Despite only debuting in the US in September 2022, Temu has quickly become one of the world’s most popular online marketplaces, now boasting more than 160 million active monthly users and operating in 66 markets worldwide.
However, Temu’s aggressive marketing strategies mean it is a far cry from its tagline of being able to ‘Shop Like a Billionaire.’
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What is Temu?
Temu is owned by the Chinese e-commerce titan PDD Holdings and serves as the Western sister company to China-based e-commerce giant Pinduoduo.
Temu’s popularity stems from the thousands of unbranded products it offers at exceptionally low prices.
The company’s tagline? ‘Shop Like a Billionaire’.
You can find everything from $1 handbags and $13 headphones – which look similar to Apple’s $549 AirPods Max – to $11 canvas wardrobes and $19 adjustable standing desks.
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By GlobalDataThe point is that Temu has a significant amount of really cheap items.
An e-commerce platform as cheap as Temu would have been popular in any case but, it is no surprise that the app’s meteoric rise over the past 21 months coincides with consumers still feeling the squeeze from the decades of high inflation that have wrought a cost-of-living crisis.
Temu delivers around one million parcels daily, with its gross merchandise volume hitting more than $15bn in 2023.
Other heavy-discount-style Chinese-owned e-commerce platforms such as Shein and AliExpress have similarly surged in popularity.
Experts assert that Temu operates as a loss leader, aiming to dominate the market by undercutting competitors.
According to WIRED‘s analysis, the company is currently haemorrhaging around $30 per order as it aggressively seeks to establish itself in the American market.
‘Shop Like a Billionaire’?
Navigating the Temu website or app, it quickly becomes apparent that the experience is a far cry from the company’s alluring tagline, ‘Shop Like a Billionaire’.
Instead, Temu offers a chaotic interface filled with a slew of visually overwhelming, aggressive marketing ploys, which create an unjust sense of urgency for customers to purchase goods.
The platform is flooded with a myriad of sales and lightning deals.
Neon orange countdown timers indicate the remaining time before product offers expire while scarcity alerts highlight items with limited quantities remaining.
Virtually every product is touted as heavily discounted from its RRP.
Temu integrates gamification and rewards, featuring spinning roulette wheels that promise cash coupon rewards.
During the 2024 Super Bowl LVIII, Temu allocated $15m towards coupons and giveaways as part of its campaign strategy in the US.
Incessant in-app messages bombard users with ‘personalised’ offers and gifts.
In just three days, my app inbox received 11 promotional messages – excluding the countless in-app pop-ups encountered.
One such pop-up was labelled as a ‘premium users bonus’ that offered the chance to win a $120 voucher bundle – interestingly, I had never placed any orders with that account.
While Temu is the focus here, it is not alone among fellow Chinese e-commerce giants employing such aggressive tactics, with Shein and AliExpress being notable examples.
These practices have raised concerns and rightly prompted calls for intervention from regulators.
Temu’s regulatory scrutiny
Temu has already faced significant backlash in Europe for its aggressive marketing practices.
Earlier this year, German consumer advocacy groups raised concerns, prompting Temu to cease displaying messages that urged shoppers to ‘Hurry up! Over 126 people have this item in their shopping cart.’
In May this year, the European Commission classified Temu as a ‘Very Large Online Platform’ under the Digital Services Act, subjecting it to stringent regulations aimed at kerbing harmful practices.
Action from the EU in this regard is also anticipated.
Temu has faced fierce scrutiny elsewhere, including in Asia and the US.
South Korean regulators earlier in April began investigating Temu on suspicion of false advertising and unfair practices, although the involved parties have since signed an agreement on product safety.
Meanwhile, the US is cracking down on a trade loophole that allows Temu to effectively sell duty-free in the country.
On gamification and regulation, a Temu spokesperson says: “We recognise that our mobile-first approach and next-generation user experience design may be new to some customers. The game elements in our app draw inspiration from familiar activities often found at funfairs or shopping malls.
“Our time-limited deals mirror the concept of flash sales in physical stores. The coupon giveaways are common in customer loyalty programmes. The idea is to translate these offline experiences into the digital sphere, offering a sense of familiarity and fun for consumers online shopping.”
As Temu continues to expand globally and navigate regulatory scrutiny, its approach to balancing growth and addressing concerns about consumer pressure and trust will be crucial in shaping its future in the competitive e-commerce landscape.
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