Abstract

In September 2022, China-based PDD (formerly Pinduoduo) launched an online marketplace Temu in the US. Temu, which showcased millions of products, connected Chinese suppliers with the US consumers directly and shipped products directly from China to the consumers. To gain quick traction, Temu needed to build a customer base, and it used several strategies like social media marketing, gamification, and discovery commerce to do that. Temu used a reward system, where users were given credits for getting their friends and family to sign up with it, posting on social media, and playing games on the app. Customers quickly took to Temu attracted by its low prices, selection of products, free shipping, and the chance to get free products through credits. In just a few months after its launch, Temu had become the most downloaded app with 100 million active users. Observers questioned its rapid growth stating that it was marketing driven. Temu was in for competition from e-commerce giant Amazon, and also other Chinese companies like Shein and TikTok. Lei Chen, CEO of PDD, needed to address the quality and customer service issues at Temu, and come up with a plan to establish the company as a formidable player in the US e-commerce market.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Analyze different elements of strategy and identify how to determine the quality of strategy
• Evaluate the role of discovery commerce in guiding customers toward products
• Appraise the use of gamification as a customer engagement tool in the e-commerce milieu
• Evaluate different types of rivalry among companies, and examine how companies should respond to low-cost rivals
• Examine how a company can achieve high quality while maintaining low prices

Keywords

Temu; e-commerce; Pinduoduo; discovery commerce; social media marketing; gamification; App-based commerce; elements of strategy; quality of strategy; customer engagement; low-cost rivals; social media advertising; influencer partnership; AI-based algorithms; Strategy Diamond model