
Temu's South American Strategy: When Ultra-Low Prices Cross the Line
Temu's South American Strategy: When Ultra-Low Prices Cross the Line
The Chinese e-commerce giant Temu has swept across South America like a digital tsunami, promising consumers products at prices so low they seem almost impossible. But beneath the veneer of consumer savings lies a marketing strategy that raises serious questions about predatory pricing and its long-term impact on local economies.
The Numbers Tell a Startling Story
Since launching its aggressive international expansion in 2022, Temu has achieved remarkable growth across Latin America. In Brazil alone, the platform has already surpassed MercadoLibre to become the country's second-largest marketplace, accumulating an estimated 400-500 million users worldwide with about 200 million monthly active users. The company's gross merchandise value is projected to reach $41 billion by 2025, fueled largely by its expansion into emerging markets.
But these impressive figures mask a more troubling reality. Temu's success in South America isn't built on innovation or superior service—it's founded on a pricing strategy that systematically undercuts local competitors by margins that traditional businesses simply cannot match.
The Anatomy of Aggressive Pricing
Temu's approach in South American markets centers on offering products at prices 60-70% lower than comparable items on established platforms like Amazon. This isn't merely competitive pricing; it's a calculated strategy to eliminate competition through unsustainable cost structures that only a heavily subsidized operation can maintain.
The company achieves these prices through several mechanisms that raise red flags about market manipulation. First, Temu connects consumers directly with Chinese manufacturers, eliminating middlemen and leveraging China's manufacturing advantages and currency differentials. Second, the platform operates at massive losses in new markets, subsidizing low prices through venture capital and parent company PDD Holdings' deep pockets.
Most concerning is Temu's focus on what internal data shows: 70-90% of traffic concentrates on popular products with the lowest prices. This isn't consumer choice driving the market—it's algorithmic manipulation designed to hook users on unrealistically cheap products while training them to expect prices that legitimate businesses cannot sustainably offer.
The Predatory Pricing Playbook
Classic predatory pricing involves temporarily selling products below cost to drive competitors out of the market, then raising prices once market dominance is achieved. Temu's strategy in South America follows this playbook with digital-age sophistication.


