🌀 Behind the scenes of Temu success ⛅

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Momentum Works has just released a new report on Temu's explosive growth since its launch in 2022. This report, prepared for market analysts and industry leaders, highlights Temu's rapid expansion, unique business model, and innovative corporate culture.

📊 Temu's Unique Business Model

• Temu operates in 78 countries and territories as of September 2024.

• It uses a full consignment model, handling fulfillment and advertising for sellers.

• This model lowers costs for sellers, making it easier to achieve profitability.

  

  🏆 Performance-Driven Culture

• Temu fosters a competitive internal culture with practices like "Horse Racing." (Multiple teams compete on the same project and are judged only by their final results!)

• Employees have freedom in their roles with a minimal number of KPIs (even procurement shares GMV/profit targets as the main KPI), with 30%! above-industry financial incentives.

🎯 Strategic Leadership Focus

• Temu's leadership is "absolutely consumer-oriented," guiding all major decisions.

• The company maintains a clear structure with minimal office politics.

• Focused KPIs help boost productivity and allow swift responses to market changes.

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Foxintelligence and NielsenIQ released their September Monthly eCommerce Pulse, analyzing online purchases from over 5M e-shoppers in August 2024. The report highlights key trends, including a significant rise in new school bag sales in France. Francesco Tribuni provided a great summary

• Overall eCommerce value in August 2024 grew by 6% across the EU.

• Items sold increased by 13%, but the average price dropped by 7%.

• The price decline indicates consumers are buying more but spending less per item compared to a year ago.

📊 Category Performance

• Fashion and High Tech sales declined across all Top 5 EU markets.

• DIY & Garden, Beauty, and Near Food categories saw growth in all these countries.

• The performance of other categories varied significantly by country, reflecting different consumer preferences.

🌍 Marketplaces & Retailer Rankings

• Marketplaces accounted for 41% of all eCommerce in the EU5, with Germany and Italy leading at 45%.

• France and the UK had lower marketplace penetration at 32% and 40%, respectively.

• Amazon remains the top retailer across the EU5 but is losing market share, while local retailers dominate in the UK and France.

▶🇺🇸 Amazon unveils AI assistant, Project Amelia for sellers, starting in the U.S. The tool helps sellers manage and grow their businesses by answering questions about sales metrics and customer traffic. Available now in beta.

▶🇺🇸 TikTok Fights for Survival in U.S. Court. After two hours of intense debate in a Washington court, TikTok’s future in the U.S. hangs in the balance. Judges are examining whether a law targeting its Chinese ownership is constitutional, which could lead to a nationwide ban.

▶🇵🇱 Allegro plans Hungarian expansion, investing millions by the end of 2024. The company plans to invest up to 20% of its adjusted EBITDA in this international expansion. Allegro’s adjusted EBITDA in Poland reached $220M, a 35% increase year-over-year in Q2 2024.

▶🇺🇸 Amazon adds PayPal to Buy with Prime. Starting next year, Prime members can link their Amazon and PayPal accounts for seamless checkout. Despite reported growth, some experts argue that Buy with Prime remains niche.

▶🇬🇧 Amazon reduces FBA fees for small oversize items. Amazon will reduce Fulfilment by Amazon (FBA) fees by up to £1.60/€1.87 for small oversize items. This fee cut impacts UK, Germany, France, Italy, and Spain from September 16, 2024. The goal is to expand the range of small oversize products available on Amazon's platforms by lowering seller costs.

▶🇲🇽 Mercado Libre secures $250M to expand in Mexico to grow its FinTech business, targeting SMBs. The company seeks a banking license, expanding its $1.5B loan portfolio. Mexico now contributes 20% of its revenue, with $2.5B investment planned for 2024.

▶🇺🇸 PayPal partners with Shopify for U.S. payments to process online credit, debit, and wallet payments through Shopify Payments in the U.S. This integration provides a unified experience for merchants, building on their 2022 collaboration in France.

▶🇨🇳 Cainiao expands delivery to 10 new regions. In Europe, they now offer next-day delivery for €2 and three-day delivery options for €3 to €5. Their flagship "Global 5-Day Delivery" service has also grown to 14 countries, including Europe and the U.S.

