The Most Evil Company That Took Over The USA
Summary
TLDRTeemu, a Chinese e-commerce company launched in 2022, has rapidly expanded globally, becoming the second most visited commerce website. Despite its low prices and high sales, concerns about transparency, product quality, and potential links to slave labor have raised questions about its sustainability and impact on the market.
Takeaways
- 🌐 Teemu is a rapidly growing Chinese e-commerce platform that launched in 2022 and has since expanded to over 50 countries, becoming the most downloaded app in the US in 2023 with over 50 million monthly users.
- 📈 Despite its recent inception, Teemu's sales in January 2024 were up over 800%, making it the second most visited commerce website globally.
- 💰 The company has spent billions on advertising across various platforms like Google, Facebook, Instagram, and TikTok, as well as during high-profile events like the Super Bowl.
- 🔥 Teemu is known for its extremely low prices, offering products like shoes for $20, an Apple Watch for $20, and other items at similarly discounted rates.
- 🛍️ Teemu is a spin-off of Pinduoduo (PDD), a Chinese e-commerce company that gained popularity during the COVID-19 lockdowns, especially in smaller Chinese cities.
- 🎰 Shopping on Teemu is likened to playing a slot machine, with roulette wheels for deals and timers that push customers to make quick decisions.
- 🏭 Teemu operates differently from traditional supply chains by cutting out middlemen and selling products directly from factories to consumers.
- 📊 The platform provides a solution for manufacturers by eliminating the need to predict market demand, allowing them to see which products sell better without the costs of storage and handling.
- 🚫 However, Teemu's products often suffer from issues of quality, with customers frequently dissatisfied and returning to established brands.
- 📉 The company's retention rate is estimated to be around 30%, significantly lower than Amazon Prime's 90%.
- 🛂 The growth of Teemu and similar platforms has raised concerns over import laws, specifically the de minimis thresholds, which may allow for the influx of cheap, potentially low-quality or unsafe products into the US market without proper regulation.
Q & A
What is Teemu and how has it gained popularity?
-Teemu is a Chinese e-commerce company that launched in 2022 and quickly spread to over 50 countries. It gained popularity through aggressive advertising on platforms like Google, Facebook, Instagram, and TikTok, as well as through word of mouth due to its extremely low prices. It became the most downloaded app in the US in 2023 and the second most visited commerce website globally.
How is Teemu related to Pinduoduo?
-Teemu is a child company of Pinduoduo, the original Chinese e-commerce company that specialized in bulk purchasing of agricultural goods. While Teemu does not use the bulk purchasing model like Pinduoduo, it shares the concept of shopping being akin to playing a game, with deals and timers pushing quick decisions.
What is the business model of Teemu?
-Teemu operates by cutting out middlemen in the supply chain, selling products directly from factories to consumers. This allows them to offer a wide range of products at very low prices. They also handle all the marketing, leaving suppliers to focus on production.
Why do investors find Teemu's model appealing?
-Investors are attracted to Teemu's model because it provides a solution to manufacturers' need to predict market demand. By listing products directly on the website, manufacturers can see which items sell better and adjust production accordingly, reducing storage and handling costs.
What are the challenges associated with Teemu's long delivery times?
-Teemu's long delivery times, which can take up to 15 business days, are a challenge because they require products to be produced and delivered from scratch. This can frustrate customers who are used to faster delivery times from competitors like Amazon.
How does Teemu's model impact product quality?
-The low prices and fast production cycles often result in low-quality products. Customers have reported issues with products not matching descriptions, being knockoffs, or being unsafe to use. This has led to a low retention rate compared to other e-commerce platforms.
What is the significance of the de minimis threshold in relation to Teemu?
-The de minimis threshold allows packages below a certain value to enter a country without being taxed or regulated. In the US, this threshold is $800, which means most Teemu packages fall under this limit, allowing them to avoid taxes and regulations that other imports must face.
How does the de minimis threshold impact traditional retailers?
-The de minimis threshold creates an imbalance of costs between direct-to-consumer Chinese suppliers like Teemu and larger firms that ship in the traditional way. Traditional retailers pay significant tariffs, while Teemu and similar companies avoid these costs, giving them a competitive advantage.
What are the potential negative effects of the de minimis threshold on the US economy?
