Temu vs. Shein Pricing Psychology💡

🛍️ Temu's Steep Global Discounts

Temu has captured attention with aggressive discounts, averaging 60%-75% off across markets in H1 2024. UK shoppers enjoy the highest reductions at 75%, while Chile sees 60%. Southeast Asia, including Malaysia and the Philippines, averages around 68%. This strategy has turned Temu into a “daily Black Friday” for customers. According to Measurable.ai’s unique e-receipt panel, these substantial discounts are a key driver in Temu’s rapid growth and appeal globally.

💰 Shein’s Smaller, Precise Cuts

Shein offers far lower discounts, mostly under 20%, with exceptions like 27% in the UAE and 23% in Saudi Arabia. US customers see a mere 9%, the lowest among markets. Despite this, Shein users often spend more per order after discounts. For instance, in the US, Shein's average order value exceeds $58, compared to Temu's $40. Measurable.ai notes that Shein’s strategy relies on higher perceived product value rather than steep discounts.

📊 Psychological Pricing Impact

Shein’s strategy emphasizes precise pricing, which research shows can drive sales. Discounts like 6.8% instead of 7% resonate more with customers psychologically. Temu, meanwhile, focuses on extreme reductions that evoke a sense of urgency. In Middle Eastern markets like Kuwait and Qatar, Shein customers spend significantly more, while Temu's lower AOV dominates Southeast Asia. This dynamic highlights the psychological impact of pricing methods.

🎯 Incentives: Temu Leads the Pack

Incentive-driven strategies are central to both platforms. In H1 2024, 85% of Temu’s orders were incentivized, compared to 59% for Shein. Shopee and Lazada also trailed at 35% and 82%, respectively. Measurable.ai suggests that Temu's generous incentives are key to retaining new users. This heavy reliance on promotions sets Temu apart but raises questions about sustainability in long-term competition.

Are Temu’s deep discounts sustainable long-term?