How to compete with Temu
The easy days for e-commerce in Switzerland are over, the low-hanging fruits have been picked and new giants have been created. Since its launch in Switzerland in early 2023, Temu has been on a seemingly unstoppable turnover run, flooding the ad space and outcompeting seasoned companies like Aliexpress and wish.com. If even the dropshipping giants are having a hard time, how can mom-and-pop online stores compete with billion dollar marketing budgets from China?
Temu - the new orange giant
What does Temu offer?
Temu is not offering a completely new shopping experience, as most of its tactics have been seen before. The gamification, cascades of discounts and bait offers are common practices for online stores, but Temu perfected the techniques and created a new paradigm. Thanks to its apparently infinite marketing budget, it’s impossible to avoid seeing Temu ads. With their C2M concept, connecting manufacturers directly to consumers, Temu eliminates several layers of middlemen, which leads to substantially lower costs for the end consumer. Critics are pointing at unsafe products, immoral labor conditions and possibly illegal business practices, but why are customers still coming back to the app?
It’s prices stupid
Swiss customers feel cheated. For years, online stores have imported off the shelf products from China for next to nothing and sold them for a 10x markup. Yes, Labor costs in Switzerland are expensive, warehousing is expensive, marketing and customer service are expensive but in the end it’s still the same product. Just having a Swiss Team doesn’t make your products better. Why should customers pay for all of these costs if they get the same products on Temu for a fifth of the price?
Back to the basics
Switzerland is still very fertile ground for e-commerce startups, but you need to know the game you are playing. There is no way to compete with Temu on prices or breadth of products. You might be able to carve out a short-lived niche for yourself by offering a depth of off the shelf products and position yourself as the leading expert. The pressure to stay ahead of the competition will seduce you to start competing on prices or increase the breadth of your product offering, which leads you down the slippery slope of giving up your initial USP. In order to win and stay on top of your game you need to create products nobody else can offer.
Farmers’ market aren’t Migros’ competitors
Temu is not your competitor - if you don’t play their game. Temu will offer everything under the sun that offers the slightest margin, but they can’t compete with your niche interest. The future of e-commerce is shaping up to be a few big behemoths and a very very long tail of niche stores catering to a 1000 fans. The former might be Temu and the latter your business, but that’s fine. Migros is not competing with Farmers’ Markets, but complementing each other. You do your daily grocery shopping in Migros, but once in a while you want something specific, special or new - that’s when you go to the Farmers' market. The products are more expensive & it’s less convenient - but people feel the difference of buying goods from somebody that deeply cares.
The winning formula
You need to create your own niche. Let’s say you are an enthusiastic Open-Air music festival goer. You know exactly what kind of products you need to survive the raging sunshine, the occasional rain with the muddy camping grounds and the constant fear of running out of smartphone battery. You know your customer - because you are the customer. You know the needs and pain points. The tents, pavilions and power banks are your expertise - use it to your advantage. Keep your eyes open and think how to make the products more handy, more useful and how to possibly combine them. How often did you have a product in your hands where you thought one simple change would make this so much better?
Make it count
Be curious & get your juices flowing. Brainstorm with your friends & family - they know what you are good at or even share your interests (and be your first customers). You would be surprised how many manufacturers are open to incredible levels of customizations, but they will need your expertise and practical experience to know what to do. Define the niche, write down the pain points inside your community and find possible solutions. You won’t know if you can fix them until you try. But give it a try!
We are here for you
You have an idea for a new product and don’t know how to start? None of the products on offer solve your problems but you know what would make them better? Let us help you.
We are the bridge between Swiss SMEs and Chinese manufacturers. We will source your products, organize your manufacturing processes and find the best suppliers for your customizations.
We want to create the future of Swiss e-commerce together with you.