o Southeast Asian consumers,” Simon Torring, co-founder of Cube Asia, a Singapore-based e-commerce consulting firm, told Inside Retail. “They don’t necessarily seek the cheapest product but rather value for money. They’re willing to shop around to find the best deal. This is a good starting point for Temu.” However, Torring expects the market reaction to be less dramatic than what has been seen in Europe and the US based on Temu’s performance in Malaysia and the Philippines, where it has gained some, but not a significant amount of, market share. “In the Western world, it has been incredibly successful because many products on Temu were either unavailable to consumers or much more expensive through platforms like Amazon or Walmart’s e-commerce,” he said.   “In Southeast Asia, however, the disruption is less intense because many of these product types are already available on platforms such as Shopee, Lazada, and TikTok Shop.” According to Torring, one of the success factors of incumbent platforms like Shopee and Lazada is their broad assortment, which allows consumers to treat these e-commerce platforms as one-stop shops.  “With Temu’s current model, it’s not clear if they could welcome the brands that perform well on other platforms. Because Temu’s model is so deal-driven, this could present a challenge if they want to truly capture the Southeast Asian market,” he added.  In contrast to the US and Europe, where Temu’s prices seem almost unbelievable to consumers, its price advantage in Southeast Asia is expected to be less striking. “I believe Temu will face stiff competition from incumbents who offer a more comprehensive selection, which consumers greatly appreciate.” According to Cube Asia’s latest report, e-commerce in Southeast Asia is on an explosive trajectory, with online sales in the region projected to reach US$190 billion this year. The market is dominated by Shopee, which accounts for more than 40 per cent of the market share. Shopee’s parent company, Sea Ltd, beat revenue estimates for the second quarter and raised its forecast for e-commerce platform Shopee, signalling robust demand for online shopping in Southeast Asia.  Impact and regulations Temu’s entry into Thailand has sparked concerns over unfair competition and its potential impact on local online sellers.  Torring expects the most vulnerable business model is one that offers such goods but cheaper by taking a smaller margin. He also added there could also be some effect on similar small sellers in offline channels, as their business model is also based on buying products from China and selling them at a markup. Temu is simply able to operate with a smaller markup. “This is a tough pill to swallow for local retailers, who will view it as unfair competition. Consequently, Temu will operate in a space where consumers love them, but local retailers dislike them. It remains to be seen which of these groups will have more influence in shaping regulations,” Torring said.  Amid concerns from local business, especially over the baht outflow to China due to the influx of substandard Chinese goods, Thai authorities from various government organisations have called for actions to address the situation.  The expert said discussions about cross-border e-commerce have been ongoing in Thailand for months, long before Temu entered the market. These conversations have primarily focused on removing the VAT exemption for small e-commerce orders. If implemented, this regulation would add approximately 7 per cent or 8 per cent VAT to cross-border prices, in line with what domestic merchants currently pay. The intent is to level the playing field between overseas and domestic sellers.  “This has been a topic of discussion for at least six months,” Torring said. “When Temu entered the market, it became a major local news story in Thailand. We’ve seen reports about the Prime Minister planning to review and invite different e-commerce platforms to discuss cross-border e-commerce. However, since then, the country has had a change in leadership.” Torring said Temu’s challenge is to manage sensitivities regarding safety, security, and product quality.  “There are some consumer doubts, and it will be crucial for Temu to address these proactively. They must strive to be an exemplary corporate citizen in Thailand and all markets they enter. There will be significant scrutiny, so they must be 100 per cent compliant,” he concluded.