Amid the slew of celebrity-driven Super Bowl advertisers this year, one brand stood out for its orange-hued value proposition. Temu, a new Boston-based online marketplace owned by China-based PDD Holdings, spent big money on the Big Game—an estimated $14 million on two 30-second ad buys—to announce its U.S. arrival. And it worked, as curious consumers flocked to Temu’s site to peruse its $1.18 sewing kits and $25 baby carriers. Temu, which is pronounced “tee-moo,” became the most downloaded app in the U.S. within weeks, according to consumer intelligence firm GWS, which found that daily users surged 79% from 5.9 million Dec. 1, 2022 to 10.5 million as of Feb. 25.

Temu might have gotten an awareness boost from its investment, but it’s not the only e-commerce company with Chinese connections looking to make a splash in the U.S. In recent months, brands including AliExpress, the consumer-facing shopping app owned by Alibaba Group, and fast-fashion brand Shein have poured marketing dollars into media here as they look to U.S. consumers to fuel their expansion. They all push a similar proposition—cheap and convenient. In Temu’s “Shop Like a Billionaire” Super Bowl spot, for example, song lyrics include “I like it, it’s mine. The prices blow my mind.”

“As we’re looking at saturation—or potential saturation—of the market in China, these companies are looking for growth beyond their borders,” said Kate Scott-Dawkins, global president of business intelligence at GroupM, which recently spotlighted an economic rebound in China in a report.

Much of that growth appears to be focused on the U.S., where cost-conscious consumers, spurred by an unpredictable economy, may now be inclined to try out their inexpensive wares.

Also read: Temu was a surprise newcomer to the Super Bowl

Though founded over a decade ago, AliExpress only just started advertising in the U.S. last fall, when it ran a Singles Day campaign with Chicago-based agency OKRP. That push, which involved creative and paid media, was eclipsed by a larger effort this month when the online marketplace highlighted its new Choice offering, a curated selection of high-rated products with free shipping, according to a spokeswoman for the brand. Parent Alibaba spent $81 million on U.S. measured media in 2022, a 13% rise over 2021, according to Vivvix, including paid social data from Pathmatics. AliExpress alone has spent around $800,000 on advertising here since its debut, according to intelligence firm MediaRadar. Marketing executives from AliExpress did not return a request for comment.

Similarly, Shein, known for its shrewd TikTok marketing, spent $405 million on U.S. measured media last year, a 33% rise over 2021, Vivvix found. For its part, Temu has already spent $43.4 million on overall advertising here since December, according to MediaRadar. Neither Shein nor Temu responded to requests for an interview.

The bulk of the marketing—with the exception of Temu’s Super Bowl national TV buy—appears to be digital, as brands focus on social media and other engagement channels for connecting with new customers. For example, MediaRadar found that Shein’s advertising has been 100% digitally focused, with 88% dedicated to social platforms and the rest given to online video and digital display.

“Temu entering the U.S. only a few months ago is perhaps the most aggressive marketing approach yet and it shows how much demand is still out there for these types of offerings,” said Juozas Kaziukenas, founder and chief executive of Marketplace Pulse, which analyzes e-commerce marketplaces. He noted that many retailers are hoping to replicate the success of Shein, which has been raking in downloads and consistently hovers near the top of the most-downloaded list of apps.

The Wish dilemma

Many of these companies are following the digital playbook of Wish, a discount online shopping marketplace based in San Francisco selling low-cost goods manufactured in and shipped from Asia.

Wish was “spending a billion dollars a year or more on advertising globally,” said Scott-Dawkins. “It’s a model that has been practiced before and is now being utilized by likes of Pinduoduo [PDD’s former name], Temu and Alibaba for expanding globally.”  

Yet Wish ran into issues the newcomers are hoping to avoid—mostly because they are backed by larger Chinese companies with deep pockets. After its 2010 founding, Wish filed for an IPO three years ago. Wish built its brand with online marketing at a time when advertising on Facebook was inexpensive, but as prices went up, the effectiveness went down, said Kaziukenas, citing public remarks made by Wish executives. The company has since decreased its marketing spend. Wish’s sales and marketing expenses went from $1.7 billion in 2020 to $254 million last year, according to financial filings from parent company ContextLogic Inc. Its revenue has fallen as it struggles to acquire new customers and return to growth. It reported $571 million in revenue last year, one-fifth of what it reported in 2020. Wish did not immediately respond to a request for comment.

