Bernstein: Temu's GMV is expected to reach US$54 billion in 2024 and has achieved profitability in the United States

Bernstein has published an interesting report predicting Temu’s GMV to be $54 billion by 2024. This represents pretty interesting growth, but perhaps even more interesting is that Temu is now considered profitable in the US and is expected to be profitable in the rest of the world within a year – the UK, Canada, and Australia are particularly promising for Temu.

The report predicts that Temu's gross merchandise volume (GMV) in the second quarter will reach US$11-12 billion. Driven by the adoption of a semi-consignment model in the United States, GMV margins have slightly increased quarter-on-quarter. The full-year GMV for 2024 is expected to be US$54 billion.

As of June, it accounted for more than 25% of US GMV and more than one-third of global GMV in the second quarter.

The report said the removal of the de minimis policy that allowed low-value parcels to be shipped duty-free would have an impact on Temu, but the impact might be smaller than expected - the costs could be passed on to consumers and prices would still remain competitive.

Even with tariffs as high as 20-25%, Temu’s prices are still cheaper than Amazon’s due to lower value extraction, lower merchant margins, and access to cheaper Chinese sourcing.

Adding a semi-consignment mix reduces the risk of potential tariffs. One-third of Amazon’s third-party merchants are Chinese merchants, who will also be affected by the new tariffs.

In terms of profitability, the report states that Temu is now profitable in the U.S., with non-GAAP operating profits of approximately $90 million in the first quarter and $150 million in the second quarter. The rest of the world is still slightly loss-making, but is expected to follow the U.S. trend within 6-12 months.

The report estimates that Temu's full-year GMV this year will be US$54 billion, with a meager annual profit.

The report suggests that comparing Temu directly to Amazon could misrepresent the market opportunity. The US retail market is worth more than $7 trillion, Europe and the UK retail market is worth $3 trillion, and the rest of the world retail market is likely worth $1-2 trillion.

90% of this market is not Amazon GMV, but involves various offline retailers sourcing from similar Chinese suppliers through multiple intermediaries and squeezing profits from them.

From BiaNews