Background
Often compared to a virtual dollar store, Temu is a Chinese discount e-commerce retailer that sells a wide range of products, from $2 plastic headphones to $200 couches.
Started in 2022, Temu is arguably most famous for two things: its unusually cheap products, and the time it ran the same advertisement not one, not two, but five times during the 2024 Super Bowl (watch the ad).
With about 292 million global monthly active users, the Amazon competitor was the most downloaded app on the Apple App Store in the US through 2024.
How It Started
Although Temu is based in Boston, its story starts in China with a company called Pinduoduo, which loosely translates to “bringing lots of people together” in English.
In 2015, Pinduoduo launched as an e-commerce platform selling produce and food before expanding to home goods, gadgets, and more. Soon enough, Pinduoduo was competing with China’s other top e-commerce giants, Alibaba and JD.com, which both already operated separate businesses in overseas markets.
So in summer 2022, Pinduoduo CEO Colin Huang launched Temu. Today, the parent company of Pinduoduo and Temu is called PDD Holdings and is listed on the Nasdaq. Temu grew from zero to 100 million US users within just 18 months, which shocked many retail experts.
As of September 2025, PDD Holdings had a market cap of more than $180B. For context, Amazon’s was more than $2T at the time, and Walmart’s was more than $820B.
Temu’s US user base and download numbers grew significantly after its initial “Shop Like a Billionaire” Super Bowl ad aired twice during the game in 2023. But after running another “Shop Like a Billionaire” ad in 2024’s big game, many criticized the ad’s messaging.
Business Model
On Temu, individual sellers list and promote their products, and Temu charges a commission rate of roughly 5% to 15%.
Temu is able to offer such cheap prices in part because it does not actually own any of the products it sells—the sellers who list their products on Temu maintain ownership instead. Other retailers often have to pay to store at least some percentage of their inventory in warehouses, and can suffer financially if they miscalculate consumer demand for their products.
Plus, while Temu is based in the US, its products mainly come from distributors in China. It used to save money on import costs due to the de minimis exemption, which allowed packages valued at less than $800 to be imported duty-free. However, that ended for packages from China in May 2025 (Temu’s user base dropped by 48% following the exemption’s end). In 2022, for instance, clothing company Gap paid roughly $700M in import duties. Temu, on the other hand, paid nothing.
Temu also spends a lot on marketing, from the estimated tens of millions spent on its multiple Super Bowl ads per game over the years, to the referral bonuses of $100 or more that it offers users who refer others to the discount retailer. Some argue that the company is more focused on rapidly gaining market share than achieving profitability: As of 2024, Temu was losing an average of $30 per order.
Experts have also analyzed Temu’s gamification strategies. On Temu, shoppers can also get discounts and other benefits through playing games (like one game where users help a tree grow, another where they spin a wheel to win, and more).
Controversy
Temu has been under regulatory scrutiny in the US for allegedly violating consumer protection laws, deceptive trade practices, privacy violations, and more.
Additionally, congressional investigations have identified an “extremely high risk” of forced labor in Temu’s supply chain that concerns products from the Xinjiang region of China, where forced labor and slavery are common for workers.