-The de minimis threshold can lead to an influx of cheap, potentially low-quality goods, which can impact domestic industries. It also makes it difficult to enforce rules and regulations on imports, potentially allowing unsafe products or those made with forced labor to enter the country.
What is the future outlook for Teemu and similar e-commerce platforms?
-While Teemu and similar platforms are currently popular, there are concerns about their sustainability. Issues with product quality, delivery times, and potential ethical issues could lead to consumer and political backlash. However, the incentives for such platforms are strong, and if one fails, another might rise to take its place.
Outlines
🌐 Teemu's Rapid Global Expansion and Business Model
Teemu, a Chinese e-commerce company launched in 2022, has quickly expanded to over 50 countries and became the most downloaded app in the US in 2023. It's known for its extremely low prices on a wide range of products, from shoes to electronics. Teemu is a subsidiary of Pinduoduo, a company that initially focused on bulk purchasing of agricultural goods. Unlike its parent company, Teemu targets Western audiences and operates more like a slot machine, offering deals and incentives to encourage quick purchases. Despite its success, Teemu's parent company, PDD Holdings, is not very transparent, with limited employee numbers and opaque financials. Teemu's business model involves direct sales from factories to consumers, cutting out middlemen and offering a solution to manufacturers' need to predict market demand.
📦 The Impact of Teemu's Business Model on Delivery and Quality
Teemu's business model, which involves selling directly from manufacturers, results in longer delivery times, often taking up to 15 business days compared to Amazon's 2. This model allows manufacturers to test the market by listing all products and observing which ones sell better. However, the extended delivery time and the quality of the products can be a deterrent for customers. Teemu's strategy of listing a vast array of products and observing consumer behavior is similar to that of Shein, a fast fashion e-commerce site. Despite the appeal of low prices, the quality of Teemu's products often leads to customer dissatisfaction and a low retention rate, estimated at around 30% compared to Amazon Prime's 90%.
💰 The Role of Import Laws in Teemu's Growth
Teemu's rapid growth in the West is partly attributed to the De Minimis thresholds, import laws that allow parcels below a certain value to enter a country without being taxed or regulated. In the US, the threshold is $800, which is significantly higher than in other countries. This law benefits Teemu as most of their packages fall under this limit, allowing them to avoid taxes and regulations. The influx of cheap goods from China, facilitated by these laws, has raised concerns about the quality of products, counterfeits, and the potential for slave labor. The high volume of such imports has also impacted oil demand and chemical production, contributing to environmental and economic concerns.
🛑 Potential Challenges and Future of Teemu
Despite its initial success, Teemu faces potential challenges that could impact its future. American consumers are known to dislike long wait times for deliveries and are increasingly frustrated with the quality of Teemu's products. There is also a growing movement to reduce the De Minimis threshold, which could affect Teemu's business model. In 2023, a bill was introduced to the US Senate to lower the threshold for non-market economies, primarily targeting China. Additionally, concerns about slave labor in China and the impact on American companies have led to calls for investigations and potential bans. While Teemu may not necessarily be banned, it could face consumer and political pressures that could lead to its decline or the rise of another similar company.
Mindmap
Keywords
💡Teemu
💡E-commerce
💡Bulk Purchasing
💡Supply Chain
💡Market Demand
💡Direct to Consumer (D2C)
💡De Minimis Thresholds
💡Quality Control
💡Retention Rate
💡Pinduduo (PDD)
💡Manufacturing Base
Highlights
Teemu, a new Chinese e-commerce company, rapidly spread to over 50 countries after launching in 2022.
It became the most downloaded app in the US in 2023, with over 50 million monthly users.
Teemu is the second most visited commerce website globally, with sales up over 800% in January 2024.
The company spent billions on ads across major platforms like Google, Facebook, Instagram, and TikTok.
Teemu's business model involves selling extremely low-priced items, such as shoes for $20 and an Apple Watch for $20.
It is a child company of Pinduoduo, known for bulk purchasing agricultural goods during the COVID-19 lockdowns.
Teemu's shopping experience is likened to playing a slot machine, with deals and timers pushing quick decisions.
The platform operates differently from Pinduoduo, not using the bulk purchasing model but copying its game-like shopping experience.
Teemu's sales in 2023 topped over 5 billion in America, with an 85% traffic increase on Black Friday.
