• Temu tops 2024 Apple App Store downloads, surpassing TikTok and ChatGPT in popularity.
• The Chinese e-commerce app offers big discounts on a wide range of products.
• Americans appear to be exploring budget-friendly options through in-app deals.

The App Store favorites of 2024 include social media platforms and one popular AI assistant, but the most downloaded app of the year was Temu.

The Chinese-owned e-commerce app was downloaded more times this year than TikTok, Threads, or ChatGPT, according to Apple. It's become known for big discounts on various products, from tech gadgets to apparel.

Temu, owned by PDD Holdings, is particularly popular among Gen Z consumers in the US. Gen Zers between 18 and 24 downloaded it 42 million times during the first 10 months of 2024, according to the app analytics firm Appfigures, which pulled data from iOS and Android users.

The e-commerce giant launched in the US in 2022 and has had a meteoric rise since then. PDD Holdings' third-quarter sales grew 44% to $14.2 billion from the same period in 2023, according to exchange rates on September 30.

It has invested millions to market to American shoppers. Three Temu ads aired during the Super Bowl, where one 30-second clip during the highly-viewed game can cost $7 million.

With Donald Trump threatening high tariffs on Chinese goods, Temu's popularity could be at risk if it resorts to raising prices to offset a possible 60% levy on its products.

Apps from retailers Amazon, Shein, and McDonald's also made the Apple App Store's top 20 most-downloaded list this year — indicating that consumers were on the hunt for a deal across categories.

McDonald's has found success in using targeted in-app promotions to build loyalty among its customers.

The chain's head of US restaurants said earlier this year that loyalty customers visit 15% more often and spend nearly twice as much as non-loyalty customers, with loyalty platform sales expected to hit $45 billion by 2027.

Amazon, for its part, has sought to capitalize on Temu and Shein's low-price appeal with a new Haul section, which is also an app-only shopping experience.

As former Starbucks CEO Laxman Narasimhan was fond of saying, "The best offers are in the app."

Chinese shopping app Temu was once again the most downloaded free app in the U.S., according to a list of top apps and games across the App Store released by Apple on Monday. The shopping app moved into the No. 1 slot last year, stealing the position from TikTok, which held the title in in […]

© 2024 TechCrunch. All rights reserved. For personal use only.

The European Union is drowning under cheap packages coming from Asian online retailers, starting with ultra low-cost e-tailers AliExpress, Shein, and Temu. The Financial Times has learned that the EU is considering a crackdown on such imported goods due to safety and counterfeiting concerns. The issue is there are currently no custom duties on goods […]

© 2024 TechCrunch. All rights reserved. For personal use only.

• Trump's second term may not bode well for Chinese fast-fashion brands in the US.
• The president-elect has floated the idea of tariffs of 60% or more on imports from China.
• Gen Z-favorite brands like Shein and Temu will likely be hit hard by such tariffs.

Donald Trump's victory in the presidential election could spell trouble for Chinese fast-fashion brands, particularly Gen Z-favorite budget brands like Shein and Temu.

On Monday, Trump said in a Truth Social post that he intends to slap China with an additional 10% import tariff — on top of any tariffs he already plans to impose. He said these tariffs were a punishment for China sending "massive amounts of drugs, in particular Fentanyl," to the US.

In his first term, from 2016 to 2020, Trump imposed protectionist policies, including 25% tariffs on $50 billion worth of Chinese goods, leading to a trade war with China.

While campaigning this year, Trump said he would impose tariffs of 60% or higher taxes on Chinese products.

In response to Trump's Monday statements, Chinese Embassy Spokesperson Liu Pengyu said that "no one will win a trade war or a tariff war."

A report published by the National Retail Federation on November 4 calculated that American consumers could lose between $46 billion and $78 billion in spending power yearly.

If Trump imposes a 10% universal tariff on all imports and an additional 60% to 100% tariff on goods from China, apparel prices would increase between 12.5% and 20.6%, the NRF wrote in the report.

Consumers would cut back spending on apparel by up to 33%, the NRF report projects.

The stakes are high for cheap Chinese e-commerce businesses: Temu parent company PDD has for months warned of slowing profits. The company's stock is down 31% this year. Meanwhile, Shein is gearing up for a hotly-anticipated initial public offering, likely next year.

David Jacks, an economics professor from Singapore's Yale-NUS College, told BI that it's "hard to think of any scenario" where the fast-fashion industry "completely escapes revived US protectionism."

He said that because their supply chains originate from China, Shein and Temu are "likely to receive even greater scrutiny and suffer higher tariffs" compared to other businesses that manufacture in Bangladesh and Morocco, for example.

"Consumers will almost certainly pay higher prices, and producers will almost certainly earn lower profits," Jacks added.

The companies have not publicly addressed possible US tariffs, including on PDD's earnings call last week. Lei Chen, PDD's co-CEO, said on the call that "intensifying competition in the global market" and a "complex external environment" will bring "ups and downs."

