Global online shopping platform Temu is already climbing the ranks in the U.S. Apple Store.
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Hours after Super Bowl viewers were inundated with ads from discount retailer Temu, an online dollar store that used to have similar buzz was acquired at a price that shows the difficulty of sustaining growth in e-commerce.
Wish, which was valued at $14 billion at the time of its IPO in 2020, said Monday that it’s being acquired by Singapore’s Qoo10 for $173 million in cash, 99% below its peak price.
Founded in 2010 and based in San Francisco, Wish made a name for itself with ultracheap goods primarily sold by Chinese manufacturers. Co-founder Peter Szulczewski bet shoppers would be willing to accept weeks-long delivery times in exchange for bargain basement prices.
The Temu marketing blitz, which blanketed Facebook and Instagram well before Sunday’s Super Bowl, is also familiar to anyone who followed Wish. The company spent heavily on Facebook’s platforms to attract shoppers, and struck a deal to put its logo on Los Angeles Lakers jerseys.
But the company was bleeding cash, and last November, after ousting Szulczewski as its CEO, said it was exploring strategic alternatives.
Qoo10 will now be taking on Temu and Shein, which both originated in China and still have strong ties to the world’s second-biggest economy. TikTok, owned by China’s ByteDance, also launched an online marketplace in the U.S. last year. The companies have shown they’re willing to spend heavily to attract shoppers, as well as lose money on sales of cheap products by offering free shipping and hefty discounts.
Their ad spend provided a big boost to Meta’s top line, but it’s hurt retailers like handmade goods purveyor Etsy, which acknowledged last year that Temu and Shein are “taking a little bit of share from everyone.”
During and shortly after the Super Bowl, Temu ran a handful of “shop like a billionaire” ads and touted $15 million in giveaways. For the second year in a row, brands shelled out roughly $7 million for 30 seconds of ad time during the game.
Temu is estimated to have spent between $600 million and $1.4 billion on ads during the first nine months of 2023, Stifel analysts wrote in a note last November. The firm projects Temu had an average of 70 million monthly active users over the same stretch last year.
Temu, which launched in late 2022, has deep pockets thanks to its parent company PDD Holdings. Shein, founded in 2012, started aggressively advertising on social media in the past couple years.
Wish’s new owner may be joining the party as the hype is waning. Analysts at Morgan Stanley wrote in a note late last month that the number of U.S. households shopping on Temu continues to fall, while web traffic and app usage data “also shows stalling/moderating uptake since October, even through the Holiday period.”
WATCH: Temu sees fewer new users post Super Bowl
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