PDD Holdings, Teemu's parent company, is not very transparent, with few employees and opaque financial statements.
Teemu cuts out middlemen, selling products directly from factories, which benefits both manufacturers and consumers.
The platform provides a solution to manufacturers' need to predict market demand, allowing them to produce based on actual sales data.
Teemu's long delivery times, up to 15 business days, are a trade-off for manufacturers to gauge market preferences.
The platform's low-quality products and slow delivery times lead to a customer retention rate of only around 30%.
Controversial growth of Teemu is partly attributed to import laws, specifically the De Minimis thresholds, which allow tax-free and unregulated imports under a certain value.
The US has a high De Minimis threshold of $800, which benefits direct-to-consumer Chinese suppliers like Teemu.
Teemu's business practices and the De Minimis law have raised concerns about counterfeits, unsafe products, and unfair competition.
There is a movement to reduce the De Minimis threshold in the US to address these concerns, with a bill introduced to the Senate in 2023.
The Chinese e-commerce space is resilient, and if Teemu fails, another company is likely to rise in its place.
Transcripts
if you've been on the internet recently
you've probably seen an ad like this or
this or this this is Teemu the new
Chinese e-commerce company that's taken
over the world despite just launching it
in 2022 Teemu has since spread to over
50 countries it was the most downloaded
app in the US in 2023 reaching over 50
million monthly users it is the second
most visited Commerce website on Earth
and in January 2024 sales were up over
800% you might have heard about it from
the literal billions they've spent on
ads across Google Facebook Instagram Tik
Tok or those famous ones from the Super
Bowl or you've heard of them through
word of mouth that's because everything
on Teemu is just so cheap I'm talking
about shoes for $20 an Apple Watch for
20 and a shyy for less than five what
timu is the child of pindu Duo the
original Chinese e-commerce company who
specialized in bulk purchasing
agricultural Goods with your friends and
strangers pin Doo Duo now PDD blew up
during the covid lockdowns mainly in
smaller Chinese cities hit hardest by
losing access to stable Supply chains
teaming up with strangers helped keep
them running smoothly and farmers in
business
teu though built for Western audiences
and regulations doesn't use the bulk
purchasing model like PDD does but they
do copy one thing shopping with Teemu is
like playing a slot machine one 2 3 4
roulette wheels are spun for deals on
your shopping carts timers tick down as
the site pushes you to make a quick
decision purchases can be split into
four separate ones down the line no
matter how cheap the item is and you
feed Virtual Fish to get credit for more
purchases using Teemu is like shopping
at a mix between the thrift store and a
casino and it works in 2023 sales topped
over5 billion in America traffic was up
almost 85% on Black Friday earnings
almost tripled in a year and PDD became
the largest Chinese Commerce Company by
market cap leting out longtime giant
Alibaba this is all a little odd PDD
Holdings is not a very transparent
company for a company of their value
they employ a remarkably little amount
of people around
13,000 they have little hard assets
little disclosure on their payouts and
quite opaque financial statements not to
mention the challenge of actually
distinguishing between teemu's and pindu
Duo's value in their little amount of
data that's
released so if you don't really know
where your money is going when it's
plopped into Teemu why are so many
Americans investing in
it it's because this website is not your
typical drop shipper or retailer of
course like the average one Teemu
handles all the marketing stuff on their
end suppliers are generally good at
making their products but less so at
getting them out into the world but
unlike a typical supply chain that might
go factory warehouse storefront purchase
Teemu Cuts these middle ones out and
sells them directly from the factory one
benefit of this is that with over
100,000 suppliers in the country with by
far the largest manufacturing base on
Earth Teemu can flood their website with
products ranging from cat toys to drill
bits to anything you can think of why
Teemu does this and what investors
really love about the service is is that
they provide a solution to the
manufacturer's puzzle the need to
constantly predict market demand a
manufacturer wants to make as many
little trinkets as people will buy no
more no less if they make too many
they'll need to store them for a hefty
cost and if they make too little they're
not making as much money as they could
be making which in the world of business
is the cardinal sin instead of
constantly trying to predict Demand with
with models and statistics wouldn't it
be so much easier if they could just
know how many products people will buy
Teemu think so too think about it from
the perspective of selling toys
Christmas season is coming up and the
toy manufacturer has eight designs you
can choose between a company like toys
are a company like Amazon has to predict