▶🇨🇳 Alibaba releases 100+ new AI models and introduced a text-to-video tool. The company aims to compete with giants like Baidu, Microsoft, and OpenAI. With 40M downloads of its models, Alibaba is intensifying its AI efforts.

▶🇬🇧 Asos sees TikTok Shop to replace e-retailers. Asos has seen significant sales growth since joining TikTok Shop in March 2024, with 57% of transactions from new customers. Execs believe social shopping may eventually bypass traditional online retailers if shoppers buy directly on TikTok.

▶🇪🇺 Shein invests €10M to support 250 European designers in its new Designer Incubator Program. This initiative aims to support 250 emerging European designers over the next five years. Through Shein X, designers retain ownership of their work while accessing Shein’s global platform. Nearly 100 French designers have already benefited, including Mathilde Lhomme.

▶🇺🇸 Shein customers prioritize unique, affordable fashion. Shein's recent survey reveals that 80% of U.S. customers choose the platform for its unique items, and 79% appreciate its variety. Despite limited funds, 90% of respondents believe they should still be able to buy clothes that make them feel good, highlighting Shein’s appeal among budget-conscious shoppers.

▶🇩🇪 Mytheresa sales grow 9.8% but profit margin drops. Mytheresa saw a 9.8% increase in net sales in 2024, reaching €840.9M. However, the gross profit margin fell to 45.7%, down from 49.6% in 2023, leading to a 6% drop in share prices. The luxury retailer expects further growth of 7-13% in 2025 but continues to face challenges in balancing supply and demand in the market.

▶🇮🇳 Myntra bets on 4-hour delivery in India. Myntra, India's largest fashion e-commerce platform, is testing 4-hour delivery in select cities. This move is part of the company's strategy to compete in India's booming quick commerce market. With plans to expand nationwide by the end of the year, Myntra is responding to changing consumer demands and increased competition from quick commerce startups.

▶🇬🇧 Volt partners with Farfetch for instant payments. Farfetch customers in the U.K., Germany, and Netherlands can now make real-time payments directly from their bank accounts. The integration enhances the shopping experience by eliminating chargebacks and reducing fraud risks.

▶🇮🇳 Blinkit tests 10-minute returns in fashion. Blinkit is testing 10-minute returns for fashion items, addressing a major challenge in online fashion shopping. Zepto offers a 72-hour return window for damaged items. With fashion returns at 25-30%, these quick commerce firms aim to solve a pressing issue.

▶🇩🇪 Flink raises $150M to focus on Germany, Netherlands. Flink raises $150M, valuing the company at nearly $1B. The Berlin-based startup will use the funds to focus on Germany and the Netherlands, projecting $600M in 2024 revenue. The funding includes $115M in equity and $35M in debt.

▶🇬🇧 Deliveroo CEO sells £15M shares after first profit. Will Shu, CEO of Deliveroo, sold 9.4M shares worth £15M for personal investments after Deliveroo's first profit of £1.3M. Despite the sale, Shu retains 95.8M shares. The company also announced a £150M buyback, and its stock remains stable.

▶🇺🇸 Grubhub links meal plans across 360+ campuses, now serves 4.5M students. It offers robot delivery, reusable containers, and Amazon's Just Walk Out tech at select schools, enhancing convenience and sustainability in college dining.

▶🇺🇸 Instacart enhances FoodStorm before holidays with new features, boosting visibility and flexibility for retailers and customers. With holiday sales approaching, these updates aim to streamline ordering, improve inventory management, and maximize sales.

▶🇺🇸 Olive Garden partners with Uber for food delivery This partnership, announced Thursday, aims to boost sales after a 2.9% drop in same-restaurant sales. A national rollout is expected by May 2025.

▶🇦🇺 DoorDash partners with BioPak for eco packaging. DoorDash and BioPak collaborate to provide affordable sustainable packaging for restaurants in WA & SA. With new regulations, DoorDash merchants can access special pricing on BioPak's products, helping them reduce plastic waste.