These online retailers are emerging at a time when there is increased scrutiny on Chinese-affiliated brands. Popular platform TikTok is facing a potential ban in the U.S. if it does not separate from China-based parent ByteDance Ltd. While TikTok is under threat for different reasons—lawmakers are concerned about the implications of the app’s data collection of U.S. consumers—the ripple effect could drag down others. Earlier this week, Google halted downloads of Pinduoduo, the sister ecommerce app to Temu also owned by PDD, because of security concerns. Temu has yet to be affected, according to a Wall Street Journal report.

Also read: How TikTok is approaching the threat of a ban

“There are less political concerns about data and who gets what like with TikTok, but if we see this protectionism of domestic retailers, we might see some anti-Shein, anti-Temu rhetoric,” said Kaziukenas. “But this is going to be a harder narrative to push because so much of what is sold by retailers already is sold by Chinese retailers—half of Amazon and eBay sellers are Chinese,” he added.

So far, brands appear to be building buzz from marketing investments. Temu, Alibaba and AliExpress and Shein have seen consistent chatter on Twitter since early November, according to social media analytics company Sprout Social. In total, the brands saw a volume of 2.64 million Twitter mentions leading to 17.1 billion impressions and 13.88 billion engagements such as likes, shares or comments, Sprout found. Overall sentiment for the brands was 36% positive, 40% neutral and 24% negative.

A lot of engagement is driven by the gamification of the shopping experience, a strategy these brands have perfected. Brands like Temu have discounts hidden inside games that customers are encouraged to play to win more deals and savings.

Shein’s website greets consumers with a coupon popup and an invitation to “Collect all.” Temu is also focusing on referrals, offering customers discounts to refer friends on social media, for example. Capitalizing on the trend of social commerce is smart given where the bulk of customers are spending their digital time, according to Zarina Stanford, chief marketing officer of Bazaarvoice, a shopper engagement platform.

“Consumers want to hear from other consumers,” she said, noting that Gen Z and Gen Alpha particularly are often referring and sharing content.

Too good to be true

One challenge for new brands is convincing U.S. customers of authenticity. In the face of low prices and shipping, many consumers may be skeptical of the credibility and quality of the product, experts say, noting that this may play a role in the marketing messaging moving forward. This is particularly true given the brand-less nature of the products—while the items are familiar, they are not from brands that Americans recognize.

“Some of those prices almost seem too good to be true,” said Michael Felice, associate partner in the communications, media and technology practice of Kearney, a global strategy and management consulting firm. Consumer questions could range from “Am I buying something that’s real is this the product?” to “If I type in my data, what’s happening to it,” he said—“because we become more concerned and conscious of that,” he added, noting the ByteDance news. 

While gaining brand awareness with a Super Bowl spot, and getting consumers to refer other friends and make a purchase is helpful, it’s really just the first hurdle. The larger test will be getting customers to return. Generating repeat purchases is the only way Temu or AliExpress can truly scale their platforms to see long-term growth, experts said, particularly when the cost of acquisition is so high. Using marketing to get that continual churn can be vital, but difficult when viewers are now so conditioned to seeing social media ads that they start to blend into the background, said Felice.

“The important thing is getting that customer back, expanding the basket size and expanding the interaction,” he said. “These companies really have to focus on the repeat rate.”

They can do that by creating a sense of community and further engaging with customers through more gamification, user-generated content and reviews, experts said. Felice noted that eventually, these brands may look to brick-and-mortar to strengthen their presence in the U.S. This could mean partnering with an existing name-brand retailer in a move similar to the Sephora shops within Kohl’s, which could also strengthen the supply chain.

In the future, Chinese-based retailers may also face obstacles around issues such as import duties as they scale. Shipping individual items does not carry a tax, but shipping containers full of goods does, according to Kaziukenas. By not wholesaling and shipping direct to consumers, Temu avoids that tax, he noted. 

Finally, one of the largest looming questions for success is around environmental safety and sustainability standards.

“How much is ethical manufacturing, how much is counterfeit?” asked Kaziukenas. “There are drawbacks that come with these super low-priced items.”