Do billionaires buy clothes for $9.99? Or maybe smart watches for 15? When Temu made his Super Bowl advertising debut in early 2023, many American football fans may have wondered that, as his tagline was “Buy like a billionaire”.
At that time, about 11 million Americans already knew what Temu was, and had also downloaded the app. Many others were already using its online marketplace to buy discount clothing or home appliances at bargain prices from China-based merchants, who ship their products directly from factories. The e-commerce platform, accessible from 2022, quickly made its way, going from 4.5 million monthly active users to around 77.3 million last June in the US, according to the consulting firm GWS Magnify.
What’s more, the app is enjoying significant engagement. “The users [en Estados Unidos] at the moment They spend almost 10 more minutes a day on the Temu app than on Amazon and Shein“said Paul Carter, CEO of GWS Magnify. It may not seem like much, but taken together, these levels of commitment show the company’s potential to become a serious competitor.
In recent months, Temu has launched its platform in several other locations. Today it is present in 39 countries in the world, both in European countries and in Japan and Australia. In August, its free app was the most downloaded in the Google and Apple stores in Germany.
Temu prices: too low to be true?
The platform attracts potential buyers with very low prices, since it eliminates intermediaries. Temu is an alternative as consumers are hit by post-pandemic inflation and rising costs, Toronto-based author and retail analyst Bruce Winder tells DW. “Temu offers new record low prices not traditionally found in Western retail, as well as access to a huge variety of products,” explains Winder. “It offers a factory-direct model, and touts its value at a time when significant inflation in food, housing and gasoline eats up much of what consumers earn.”
Still, the app relies heavily on scheduled sales, discounts and freebies to encourage impulse purchases. Since launching, they have also invested in online advertising and encouraged influencers to post videos showing what they purchased and make recommendations.
Packaging and CO2 quantities
Temu’s success sparks criticism from environmental activists due to the flood of cheap goods and fast fashion. Boarding individual packages and shipping them around the world adds more global CO2 emissions. Lax US regulations, in particular, make this possible. Most shipments to the US valued under $800 are not subject to tariffs. That means that if a company buys a box of 10,000 t-shirts, it would have to pay taxes. But if those shirts are shipped separately, they don’t. No other country is as generous with shipping duty-free packages.
US consumption data shows that More than 10% of Chinese imports are being shipped directly to consumers. A decade ago it was less than 1 percent.
In 2021, the Federal Reserve Bank of New York estimated that the United States loses up to $10 billion a year in tariffs, according to a report released in April by the US-China Economic and Security Review Commission. The report also highlights other controversial points concerning Temu, such as accusations of trademark infringement and quality issues.
China’s influence and national security
But it’s not underpricing, environmental concerns or counterfeiting that worries government watchdogs most: it’s the security of user data. Relations between the United States and China are at a low point, and American officials are unhappy with companies like Temu, Shein and TikTok hoarding consumer data. Over the past year, there have been numerous calls to ban or restrict TikTok on national security grounds. And Chinese technology has been blocked in many infrastructure projects in the West, such as 5G networks.
Temu’s owner is PDD Holdings, which also owns Pinduoduo, a Chinese online retailer. In its 2022 “Notorious Counterfeiting and Piracy Markets” report, the Office of the United States Trade Representative included Pinduoduo. Although this e-commerce platform had improved anti-counterfeiting measures, the lack of transparency remained a major problem. In March, the Pinduoduo app was removed from the Google Play Store due to suspected malware. This caused Temu to distance himself from Pinduoduo. In the US, he moved his operations to Boston. For the rest of the world, it is registered in Ireland. It is not yet clear whether it stores user data outside of China.
But it’s virtually impossible to guarantee that that data doesn’t end up in China, says Lindsay Gorman, head of the Technology and Geopolitics team at the German Marshall Fund. For her, the key question is what type of data it is. “All technology platforms, to a greater or lesser extent, recognize data as a strategic asset,” she explains to DW. “Chinese platforms have only been more brazen about spying on users.”
Low prices vs. privacy
Although Temu’s website notes that “all data will be encrypted,” specialists like Gorman call for more transparency. “The Chinese Communist Party’s quest for global technological leadership is driven by data and cyber espionage. E-commerce platforms are no exception,” said Washington, D.C.-based Gorman, who recently served as a senior adviser to Joe Biden.
Although she considers purchasing patterns on Temu to be less sensitive than videos or messages on TikTok, the true risk to data security on Temu represents a step forward. “Why does an e-commerce platform need access to Bluetooth and WiFi network information? “That’s the real privacy concern.”
However, as countries become more concerned about competition and review their dependence on Chinese technology, customers are flocking to it. In most cases, abstract ideas about privacy, poor labor standards and environmental protection are overridden by low prices, says Bruce Winder. “I think many consumers are willing to risk their privacy and turn a blind eye to other potential social risks because they are financially desperate,” he concludes.
(cp/ers)
