First it was AliExpress and Wish, then it was Shein and now it’s Temu. Bargain shopping sites are everywhere – and they’ve turned the e-commerce world on its head.
The Chinese-owned marketplaces have rapidly gained popularity with price-sensitive shoppers thanks to their huge selection of fashion, beauty and homeware items available at drastically discounted prices.
Following an aggressive marketing effort, including its viral $45 million ‘shop like a billionaire’ Superbowl ad, Temu is now the number one free shopping app in both Apple’s App Store and Google’s Play Store, leaving well-established companies such as Walmart in its dust.
Like similar websites, Temu operates on a razor-thin margin with its suppliers holding almost no inventory. Products are manufactured in China before being shipped to the UK and US, meaning prices can be kept low (sunglasses cost as little as $2, t-shirts can be found for $3).
While budget shopping sites might be welcomed by shoppers – especially during the cost of living crisis – they are causing widespread worry among retailers.
The ultra-low prices available on Temu, Shein and other similar sites make it impossible for e-commerce retailers to compete solely on price.
Instead, brands must find innovative, alternative ways to navigate the new and evolving retail landscape of which bargain shopping sites are now part of. Here are seven suggestions:
1. Understand the limitations of sites like Temu
While sites like Temu may seem to have an unbeatable advantage in terms of price, it does have serious limitations.
For instance, product quality can be poor – as can customer service. Plus, because all goods come from China, there is an inevitable delay in shipping time and there is growing concern from some about the use of unethical, cheap labor, and growing resistance against mass-produced fast fashion and its impact on the environment.
Rather than slashing prices to compete, which will ultimately hit profits, brands should look to step up in the areas where budget shopping sites fall down.
Lean into the ways your brand is different. For instance, emphasize how your clothing is ethically-made by workers paid fairly or designed to last the test of time or available for delivery in a matter of days, rather than weeks.
2. Level-up your marketing
One of the reasons Temu has experienced such astronomical growth is because it has invested heavily in aggressive marketing and social media campaigns since its launch in September 2022.
Social media and PPC advertising is especially expensive right now but email marketing can offer excellent results, often at better value. For that reason, it’s a good idea to focus on expanding your subscriber list and curating quality, engaging email sequences.
To see how your marketing performance compares to your competitors, benchmarking can be invaluable. Brightpearl Benchmarking lets you see how you rank against similar businesses when it comes to revenue, selling price, sales, marketing, traffic and customer metrics. Then you can compare your performance then refine your strategies to stand out from the crowd.
3. Automate your operations
Automating key aspects of your e-commerce operation is a surefire way to improve efficiency, boost service and reduce costs – helping you stand out against budget shopping sites for all the right reasons.
Brightpearl’s powerful Automation Engine makes it easy to set up rules that will automate almost every workflow in your business, with no coding necessary.
Used by e-commerce brands across the world, it is proven to save hundreds of hours a year on e-commerce admin, reducing errors by 65% and cutting labor costs in half – all by automating tedious manual workflows, including inventory management, order fulfillment, and customer support. This can give your brand a distinct advantage against ultra-cheap, Chinese-owned competitors.
4. Eliminate stockouts to gain competitive advantage
Stockouts frustrate customers and hit revenue – but maintaining stock levels is one area where bargain shopping sites really struggle, primarily due to the sheer volume of their inventory. The rapid turnover of products on these platforms is a major inventory management challenge.
This means there’s an opportunity for you to differentiate your brand and compete on a level that isn’t related to price. Ensuring your products are consistently in stock can give your brand a distinct competitive advantage.
To do this, you must be able to accurately forecast demand and reorder inventory on time, and that’s where market-leading inventory planning tool Inventory Planner can help.
It analyzes historical sales and factors in seasonality, promotions and market trends to reliably predict future sales. It then goes one step further by translating its analysis into easy-to-understand buying recommendations so that you can know exactly when, where and what to order. This is a tried-and-tested way to eliminate stockouts and ensure the right items are always available when customers want to buy.
5. Optimize your inventory
Tools like Inventory Planner aren’t just invaluable for eliminating annoying stockouts – they are also a powerful solution for optimizing inventory so you can boost cash flow and be in a better position to fight back against budget shopping websites.
Overstock (too much stock of the wrong items) is just as damaging to your cash flow as stockouts, but accurate, reliable demand forecasting enables you to only invest in the items you know will sell well.
With Inventory Planner, forecasts can be customized at a granular level – you can factor in multiple variants of each item (including size and color) so you can be super specific with your purchasing and avoid having too many variants you might not even sell.
Proper inventory planning can also help you adapt and respond to supply issues and market shifts. Purchase orders can be created in a matter of clicks directly from buying recommendation reports. Inventory can be automatically transferred between warehouses, including partial transfers. Slow-moving products are automatically flagged up so they can be liquidated or promoted before they become obsolete
6. Future-proof against further developments
The longevity of sites like Temu remains to be seen – perhaps it’s a bubble that will eventually pop (when the economic outlook improves), or perhaps it’s a shopping trend that’s here to stay. Either way, further challenges (like price pressure) and opportunities (like insights on emerging trends) for established e-commerce brands will arise.
One of the best ways to future-proof your business is with a built-for-retail operating system like Brightpearl, that includes inventory planning, automation, benchmarking, intelligence tools and lots more.
Unlike traditional ERPs which can take months (or even years) to implement, Brightpearl can be set up and getting results in weeks – and a team of experts is always on hand to help you get the best from it.
With a retail operating system at the heart of your tech stack you can protect your business from future challenges, including the possible expansion of budget shopping sites, and be best-placed to cash in on opportunities.
7. Adapt your customer experience
Customer experience is a major stumbling block for cheap shopping websites like Temu, Shein and others. According to reports, the Better Business Bureau, which analyzes companies based on reviews and complaints and also offers a place for people to share feedback on businesses, gave Temu a C-minus rating in part because 581 complaints have been submitted against business since it opened last July.
Some users complain of goods never arriving or of being made with such cheap materials that they are unfit for purpose or break after a short while – and that’s after waiting weeks for it to arrive.
It’s therefore a smart idea to boost your own customer experience so you can provide an attractive alternative for consumers. This should include fast, streamlined order processing, excellent customer comms – both of which can be achieved with automation.
Modern consumers also increasingly seek cutting-edge shopping experiences on the latest sales channels, which can easily be achieved with access to Brightpearl’s library of best-in-class apps and tools.
Want to learn more about how to beat budget shopping sites? Book your free demo of Brightpearl now.
