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Buffett's senior apprenticeHow will Pinduoduo's new 'Pingmu' start off?
Not long ago, I saw a summary of expert exchanges about New Temu, and today I saw an update on New Temu shared by LatePost. There's a lot of information that can be cross-verified, though of course the sources might be overlapping.
Combining this information, we can basically sketch out how New Temu plans to start, so let me share it with everyone:
1. New Temu will basically not operate in the domestic market. Its overseas route will be North America, Europe, and Southeast Asia, in that order. This makes perfect sense. Domestic supply can't meet demand, brands are plentiful, and merchants already feel there's not enough to go around. Just focusing on being a platform is enough.
2. The initial categories chosen are apparel, outdoor, and home goods. I think apparel is definitely a good choice. It's a category validated by Sam's Club and Costco, and can even be used as a traffic driver. Every time I visit Sam's Club, the area with the most foot traffic seems to be the apparel section. The problem is, Sam's physical stores are so expensive per square foot that they can't possibly stock that much apparel. This is actually an advantage for an online platform like New Temu. Just copy the homework, and you're done.
3. The apparel brands reportedly being approached currently include Bosideng, Youngor, Camel, etc. They will all later be rebranded with New Temu's private label. From this, we can also see that it's likely a different path from Shein's fast fashion. New Temu's apparel should focus on mass-market consumer goods, aiming for the greatest common denominator.
4. Both are down jackets. Bosideng is reportedly considering cooperation, while Yaya reportedly refused. This is because Bosideng believes New Temu's price range (299-1299) won't hurt its own brand's price range (2400+). By contrast, Yaya's reason for refusal becomes clear.
5. The overall cooperation is exclusive, meaning the products can only be bought on Temu's New Temu and are not allowed to be sold separately. If they can create a few hit products with this, the massive traffic would be a piece of cake.
6. Compared to Temu's low requirements for merchant onboarding (I often get invited even with a test store that's never made a single sale), New Temu requires suppliers to have complete supply chain and design capabilities, able to handle production and compliance issues themselves to reduce hassle. This is actually very similar to how Costco screens suppliers. They definitely won't cooperate with just any small fry. First, the efficiency is too low, and second, it's hard to manage.
7. How will they settle with suppliers? Mainly through raw material cost + processing fee rebate + sales rebate. Product quality is tied to the processing fee rebate, and sales volume is tied to the sales rebate. To sum it up, the requirement for suppliers is to be both good and cheap. So the overall gross margin might be around 10% - 20%.
8. Why are suppliers willing to cooperate? Simple. Even though there are many requirements, the platform promises to buy the entire output. As long as quality is controllable, there's basically no risk. Given how hard it is to do business these days, they'll definitely be scrambling to do it.
9. In terms of managing suppliers, New Temu won't send teams to station at factories like Shein does. It will mainly rely on pre-screening and post-punishment, combined with Colin Huang's credit card points theory. This is squarely within their comfort zone of competence.
10. The above is basically New Temu version 1.0. Reportedly, version 2.0 will try brand collaborations, like (New Temu + Bosideng). Suppliers can exchange brand premium for more resources. This evolution feels basically the same as the main site's "10 Billion Subsidies" channel.
All in all, I don't see any problems. The team is reliable, and their work is just that reassuring.
New Temu is basically Temu's own "10 Billion Subsidies."
They just can't mechanically copy past experience; they must make decisions based on Temu's actual situation.
Pinduoduo truly gained a firm foothold because of the "10 Billion Subsidies," moving from outside the Fifth Ring Road to inside.
I hope New Temu can achieve the same success.
The sea is vast for fish to leap, the sky is high for birds to fly.
$PDD(PDD.US)
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