BREAKINGVIEWS-Temu is spending like a billionaire
Chinese shopping app Temu is spending heavily on advertising to become America's e-commerce leader, while benefiting US companies like Meta Platforms. However, Amazon faces increased competition from Chinese retailers and is reducing fees to fend off antitrust complaints. Temu's aggressive spending and Chinese competition will intensify Amazon's efforts to improve retail operating margins.
(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)
NEW YORK, Feb 12 (Reuters Breakingviews) - Temu is spending like a billionaire to become America’s e-commerce champion, leaving winners and losers in its wake.
The popular shopping app from China’s Pinduoduo (PDD.O) aired commercials during the National Football League’s grand finale, the Super Bowl, on Sunday. Bernstein analysts reckon Temu directed over $1 billion to advertising last year outside the Asia-Pacific region. Relative to consumer goods giant Procter & Gamble (PG.N) , which spent about 5% of its overall top line according to consulting firm Madison and Wall, it’s a massive advertiser.
U.S. companies that depend on commercial spending, like Meta Platforms (META.O) , are being saved by Chinese retailers like Temu and Shein. They represented 10% of Meta’s revenue last year, the Facebook owner said. And as the social media firm takes on competitors with China-based parents, like TikTok, the ammunition should help.
Amazon.com (AMZN.O) is a different story. It reduced fees it charges merchants recently, putting up to $350 million of revenue at risk from lowered take rates, according to Bernstein. That helps it fend off antitrust complaints. But given the company led by Andy Jassy is trying to make strides with its retail operating margins, which hit a slim 2.5% last year, Chinese competition will only intensify his efforts.(By Jennifer Saba)
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