which ones are going to sell well and
roughly how many people are willing to
buy if they do this beforehand they can
minimize the amount of time the toys are
sitting on their shelves or in their
warehouses getting the toy to the buyer
as quickly as possible but teu flips
this on its head because they cut out
the middleman that toy manufacturer with
eight different products can put them
all up on the website and literally see
which ones sell better than others they
can cut out all those costs of storing
them handling them and the retailers is
marketing of them the catch is because
they're not buying them in advance it
takes a long time for a Teemu package to
arrive at your door because it takes
time to produce these toys and deliver
them from scratch Teemu takes as many as
15 business days to arrive at your door
compared to Amazon's 2 it takes longer
for the buyer but this way every product
is its own little market survey that's
why Teemu has so many weird products and
plastic dud ads the bizares is part of
their their strategy put everything up
on their website and then see which
little trinkets stick and which ones
they can scrap she in another Chinese
e-commerce site which specializes in
fast fashion uses a similar strategy I
did some shopping around here but this
website it wasn't for me I won't lie
though it has an appeal to it all these
clothes are just so cheap by working
with over 6,000 textile fact factories
across China and also employing a
similar stick everything on the app and
see what people buy model in 2021 Sheen
was able to add 20 times more new items
to their service than H&M and Zara
combined oh and it also outsold these
two as well Shen makes up only a fifth
of all e-commerce sales from China but
the versatility of Tex sters could be
why over half the total sales are
fashion related this model just works
best with easily variable items the
problem with this waiting game is that
the products are usually of such low
quality Teemu customers get frustrated
and shift back to the big players often
times products are not what's described
other times it's a cheap knockoff of an
established brand that would probably
lose you credibility if you wore them
outside or sometimes they're too unsafe
to use I personally wouldn't recommend
getting a toaster on there Goldman Sachs
has estimated that the retention of
Teemu the number of customers who will
come back to purchase another orange
package is only around
30% Amazon Prime has a retention rate
around
90% this Ultra cheap test and repeat
advertised everywhere model may work to
reel people into the service but it
doesn't seem to get them to stick around
Savvy business practices may not be the
only reason teu has performed so well
but before we talk about the other
theory of their growth I want to thank
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grammarly and now let's ask how did teu
grow so fast another more controversial
reason is is often blamed for this
explosion of cheap Chinese Goods into
the West import laws specifically the
Dom Minimus thresholds if a parcel
coming into the country is below this
certain value then you don't have to
declare it it doesn't have to be taxed
and it doesn't have to be regulated the
idea behind this is that it's not worth
a country's administrative capacity to
go through every tiny little package
when they could spend their time looking
for drugs and enforcing teror on the
larger easier to handle containers the
specific value this is varies by country
in Canada the threshold is $ 20 Canadian
dollar in the EU
€50 in the UK 135 quid in Japan it's
10,000 yen in China 50 Yuan many
countries have a threshold of zero and
in America the world's largest consumer
Market it's $800
that is very high globally and it was
actually increased from $200 in 2016 to
reduce costs to businesses and increase
trade the national foreign trade Council
a trade Association that includes
companies like Amazon eBay and FedEx was
certainly happy to increase the amount
of packages coming into the us but so
were their opponents if you look at
teemu's prices a package with them would
almost definitely fall under
$800 pretty much no matter what you buy
and because it's shipped directly from
the manufacturer not through a
wholesaler who tries to move things in
bulk Teemu orders almost always fall
under Dom Minimus in the US since the
online shopping boom of the pandemic and
the highest inflation in a generation
Dom Minimus Imports have boomed in
America to around 2 million a day
600,000 of these are estimated to be
from timu and shien alone 600,000 a day
assuming that's roughly 9,000 tons of
knicknacks that translates to around 90
Boeing 777s coming into the US full of
Teemu and Sheen orders daily these are
individual unlabeled packages coming in
making it very hard to enforce any sort
of rules regulations or keep data on
them contrary to the trend of slowing
Chinese exports growing only 0.6% in
2023 direct to Consumer e-commerce
exports grew by
69% 230 times the average and America
received over a third of these Ecommerce
exports besides a system where
counterfeits unsafe products and
chemicals used to make hard drugs can
slip into the US three Ripple effects of
this boom are one through the chemicals
