Temu vs. Alibaba: How Temu Triumphs Through CX

Over the past decade, Amazon has been the crystal clear frontrunner in the e-commerce industry. But just a year ago, the Chinese company Temu launched and has since nearly matched Amazon in number of users, slowly but surely eating away at Amazon’s market share in the US.

The question is, how did a practically brand-new company with a not-so-new concept win over millions of customers in just one year? And will they be able to keep these customers around long term?

Temu vs Alibaba

In 2023, Temu finally began to ramp up their marketing efforts, spending over $1.7B on marketing alone. Their real competitive edge, however, is no secret. While Amazon competes to be the speediest in the industry, Temu aspires to be the cheapest. In fact, you can pretty much find any product sold on Amazon for practically half the price on Temu.

But what Temu is doing has actually been done before. Alibaba has already been selling Temu products at Temu prices for years and years. The key difference lies in these companies’ customer experience journeys.

There are 5 stages to the customer journey: awareness, consideration, purchase, retention, and advocacy. Let’s break these stages down for Temu vs Alibaba.

Awareness and Consideration

Alibaba

When it comes to the US market, Alibaba really isn’t very well-known at all — at least not nearly as well-known as Temu. Sales in China still make up more than 2/3rds of their total revenue. A few contributing factors here are their minimal marketing efforts in the US, along with their focus on selling B2B. Because of this, Alibaba isn’t even in most consumers’ consideration sets in the first place.

Not to mention — their website is also very difficult for a consumer to navigate. There are an overwhelming number of options from different sellers when you search for one product, and the descriptions and images that go along with product listings are often inconsistent and scrappy. Even if Alibaba is in a consumer’s consideration set, the non user-friendliness of their website will usually already turn them away.

Temu

Temu, on the other hand, invested heavily in marketing to consumers from the start. In fact, they’re on track to spend around $3B on marketing just this year, nearly doubling their budget from last year. As a result, Temu easily became the most-downloaded app in 2023 — meaning consumers are well aware of its existence and keep it top of mind whenever they consider making an online purchase.

Temu also found a way to make product listings appear more legitimate by using higher quality marketing images and by incentivizing customers to write honest reviews. These strategies have significantly increased brand trust toward Temu.

Purchase

Alibaba

Many of Alibaba’s products have a minimum quantity that must be purchased since Alibaba is primarily a B2B company. For products that don’t, the purchase process can still be overly complicated, with month-long shipping times and expensive delivery costs.

Temu

Temu’s products are primarily shipped from China, meaning shipping times will inevitably be longer than two days. BUT they almost always promise customers free shipping AND a reasonable shipping time. Customers can also see exactly where their order is at every moment using an app feature that tracks buyers’ packages.

Retention

Alibaba

For customers that choose to buy directly from Alibaba, there really aren’t any incentives that encourage them to re-purchase. If anything, there’s a good chance there ends up being an issue with quality or shipping the first time they make a purchase, which defers them from buying from the company again.

Temu

Temu, on the other hand, has gamified the app experience, offering daily incentives and monetary promotions to users that encourage them to buy again. Users’ app feeds and product recommendations are also updated in real-time based on their browsing and buying behaviors.

Advocacy

Alibaba

The issue with Alibaba is that if a customer chooses to buy from an untrustworthy and unreliable supplier, the blame for any problems they have with that supplier will automatically be shifted to Alibaba as a brand. So, even though there may be Alibaba suppliers that are higher quality and more reliable than others, there are an overwhelming number of bad ones that lead to horrible brand reviews and negative word of mouth, negatively affecting Alibaba’s reputation.

Temu

Temu, however, understood from the start that their brand would be held responsible for any and all poor customer experiences, which is why they do a much better job of picking and choosing which suppliers to use AND offer generous return policies. This has led to relatively positive word of mouth surrounding Temu and tons of testimonials from customers whose expectations were far exceeded.

Conclusion

While Temu’s customer experience strategy is certainly a huge improvement compared to Alibaba’s, Temu is estimated to have lost on average $30 per order in 2023. They’ve seemingly chosen to keep prices low in order to acquire more customers in the short run, but the real challenge will be convincing these customers to stick around when Temu eventually has to jack up their prices. This means curating a meticulous retention strategy will be key for Temu in the future if they want to stay afloat long-term.

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