▶🇬🇧 Co-op launches 24-hour grocery delivery service in select UK cities. Partnering with Deliveroo, Just Eat, and Uber Eats, they aim to capture over one-third of the quick commerce market. Service targets Gen Z and night shift workers.

▶🇪🇺 Google wins bid to overturn $1.6B EU antitrust fine. Google overturned a $1.6B fine from the EU's General Court, disputing a 2019 ruling on its digital ad practices. The court annulled the fine, citing errors in the European Commission's assessment of Google's contracts. The decision comes amidst broader regulatory scrutiny of Google’s business across the globe.

▶🇮🇹 DHL and Poste Italiane launch 10,000 Locker Italia. The initiative, announced on September 16, 2024, aims to offer convenient, provider-agnostic parcel delivery for shippers and customers nationwide.

▶🇫🇷 Back Market partners with Sony, targets U.S. market. Back Market held a press conference in Paris, announcing a partnership with Sony and plans to enter the U.S. market. The company, which has sold 30M refurbished devices, also introduced a new premium tier and AI-based shopping tools.

▶🇬🇧 B&Q marketplace hits 40% in UK H1. B&Q, part of Kingfisher Group, achieved 40% marketplace participation on diy.com in H1 2024. With 1.5M products and £157M in GMV, the platform saw a 78% YoY growth. Kingfisher's broader strategy includes rapid marketplace expansion in Iberia and France.

▶🇨🇭 Migros shuts down Café Royal online store. Migros is in the middle of a major restructuring, leading to the closure of several online stores. The Café Royal online shop will close on September 25, 2024. Other closures include SportX, which will cease operations by February 2025, and Bike World by March 2025.

▶🇩🇪 SupplyX launches with global logistics expertise. SupplyX, launched by the Otto Group on September 13th, aims to optimize global supply chain management. With roots in Otto Group Logistics GmbH, it promises enhanced customer-centric services in e-commerce, freight forwarding, and supply chain resilience.

▶🇺🇸 Etsy offers free shipping in paid program. Etsy launched Etsy Insider with free shipping, aiming to increase growth. New features like Gift Mode and improved search tools are designed to boost sales, app usage, and customer loyalty.

▶🇨🇦 TD launches eCommerce platform for SMEs. TD has launched TD eCommerce Solutions, an all-in-one platform powered by BigCommerce. It allows Canadian small businesses to easily set up online stores. The platform includes web design tools, payment solutions, SEO, and same-day deposits.

▶🇺🇸 Expedia launches 100+ Travel Shops with creators. This exclusive launch, involving names like Jaime Camil and Virgil Van Dijk, offers users a way to book travel experiences directly from social media. By 2025, more creators can join, aligning with a growing trend in social commerce seen on platforms like TikTok.

▶🇩🇪 Axel Springer’s €13.5B media split with KKR. Axel Springer’s media assets, including Politico and Bild, will split off in a €13.5B deal. KKR takes control of classifieds, while Mathias Döpfner and Friede Springer lead the digital news arm. The deal aims to create a global digital media giant.

▶🇧🇷 Cayena secures $55M in Series B funding round. Cayena, a Brazilian B2B marketplace for wholesale food supplies, raised $55M in a Series B round led by Bicycle Capital. Other investors include Picus Capital, FEMSA Ventures, and more. The funds will help Cayena expand its reach to 500 more cities in Brazil.

▶🇦🇺 Ferovinum secures $23.2M to transform wine industry The platform helps wine makers by transforming their inventory into a “just-in-time asset,” providing £114M in working capital. With growing interest, it’s also attracting significant investment, including from Notion Capital. The company is now supporting major distilleries and sparkling wine producers across the U.K.

That’s all. See you next week in the 🌀Maze!

Your guide through the maze

Artur Stańczuk Chief Strategy Officer at Packhelp, the leading European packaging marketplace. Previously worked ~8 yrs at Bain & Co. In the past, Digital Transformation Director at the leading Polish convenience chain Żabka and Entrepreneur that co-launched 3 startups