needed to make these plastic Trinkets
and cheap clothes it's kept oil demand
higher than ever China has been
consolidating the factories to make
these so-called petrochemicals going
from a shortage to a huge surplus of
chemicals like polyester and
pelene China who already produces around
75% of the world's polyester has grown
output by enough in the past few years
to make an additional 100 billion
t-shirts annually in fact the
International Energy agency has
estimated that Global oil demand
excluding petrochemical demand would be
lower today than in
2019 moving chemical production from
Europe and Japan to China is keeping oil
fuming and its prices High the second
issue uh it perpetuates
slavery there are almost 2 million
Wagers in the shin inang region of China
who live in internment camps these are
prison camps for the Muslim population
to be re-educated into Chinese Society
prisoners suffer horrible abuses torture
and are put to work in the name of
curbing terrorism and religious
extremism many countries have officially
declared the system a genocide and the
United States has pass legislation to
block All Imports which use this weager
labor from entering the country
timu officially disagrees with these
allegations saying its low prices are
due to its streamlined supply chain but
an independent audit from Ultra
Information Solutions seems to have
found at least 10 products linked to
this slave labor if the Department of
Homeland Security cannot verify the
origin of the goods through the dominous
loophole then it would not stop products
that were made at the hands of slaves
from being bored entry into the us and
third it's not fair old Joe loves to
talk about Fair competition with China
but the Dom Minimus law creates an
inbalance of costs between direct to
Consumer Chinese suppliers and larger
firms who ship in the traditional way in
2022 Gap paid around $700 million in
tariffs H&M paid 200 million and across
the us over 111
billion was collected timu and Shen on
the other hand haven't paid a single
dime technically this is not illegal
Teemu is just playing by the US's own
rules but it puts American companies at
a huge disadvantage over cheap Chinese
sellers on their own home turf not fair
if you ask most and this is a reason why
there is a movement to get the Dom
Minimus threshold the minimize
back in 2023 a bill was introduced to
the US Senate to reduce the threshold
for non-market economies from
$800 all the way down to
$7 proponents argue these government
lead economies are the ones to unfairly
subsidize their exports bringing their
price down below the limit to sneak
products into the us but of course this
bill is mainly aimed at China and their
glut of small and medium-sized Manu
factories in the growing trade war
between the two superpowers in 2024 a
law was passed which required B dance to
either sell Tik Tok to an American owner
or have it banned from the country the
same bill allows the president to
determine any other foreign adversary
controlled application to have a similar
divest or ban ultimatum the American
government is in the mood to drisk their
economic ties with China that that means
doing more to protect American brands's
intellectual property or blocking the
import of drugs from China in June 2023
the select committee on the Chinese
Communist Party released a report on teu
saying it does next to nothing to keep
its Supply chains free from slave labor
with no internal audits on its suppliers
in April 2024 Senator Tom Cotton wrote a
letter to President Joe asking the
government to officially investigate
team
and ended off with a simple question if
you had the authority would you ban it
maybe Teemu does not need to be banned
it might die off on its own American
consumers a don't like to wait 3 weeks
for their deliveries to come and B are
getting fed up with teemu's quality eBay
probably the most similar American
equivalent to Teemu has claimed they
faced no additional pressure due to
their competitors rapid entry into their
space teu may just be blowing money
giving out free cash and deals to
Consumers who will only click on the
site once get their one package and
switch back to Amazon promptly after
investors may still love teu now but
look back and you'll see many once
Chinese Superstars have fizzled out over
time wish.com had a similar service to
Teemu in fact pretty much identical but
after being the butt of too many wish
version jokes the company lost over 99%
of its value from its peak in
2021 all these viral Teemu hall videos
are an echo of those same videos for
wish products consumers are curious
about the randomness of the purchases
but would never seriously substitute
their quality for that there will
probably come a time when teu succumbs
to either political or consumer pressure
but as for the Chinese e-commerce space
as a whole the incentives are too strong
to kill it outright If teu eventually
dies we will probably just see another
rise from its
ashes one of the only types of products
in the US exempt from the dominous
threshold are agricultural Goods if you
want to know why food seems to face far
more protection than any other industry
then why not check out this joint I made
on
thanks
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