Temu, a Chinese e-commerce platform, has recently launched its services in Nigeria. It is owned by PDD Holdings, a major Chinese e-commerce company known for offering a wide range of inexpensive consumer goods, which are primarily shipped from China.
Temu was founded in Boston, USA, in 2022, and has quickly gained popularity. Users spend an average of 22 minutes on the Temu app, which is significantly more than the 11 minutes spent on Amazon’s app. This impressive engagement shows that Temu is capturing attention and keeping users interested, especially considering it is only two years old compared to Amazon, which has been around for 30 years.
To expand its business, Temu has been aggressive in its marketing strategies and has successfully entered around 80 different markets worldwide. After making its way into Europe and Southeast Asia, Temu is now focusing on Nigeria, following its recent expansion into South Africa in January 2024.
A spokesperson for Temu explained, “We’ve noticed a rising demand for affordable and quality products, and we believe our factory-direct model will meet that need.” This means that Temu aims to connect consumers directly to manufacturers, which can help keep prices low. They also emphasized their commitment to providing a safe and reliable online shopping experience for Nigerian customers.
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In Nigeria, Temu will face competition from established local e-commerce companies like Jumia, which has been operating for 12 years and is currently the leading online retailer in Africa. However, Jumia has recently experienced some challenges, reporting a 13% drop in revenue in its latest quarterly results, which amounted to $36.4 million. Although the number of orders increased to 5.9 million, the overall value of goods sold decreased to $162.9 million, largely due to the declining value of the Nigerian currency.
The e-commerce market in Nigeria is projected to grow significantly, with estimates suggesting it could reach $75 billion in revenue by 2025. This indicates that there is still plenty of opportunity for new players like Temu to find their place in the market.
One factor that could work in Temu’s favor is the increasing use of smartphones in Nigeria. In 2018, around 85% of Jumia’s customers were using smartphones to shop. This trend suggests that more people are becoming comfortable with online shopping, which could help Temu attract new customers.
However, Temu will also need to navigate some challenges in Nigeria. The country faces issues with its logistics system, including unreliable addressing, poorly maintained roads, and limited access to some areas. These problems can lead to delays and higher delivery costs, which could deter online shoppers.
To tackle these challenges, Temu has partnered with local logistics companies, Flyt Express and Speedaf, to help manage deliveries. Additionally, by accepting payments in Nigerian naira, similar to what AliExpress does, Temu aims to appeal to local customers and compete directly with Jumia.
Overall, while Temu has a solid plan to establish itself in Nigeria, it will need to address the unique challenges of the market and find ways to effectively compete with established brands.
