Temu, the fast-growing e-commerce platform known for its rock-bottom prices and wide selection of goods, has made another aggressive move in the European market. By opening local warehouses, Temu aims to reduce shipping times and costs, providing an even more seamless shopping experience for its customers. For European consumers, this development means faster deliveries and easier returns, while for local retailers, it signals yet another challenge to staying competitive in an increasingly globalized marketplace.
Founded in 2022 as an offshoot of Chinese e-commerce giant PDD Holdings, Temu quickly made waves with its direct-to-consumer approach. The platform leveraged Pinduoduo’s vast supply chain to offer incredibly cheap, mass-produced goods. Initially focused on the U.S. market, Temu rapidly expanded its reach, taking advantage of its scale and operational efficiency to disrupt local retail markets worldwide.
Now, in January 2025, with the introduction of local warehouses in Europe, Temu has eliminated one of its major disadvantages—long shipping times. This move represents not only a significant advantage for the company but also a wake-up call for European retailers already grappling with the challenges of competing in a price-driven market.
By setting up warehouses closer to their customers, Temu can:
These advantages solidify Temu’s appeal to price-conscious shoppers and make it even harder for local retailers to compete on traditional terms like pricing and convenience.
Facing a behemoth like Temu, European retailers must acknowledge certain battles they (probably) can’t win:
Sell the same cheap, undifferentiated products:
Temu’s scale and access to global supply chains mean it can undercut prices on commoditized goods every time. Local retailers that try to compete by selling similar low-cost items risk being outpriced and overlooked.
Compete on marketing budgets:
Temu’s parent company has deep pockets, allowing it to run aggressive advertising campaigns across multiple channels. Small and medium-sized retailers often lack the resources to match these efforts, making direct competition a losing game.
While some doors may be closed, others remain wide open for those willing to adapt and innovate. Here’s how local retailers CAN carve out their own space:
Differentiate:
Retailers need to focus on selling more than just a product. By emphasizing the story behind their offerings and curating unique experiences, they can create value that Temu’s standardized approach cannot replicate. For example, local artisans or niche brands can highlight craftsmanship, sustainability, or exclusivity.
Build brand loyalty:
Temu thrives on transactions, not relationships. Local businesses have the opportunity to create lasting connections with their customers by offering personalized service, loyalty programs, and community involvement. Building a sense of trust and belonging can be a powerful counter to Temu’s impersonal scale.
Advertise local nature:
As sustainability and ethical consumption become more important to consumers, local retailers can highlight their proximity and commitment to the community. Emphasizing shorter supply chains, better working conditions, and eco-friendly practices can appeal to quality-conscious shoppers who value responsible buying decisions.
If you're looking for more, here is a more complete guide on how to compete with the likes of Temu and Shein.
Temu’s expansion in Europe, bolstered by local warehouses, poses a significant challenge to local retailers. It’s a stark reminder that the age of competing on price and convenience is over for small businesses. Yet, all is not lost. By focusing on differentiation, loyalty, and their unique advantages as local entities, retailers can not only survive but thrive in this new landscape.
The rise of Temu is undoubtedly a threat, but it also serves as a call to action. The way forward isn’t to play Temu’s game but to change the rules entirely. Success lies in offering what Temu can’t: authenticity, connection, and a shopping experience that’s truly one of a kind.