Neither Shein nor Temu responded to Business Insider's requests for comment.

Shein and Temu won't escape the consequences of tariffs

Jeffrey Towson, the founder of US and China-based retail consultancy TechMoat Consulting, said that Shein and Temu are popular in the US precisely because of their cheap products.

"Shein and Temu excel at very low prices. That's why American consumers love them. But there is nothing left to squeeze out of their China supply chains," Towson told BI.

He said that consumers are likely to face price increases unless "the supply chains are redirected," which he said was "very likely."

Emily Pfeiffer, a principal analyst at market research firm Forrester, said that she expects struggles for the businesses in the future, especially after Amazon launched its own low-price site called Amazon Haul.

"Shein and Temu only became popular in the US relatively recently, over the past four years or so. They haven't been subjected to changes that would have a sudden, significant, negative impact on their competitiveness as low-price marketplaces," Pfeiffer said.

But Jacob Cooke, CEO of e-commerce consulting firm WPIC Marketing + Technologies, offered an alternative view. He said that even if the tariffs are imposed on Temu's imports, the brand "will still be price competitive due to thinner merchant margins and access to cheap Chinese sourcing."

Shein and Temu have made bank in the US

Shein is known for its massive garment production. Analysts have called Shein's business model "real-time retail" because new designs can take as little as three days to produce, Vox reported in 2021.

The company is planning to go public in the UK, eyeing a $65 billion valuation, Bloomberg reported in October.

However, its reputation has been marred by exploitative labor practices and investigations that showed that its products contained toxic substances.

And while Shein has become synonymous with fast fashion produced in China, it's facing rising competition from Temu.

Temu sells low-cost products ranging from home goods to motorcycle accessories. In February, it spent millions of dollars on Super Bowl advertisements in an effort to win over the US market.

Both brands have been under regulatory scrutiny. In September, the Biden administration announced that it would take steps to reduce the "abuse" of a trade law that has allowed firms like Shein and Temu to avoid taxes and tariffs when they enter the US.

The trade provision, called "de minimis," allows importers to avoid paying import fees on shipments of less than $800 if they go straight to consumers.

• Children's clothes from Temu and AliExpress were found to contain toxic substances.
• South Korean authorities said a jacket from Temu contained 622 times the legal limit for such substances.
• The substances include phthalate plasticizers, lead, and cadmium, which are classified as hazardous in the country.

Some children's clothes from Chinese fast fashion retailer Temu contained up to 622 times the legal limit for toxic substances, the Seoul Metropolitan Government said.

The government tested 26 pieces of children's winter wear from Temu, AliExpress, and Shein and found that seven contained toxic substances like phthalate plasticizers, lead, and cadmium, per its news release on Friday.

A children's jacket from Temu contained 622 times the legal limit for phthalate plasticizers, a chemical compound that makes plastics more flexible.

According to the government's news release, the jacket was also found to contain lead at about 3.6 times the legal limit and cadmium at approximately 3.4 times the limit.

"Phthalate-based plasticizers affect reproductive functions such as sperm count reduction and can cause infertility and even premature birth," an official from Seoul's environmental health team told the AFP after an earlier investigation in August.

Lead and cadmium are both hazardous carcinogenic materials, according to the US Department of Health and Human Services.

A jumpsuit from Temu contained 294 times the legal amount of phthalate plasticizers, the report said. The report also said a pair of children's shoes from AliExpress contained around five times more lead than is legally permitted in South Korea.

Temu, which is owned by the Chinese company PDD Holdings, sells low-cost products ranging from home goods to motorcycle accessories. In February, it spent millions of dollars on Super Bowl advertisements in an effort to win over the US market.

In response to a request for comment from Business Insider, a Temu spokesperson said: "Of the seven products mentioned in the Seoul Metropolitan Government's recent report, two were sold on Temu."

"These products had already been removed from our platform through proactive monitoring before the report was issued," the spokesperson added.

An AliExpress spokesperson told BI that the platform had "cooperated with the Seoul Metropolitan Government's request to remove the affected items from sale immediately."

Representatives for the Seoul authorities didn't respond to a request for comment from Business Insider.

This is not the first time South Korea has found toxic chemicals in items from Chinese fast fashion brands.

In August, the Seoul authorities found phthalates in some pairs of shoes, with one particular pair containing 229 times the legal limit.

The same investigation revealed that sandal insoles sold by Temu contained 11 times more lead than legally permissible.

And in an earlier investigation in May, Seoul officials said that they tested a pair of Shein shoes, and found that it contained 428 times the permitted levels of phthalates, according to the AFP.

The company is planning to go public in the UK, eyeing a $65 billion valuation, Bloomberg reported in October. The date of the IPO has not yet been revealed.

With reference to the November 22 report, a Shein spokesperson directed BI to a report by Seoul authorities showing that the tested Shein products were in compliance with regulations.