold primarily by Chinese manufacturers. Co-founder Peter Szulczewski is betting that buyers would be willing to accept delivery times of several weeks in exchange for favorable prices.
Temu’s marketing blitz, which covered Facebook and Instagram well before Sunday’s Super Bowl, is also familiar to anyone who has followed Wish. The company spent a lot of money on Facebook platforms to attract buyers and struck a deal to put its logo on Los Angeles Lakers jerseys.
But the company was short on cash, and last November, after ousting Szulczewski as CEO, it said it was exploring strategic alternatives.
Qoo10 will now take on Temu and Shein, both of whom hail from China and still maintain close ties with the world’s second-largest economy. TikTok, owned by China’s ByteDance, also launched an online marketplace in the United States last year. Companies have shown that they are willing to spend a lot of money to attract buyers, and lose money on selling cheap products by offering free shipping and deep discounts.
Their ad spending significantly increased Meta’s revenue, but it hurt retailers like craft supplier Etsy, which admitted last year that Temu and Shein were “taking a small cut from everyone else.”
During and shortly after the Super Bowl, Temu aired a handful of “Shop Like a Billionaire” ads and touted $15 million in giveaways. For the second year in a row, brands paid around $7 million for 30 seconds of in-game advertising.
Temu is estimated to have spent between $600 million and $1.4 billion on ads in the first nine months of 2023, Stifel analysts wrote in a note last November. The company projects that Temu had an average of 70 million monthly active users during the same period last year.
Temu, launching in late 2022, has deep pockets thanks to its parent company PDD Holdings. Shein, founded in 2012, began advertising aggressively on social media over the past two years.
Wish’s new owner could join the party as the hype dies down. Analysts at Morgan Stanley wrote in a note late last month that the number of U.S. households shopping on Temu continues to decline, while web traffic and app usage data also “shows stagnant/moderate adoption since October , even during the holiday season.
WATCH: Temu sees fewer new users after the Super Bowl
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