Temu stirs Nigeria’s e-commerce waters amid global struggles

The neon-orange ads have become almost impossible to miss. Whether scrolling through Instagram, TikTok or catching up with mutuals on Facebook, Nigerians are being introduced to Temu–the Chinese e-commerce platform promising quality at “ridiculously low prices” rather aggressively.

But this isn’t just another online shopping platform vying for attention. Temu’s interest in Nigeria signals a pivot by its parent company, PDD Holdings, aiming to tap into one of Africa’s largest consumer markets as pressure rises overseas.

Nigeria’s e-commerce market, valued at $8.53 billion in 2024, is on track to grow to $14.92 billion by 2029.

With nearly 50 percent of the population connected to the internet, Nigerians are increasingly shifting toward online shopping—especially for everyday products—due to the convenience and affordability it offers amid rising inflation.

In fact, online retail spending in the country has grown to $13 billion annually, with projections to hit $75 billion by 2025.

Platforms like Jumia have already expanded to meet the growing demand for online goods, including fast-moving consumer goods (FMCG), fashion, and beauty products. It’s within this rapidly expanding market that Temu is staking its claim.

“The Nigerian e-commerce market is fragmented, with significant players like Zikel Cosmetics, Jumia International, Slot Systems Limited, Ajebomarket, and Chrisvicmall.

Players in the market are adopting strategies such as partnerships and acquisitions to enhance their product offerings and gain sustainable competitive advantage,” said Mordor Intelligence, a market research company.

Temu’s entry, however, appears distinct. It will not be the first Chinese company to sell products to Nigerians at attractive rates with the existence of Alibaba and Aliexpress but unlike its Chinese counterparts, Temu aims to differentiate itself by offering faster delivery times—ranging from 7 to 15 days—compared to AliExpress’s typical 15 to 30 days.

The company offers products at heavily discounted rates, often starting at less than $1, thanks to the platform’s solid supplier connections and the substantial investment from PDD Holdings.

Also, Temu accepts Naira debit cards and bank transfers, a payment feature that Alibaba and AliExpress lack, making transactions more seamless for local shoppers. These features, combined with a deluge of ads, have already begun turning heads.

“I caught the Temu fever and spent my allowance there. Their refund process is seamless,” Blessing, one of many Nigerians experimenting with the platform, shared on X. Another person, Kamaldeen Kehinde, said “I bought some items on Temu last night. After making the payment to test how fast their platform is, I canceled my order, and to my surprise, I received a refund in less than 10 minutes.”

The trade-offs of expansion

But Temu’s Nigerian strategy isn’t without its challenges. While faster delivery and cheap prices are good selling points, Nigeria’s import processes are notorious for their complexity, involving 24 steps to clear goods at Customs-leading to potential delays and increased operational costs.

In addition, logistics and security are key concerns. The lack of a reliable and affordable logistics infrastructure in Nigeria remains a major barrier to the growth of the industry.

“The increase in cybercrime poses a significant restraint to the Nigerian e-commerce market. Cybercriminal activities can undermine consumer trust, disrupt online transactions, and create concerns about personal and financial information,” Mordor Intelligence adds.

Moreover, shipping costs remain steep. Express shipping, Temu’s option to speed up delivery time, can cost $30-$50 per kilogram, according to Sino shipping, an international freight forwarder and customs broker based in China. For a platform relying on low-cost goods, these logistics costs could erode its margins.

The fragmented nature of Nigeria’s e-commerce market poses another challenge. Jumia, for example, has cultivated a strong local presence by tailoring offerings to Nigeria’s infrastructure and consumer habits. Temu must not only match such adaptability but also contend with Nigeria’s price-sensitive shoppers, for whom rising inflation has made every naira count.

A desperate strategy shift?

Temu’s interest in Nigeria might also be a reflection of more general strategy changes as PDD Holdings faces increasing pressure overseas.

In the third quarter of 2023, PDD Holdings reported revenue of 99.35bn yuan ($13.7bn, £10.9bn), below analysts’ forecast of 102.8bn yuan.

Jun Liu, its vice president of finance, openly admitted to “intensified competition and ongoing external challenges.”

Temu is also under increasing regulatory scrutiny in addition to its financial strains. Vietnam threatened to ban the platform unless it registered with local authorities recently. The Indonesian authorities removed the app from major stores to protect domestic retailers and the EU is investigating Temu’s practices in regards to the sale of illegal products.

“There’s uncertainty on potential tariff change and increasing pushback from more countries related to its ‘cheap’ prices,” said Alicia Yap, an equity research analyst at Citi.

These headwinds are likely pushing the platform to pivot to more lenient markets like Nigeria. The company already began operations in South Africa in January this year.

For now, Temu appears determined to have a share of the Nigerian e-commerce cake though it hasn’t made any formal statement or intentions known. But whether Temu can translate its flashy advertisements into long-term success remains to be seen.