This post is also available in: Română (Romanian)
Temu takes the e-commerce battle to the next level
Suddenly, clicking on an advert, I found myself becoming a Temu user, a new Chinese alternative to Amazon or Emag, in addition to the older, more established Alibaba.
What’s different about Temu – a PDD group company – is that the online shopping experience is more akin to video games, there’s a gamification of shopping. While you’re on the page, animations appear with additional discounts, or a roulette game where you win a coupon, etc. The company also puts pressure on the consumer to act quickly, as the discounts are only temporary.
It’s clear that Temu knows how to push consumers’ buttons, having the technology behind it to see what you’ve looked at, what you haven’t bought, and tries to force the decision (maybe the product is cheaper at other shops – let’s come up with a new discount offer on that item!) Leaving my products in the shopping cart for several weeks without completing the order, I started getting all sorts of surprise discounts, and more “click on the image” messages to see what you won, etc. I get daily emails with subjects like “Congratulations! I am so happy for you!” or EXTRA DISCOUNT OFFER – You have been picked by the butterflies! – with a butterfly animation that gets you a surprise discount. OK, it’s clear that these things are on a pretty naive level, seemingly aimed at children, but the company’s results on the market are spectacular.
Temu has reached 75 million users in the European Union and 77 million users in the US. Last month, PDD Holdings, the parent company of Pinduoduo and Temu, reported that its annual revenue nearly doubled in 2023, while Alibaba and JD’s revenue grew by less than 10%, according to The New York Times. Competitors, even market leaders, are worried. The founder of e-commerce giant Alibaba, Jack Ma, sent a memo to all employees, asking them to adapt.
Overall, Temu is a danger to all retailers who have grown accustomed to dominating their markets and, comfortable in their dominant position, have neglected customer relations. Temu’s prices are very attractive, the products are a mix of quality, some bad, some OK – but the customer service system is very consumer friendly. First of all, if the shipment is late beyond a certain date you get a 25 lei credit. Returns are very easy, with no resistance from the company, or even prompted by it. I wanted to give a one star review on a garden hose (I ordered a 15m one and they sent me a 15ft one) – but before writing the review I got a message to see what the problem is and if I wanted to return the product, so I clicked OK and got a pre-paid DHL label.
On another note Temu is also a new trade channel boosting exports of goods produced in China, which is still struggling to recover after the pandemic, to the West. Consumers are rejoicing, shipping companies too, but it’s worth noting that China is thus managing to break into more high value-added trade channels.
This reminds me of an English businessman who used to explain to me why trade with China is not a problem – “See this hammer from Tesco? It costs £7. But the factory in China got 70 pence for it (£0.70). The bulk, £6.30, is made by the others in the chain, the British firms – importers, distributors and in the end most of the money goes to Tesco.” Well, now the Chinese have realized that you don’t get rich from production but from trade and having their own shops with direct access to Europeans and Americans, they are betting that they will earn more, even if the products are sold at a low price – after all, the margin between the £0.70 and £7 is big, and they can comfortably sell that hammer for £2 and make three times as much money as before.
One thing that is not to be overlooked, however, is the danger posed by the aggressive gamification strategy – turning shopping into a game, or even gambling – it is quite likely that we will soon have many people addicted to Temu-style shopping.
Yet another criticism regards the Chinese apps’ collection of data in the West. According to Politico, cybersecurity and privacy officials are concerned about the Temu app’s shadowy privacy and cybersecurity practices, the suspension of its Chinese sister app over malware, and Beijing’s potential access to Temu’s data.
