In a recent development, daily U.S. users of PDD Holdings’ global discount e-commerce platform, Temu, experienced a 58% decline in May. This downturn, reported by market intelligence firm Sensor Tower, highlights the challenges Temu is facing amid ongoing U.S.-China trade tensions. For more details, you can read the full report here.
Read also: Temu Shifts to US-Based Sellers Amidst Tariff Changes
The decline in user engagement comes after the U.S. government ended the ‘de minimis’ rule on May 2, which had previously allowed Chinese companies to ship low-value packages to the United States without tariffs. This policy change has forced Temu to rethink its strategy, including reducing its advertising spend in the U.S. and altering its order fulfillment approach.
According to data from the IndexBox platform, Temu’s struggles are more pronounced compared to its rival, Shein. While both companies have been impacted by the tariffs, Shein has managed to increase the average spending per customer, whereas Temu has not seen similar success. The tariffs have led both platforms to raise prices, but Shein’s ability to maintain customer spending levels suggests a more resilient business model.
Despite these challenges, Temu is shifting towards a local fulfillment model, allowing merchants to ship products to U.S.-based warehouses while handling tariffs and customs charges. This strategy aims to stabilize prices and maintain competitiveness in the market.
Interestingly, Temu’s growth outside the U.S. has shown promise, with non-U.S. users accounting for 90% of its 405 million global monthly active users in the second quarter. The platform has seen the fastest growth in less affluent markets, suggesting potential for expansion beyond the U.S.
PDD Holdings’ first-quarter earnings fell short of growth estimates, with executives attributing the shortfall to the pressures of tariffs. However, they remain committed to working with merchants across regions to adapt to the new trade environment.
