Temu, the hugely popular online shopping platform, has been in the news this week. Beginning on April 25, costs for the products it sells will skyrocket due to tariffs the Trump administration slapped on Chinese imports. The company has set record growth in the U.S. market. It has quickly climbed up the charts. It is currently the 75th most downloaded free app on the Apple Store. Over the last two years, Temu has led or been a top five downloaded app virtually every week in China. That’s the sign that told us all about how much American consumers love affordable stuff.
That said, Temu is planning major price increases. In the two weeks prior to April 13, the company’s average daily ad expenditure on social media—including Facebook, Instagram, and YouTube—decreased precipitously by 31%. Increasingly escalating operating costs are pushing the scaled back ad spend. Recent global trade rules changes and tariffs have exacerbated this rising cost burden.
Despite the challenges posed by tariffs, Temu has successfully attracted tens of millions of customers in the U.S. with its ultra-low prices. The upcoming wave of inflationary prices saddle it with new challenges to its competitive edge. Temu has taken an ambitious route by cutting all U.S. Google Shopping ads, effective April 9. This change allows them to better pivot their marketing strategy as their operational expenses fluctuate.
The company’s app ranking has dropped considerably since the tariffs were initially imposed. As a response to these economic pressures, Temu has encouraged its customers to shop before the higher prices take effect.
Temu didn’t respond right away to the BBC’s follow-up comments about these turns of events.