The news: Temu’s explosive overseas growth wasn’t enough to rescue parent PDD Holdings from the challenges weighing on consumer spending in China in Q3.
What it means: Up until very recently, PDD was the fast-growing upstart challenging the dominance of Alibaba and JD.com in China’s ecommerce market. But the tables appear to be turning somewhat: The company said that it expects to be “disadvantaged against our competitors for some time to come,” citing its relative lack of experience and the limitations of its third-party platform.
Our take: While PDD’s revenues continue to grow at a healthy clip, it faces more intense competition domestically as well as from international players like Amazon, Shein, and TikTok Shop—not to mention the increased scrutiny of Temu’s business practices from governments worldwide.
Those pressures could force the company to take a more measured approach to expansion and to adopt a more sustainable advertising strategy that focuses on retention and boosting customer lifetime value.
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