Temu’s disruption may have been transitory, 2025 data shows

Discount Stores have the most Temu customers

Temu’s meteoric rise shortly after entering the US market in September 2022 generated numerous alarming headlines. They suggested the US retail landscape would be forever reshaped and certain brick and mortar retailers would be disrupted. However, recent analysis highlights meaningfully slower customer growth for the gamified Chinese online retailer as it approaches US market saturation.

Unsurprisingly, Temu penetration is highest among Discount & Dollar Stores within the General Merchandise category. Five Below leads the group at 25.5%, followed by Ollie’s Bargain at 24.8%. eBay (23.8%), Dollar Tree (22.5%), and Dollar General (21.2%) round out the top five. 

Temu customer penetration of Etsy, Walmart, Amazon, and Target ranges from the mid-to-high teens. This is slightly above/in-line with Temu’s penetration rate panel-wide of 15.7% (i.e. proxy for US household penetration rate).

Temu shoppers are highly valuable to most Gen Merch retailers

Temu shoppers spend more annually than the average customer across most large General Merchandise retailers, making them highly valuable. Temu shoppers spent $133 on average at Dollar Tree in the 12-months ended March 16, 2025. This is 1.45x (i.e. 45% more than) the average customer’s spend of $91. Temu shoppers also outspend by double-digits at Walmart (34%), Dollar General (31%), Five Below (25%), and Ollie’s Bargain (14%).

eBay, Amazon, and Etsy only see moderately higher levels of spending by Temu customers. Target is the only large General Merchandiser to experience lower spending from Temu shoppers (-10%).

Temu overlap declining across key Gen Merch retailers

The share of trailing-twelve-month customers shopping at Temu (i.e. customer overlap) peaked in May 2024. However, since then, Temu overlap with leading General Merchandisers steadily declined. This suggests Temu may be falling out of favor with these retailers’ customers.

Overlap with Five Below, the retailer with the highest Temu penetration, reached 19.5% in May 2024. It then declined over 200bps to 17.3% in February 2025. This decline represents the largest drop in overlap among large Gen Merch retailers. Ollie’s Bargain Outlet overlap declined 130bps from 19.0% to 17.7% over the same period. Notably, Five Below’s overlap fell below Ollie’s Bargain Outlet in September 2024 after leading the group since Temu’s US launch.

Etsy (not shown) experienced the second largest decline in overlap, falling to 12.3% from 14.2%. Overlap with Dollar Tree, Dollar General, Walmart, Amazon, Target, and eBay (not shown) each fell around 150bps.

Temu’s direct impact may have been limited

Temu penetrated the US market at an unprecedented rate. However, their success has not had a direct, sustained, and meaningful impact on most large General Merchandise retailers. Walmart, Dollar Tree, Dollar General, eBay, Five Below, Amazon, and Ollie’s customers all spent similarly or slightly more on average at the retailers four quarters after their first Temu purchase. 

Dollar General, Walmart, and Dollar Tree saw quarterly spend per customer steadily rise following a first purchase at Temu. Spending grew low-to-mid single-digits between the quarter prior to first purchase and four quarters after first purchase. eBay customers spent slightly less on average one quarter after a first Temu purchase. Then, spending grew 6% four quarters later, suggesting any impact was short-lived. Average Five Below customer spending was 2% higher after four quarters. Amazon and Ollie’s average customer spending was flat four quarters later, a slowdown from pre-Temu purchase growth trends.

Conversely, Target and Etsy customers spent 3.3% and 4.5% less, respectively, four quarters post first Temu purchase. These trends suggest Temu’s rise has not meaningfully shifted consumer dollars away from most General Merchandise retailers. Instead, a Temu transaction is typically a sign of total wallet growth. However, the data indicates Temu may have stolen spending from retailers with higher discretionary assortment, such as Target and Etsy… (download report to continue reading.)