Why are both TEMU and TikTok Shop targeting Europe?

Can Chinese e-commerce platforms continue their past myths in the European market? Which consumer groups should the European market focus on and what are the characteristics of these groups? What are the new consumption trends in Europe?

Globally, the supervision of social and e-commerce platforms with Chinese backgrounds has been continuously strengthened in the past few months.

Not only is there a bill against TikTok (registered in Singapore) in the United States, but the European Union has also officially launched an investigation into TikTok’s interference in member states’ elections. At the same time, Vietnam and Indonesia have also issued platform bans against TEMU and Shein. Obviously, in the face of the rapid rise of social and e-commerce platforms with Chinese backgrounds, regulators around the world have shown unprecedented vigilance and precautions.

However, these have failed to stop the global ambitions of these Internet platforms with Chinese backgrounds, especially their determination to expand their territory in the European market. Judging from the situation in 2024, both TEMU and TikTok Shop have made breakthroughs in the European market: on the one hand, TEMU is making great strides in the German, French, Spanish and Italian markets, and TikTok Shop has successively opened up the Irish and Spanish markets on December 9, and is expected to continue to further expand its business in core countries such as Germany, France and Italy next year.

In fact, whether it is TEMU or TikTok Shop, as the pressure on the North American market increases, betting on Europe is an inevitable choice: according to Morgan Stanley analysis, the European market will become TEMU’s largest source of turnover (GMV) in 2024, accounting for as much as 37%. TikTok Shop is also constantly looking for breakthrough points between different European countries’ markets, weakening the identity of third-country platforms through more localized operation strategies.

From the perspective of e-commerce, the European market has always been a tough “bone”. According to Xinfu’s research, in the eyes of many large sellers in China, the European market is sometimes more like a “chicken rib” compared to the US market.

On the one hand, European consumers have always been cautious about online shopping. They prefer to buy products that can be “seen and touched” through offline channels, rather than relying entirely on information on the platform. On the other hand, European consumers are generally regarded as a group with extremely high brand loyalty. Not only are they willing to pay a premium for well-known brands, but they usually do not change brands easily.

In the past five years, the European market has suffered from inflation. In my research in recent years, prices have risen significantly in Berlin, Paris, Amsterdam and Budapest. For example, a small loaf of bread that used to cost only 0.2 euros has now risen to 0.8 euros; and a bottle of mineral water that originally cost 0.3-0.8 euros is now close to 1.5-2 euros.

In 2020, the outbreak of the epidemic promoted the rapid development of e-commerce in the European market. In the UK, the proportion of online sales in total retail sales increased from 18% in 2019 to 28% in 2023; in Germany, this proportion increased from 8.9% to 21.7%; and in France, it increased from 7.8% to 20.2%. At that time, many forecasts believed that with the end of the epidemic in 2022 and the resumption of offline shopping, there would be a certain correction in the demand for online shopping. However, the reality is that with the increase of inflationary pressure in Europe, e-commerce with stronger cost-effectiveness has not only not declined, but has delivered satisfactory results.

Since TEMU entered the markets of major European countries in 2023, its performance in many countries has been very impressive. According to European media reports, in Germany, one in three people shop on TEMU; in France, 12 million people shop on the platform every month in the fourth quarter of 2024; in the UK, more than 60% of consumers have already shopped on TEMU, of which 62% are repeat customers; in Denmark, TEMU even surpassed Amazon to become the most popular online retail platform; in Italy, TEMU is also one of the most downloaded applications.

The best market for TEMU in Europe is Germany. As the country with the strongest purchasing power in Europe, German consumers have always been known for their rigor and high requirements for quality. Why are they so obsessed with TEMU?

Two important reasons: First, TEMU’s promotion and penetration in the early stage are very strong.

The survey found that when more than half of consumers in many European countries decide whether to buy, the most critical factor is no longer the brand, quality, production method or country of production of the product, but the price. For example, in Germany, more than 51% of consumers believe that price is the core factor for changing brands, and only 13% of consumers change their purchasing habits due to product quality. In France, 50% of the lower middle class and 30% of the upper middle class believe that price is the most important factor in refusing to buy a product.