It coincided with the approval of new legislation by the Brazilian Senate, which imposes an additional 20% tax on cross-border e-commerce packages with a value of less than US$50.
Temu, the growing cross-ecommerce platform, has made its highly anticipated debut in Brazil, despite facing a number of challenges. The launch, which took place last Wednesday, marks Temu's expansion into its 70th country, consolidating its global presence in the e-commerce landscape.
Amid talks with key players in China's cross-border logistics sphere towards the end of last year, Brazil emerged as a focal point for China's cross-border platforms and sellers in 2024. With a strong population of 216 million, Brazil boasts a 50% larger than that of Indonesia, indicating significant consumer power within its borders. While Brazil has developed digital shopping malls such as MercadoLivre and Amazon, it has not yet established large online marketplaces.
Of the five main platforms frequently referred to by the Chinese cross-border community, SHEIN, AliExpress, TikTok Shop, Shopee and Temu, four are already operational in Brazil. Anticipation now focuses on when TikTok Shop will make its entry into the Brazilian market, with resource allocation currently prioritizing the US market.
The launch of Temu in Brazil coincided with the approval of new legislation by the Brazilian Senate, which imposes an additional 20% tax on cross-border e-commerce packages with a value of less than US$50, on top of the existing ICMS of 17% . Despite the imposing effective tax rate exceeding 40%, Temu remains undeterred.
Originally scheduled for a May 31 launch, the slight delay in Temu's deployment raises questions about its cause, whether due to preparatory measures or pending clarity on the tax regime. However, the delay is unlikely to significantly affect Temu's trajectory.
Employing full shipping to send packages from China to Brazil, Temu aims to offer items at attractive prices to Brazilian consumers initially. However, a transition to the semi-consignment model, which encourages sellers to ship goods from domestic warehouses, is anticipated.
This strategic shift aligns with Temu's focus on the US market, where full-ship digital marketing spend has decreased. The move to semi-consignment not only tests consumer preferences for faster delivery, but also mitigates the political pressures associated with cross-border deliveries.
Despite challenges such as delays in US customs clearance, Temu remains focused on overcoming obstacles. With a substantial portion of Pinduoduo's core management, Temu's execution approach positions it to overcome obstacles that deter competitors.
As Temu's expansion unfolds, its trajectory and potential impact on e-commerce giants like Meli and Amazon remain intriguing. Observers are looking forward to how Temu navigates these challenges and whether it emerges as a formidable contender in the global e-commerce space.
