Barclays_U_S_Internet_Data_Science_Temu_US_May_Be_on_the_Mend

Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companiescovered in its research reports. As a result, investors should be aware that the firm may have aconflict of interest that could affect the objectivity of this report. Investors should consider thisreport as only a single factor in making their investment decision.This research report has been prepared in whole or in part by equity research analysts basedoutside the US who are not registered/qualified as research analysts with FINRA.(iv) This author is a registered US equity research analyst who is subject to US FINRA Rule 2241Please see analyst certifications and important disclosures beginning on page 14.U.S. Internet / Data ScienceTemu US May Be on the MendUS Temu buyer activations up 46% q/q in 3Q25 off 2Q trough,but still down 40% from the early days of Temu's US ramp.Buyer retention improving a bit in new cohorts, whilepurchase frequency on the rise. Clarity on tariffs, de minimismay mean Temu could get more aggressive in the US in 2026.The Key Takeaway: Consistent with peak uncertainty around trade policy (including the deminimis exemption rescission) and Temu pulling back on ad spend, US Temu buyer activationsin our Barclaycard data troughed in 2Q25, down more than 80% from 3Q23 peak and down 60%from 1Q23 base, before rebounding +46% q/q in 3Q25 – but still down by more than 40% fromthe base period. Temu (owned by PDD) appears to be more aggressively targeting new accountactivations and is currently running a brief app-only $100 promo for new users, in celebration ofthe company's 3rd anniversary of its US launch. Other metrics, such as buyer retention, averagetransaction size and transaction counts continue to show similar patterns among new quarterlycohorts and older groups, reflecting more stable buyer behavior. Overlap spend on Temu andother peer platforms is ticking back up, and as evidenced in our ongoing trailing seven dayspend in our card panel (link), US Temu buyer spend is well off the lows earlier in the year.In the context of our US Internet e-commerce coverage, we view these developments as positivefor names like AMZN, EBAY and ETSY, and our thesis that 2025 would be a year of diminishedcompetition from foreign players such as Temu (and Shein; private, not covered) does seem tobe playing out. That said, with greater clarity on tariff policy and de minimis now eliminated forall US inbound trade corridors (vs. just China/Hong Kong from May 2nd through August 29th),we do think these foreign platforms have a clearer operating environment within which towork, and these marketplaces and underlying sellers can now adjust product pricing andinventory placement to compete more effectively. As such, we would not be surprised tosee a resurgence from these companies as we head into the holiday season and 2026; we'llcontinue to monitor our credit card data to validate whether this is playing out and manifestingin improving spend trends.EU Internet