Criticism of Temu ranges from data mining to rampant waste production to potentially forced labour use, but that hasn’t stopped it becoming the world’s fastest-growing online retailer in just 18 months.
“It’s like AliExpress on steroids. It’s hardcore,” says BusinessDesk investigations editor Victoria Young — who’s also a Temu user.
The Chinese-owned company has taken online retail to a new level and turned shopping into a game, she says, with a pyramid-style formula that uses influencers and the slogan “Shop Like a Billionaire”.
Unlike its online rival Shein, which sells fast fashion, Temu sells a vast array of products from clothing to wireless doorbell cameras to leather bags at rock-bottom prices, and express ships them around the world.
Temu rival Shein sells fast fashion. Photo / AP
It is less than 18 months old but is now the top app by downloads in the US, bigger than even Amazon. Its rapid growth has sparked investigations by US lawmakers into claims it uses forced labour and that it is importing products into the US duty-free.
The BBC reports British anti-slavery charities have raised similar concerns, with suggestions that Temu sources its goods from areas where forced Uyghur slave labour is used.
Temu told the BBC that it strictly prohibits the use of forced, penal or child labour and that “anyone doing business with it must comply with all regulatory standards and compliance requirements”.
Young explains Temu’s background to The Detail and looks at the slave labour and data mining allegations in the New Zealand context.
The company is owned by the Nasdaq-listed PDD Holdings, which was founded by billionaire Colin Huang. Formerly based in Shanghai, it has relocated to Dublin, likely for tax reasons.
Its products are dirt cheap because Temu cuts out the middle man, directly sourcing the products from the suppliers and selling on to the customers. Temu’s aggressive, intense marketing model that relies on a form of pyramid selling, where customers refer it to their network of friends, sets it apart, says Young.
She describes how she was introduced to the online megastore by a friend.
“A girlfriend of mine posted in a group chat: ‘Can you accept my invitation so I can get a free gift’.”
Young clicked to accept the invitation and was immediately offered 10 free gifts herself, followed by promises of 10 per cent discounts.
“And then the wheels start spinning and then you tap the wheel and it says, ‘Hooray’, you’ve won free shipping.” The casino-style game continued until she was told if she wanted her 10 free gifts she needed to share it with friends. Just as aggressive are the follow-ups with three daily emails from Temu urging her to buy more.
Temu’s aggressive, intense marketing model relies on a form of pyramid selling. Photo / AP
Young says the pyramid technique, combined with the company’s huge marketing budget — reportedly more than US$3 billion ($4.88b) a year — its use of Instagram influencers to show off their Temu “hauls”, and advertising at big events such as the Super Bowl, makes it a hard act to follow for local retailers.
The Detail also talks to local influencer Kate Hall, known to her 45,000 followers as Ethically Kate.
She admits she tries to ignore Temu as she takes her message of living sustainably to small groups around the country.
After studying business psychology she sees how the online giant is capturing customers by turning shopping into a game.
“I think we’ll see more of those themes of that type of shopping which makes me sick to even think about.”
But Hall says even so-called sustainable companies are sending daily emails to customers.
“When we think about sustainability we’re not just talking about the environment, we’re talking about your marketing tactics,” she says. “When a company emails you every day with things, they’re trying to play to your thirst for new stuff.”
