OnlineShop Online Shop News What you need to know about Temu, the online shopping app dominating download charts

What you need to know about Temu, the online shopping app dominating download charts

What you need to know about Temu, the online shopping app dominating download charts post thumbnail image

“I’m shopping like a billionaire,” sings a voice in Temu’s Super Bowl ad, echoing the online shopping app’s tagline.

With many of the e-commerce platform’s best-selling goods priced under $10, it’s easy to see why people are flocking to the app to purchase everything from clothes and accessories to home appliances.

But some experts caution people to think critically about using it.

“You probably get what you pay for,” said Shreyas Sekar, an assistant professor of operations at the University of Toronto Scarborough and the Rotman School of Management.

Temu — a Boston-based, Chinese-owned shopping app — first launched in the US in September 2022. Its owner, PDD Holdings Inc., also operates a sister company, Pinduoduo, a Chinese e-commerce platform. Since its Canadian launch in early February, Temu has since held the number-one spot for mobile downloads for both apples and Androids users for weeks.

Its massive popularity has been bolstered by an aggressive social media marketing campaign. The hashtags #meet on TikTok has now amassed 1.3 billion views. On YouTube, videos on their official account alone have grossed over 215 million views since last August.

Sekar, whose research specializes in online marketplaces, describes it as a “growth-at-all-costs” approach.

A big contributor to Temu’s popularity is their referral strategy, Sekar said, which he calls a “borderline pyramid scheme,” where users are encouraged to get their contacts to download the app in exchange for free gifts or in-app credit.

“This unique combination of super cheap products, crazy marketing, combined with the social gamification thing they have going on has kind of led to them kind of ascending to the top pretty quickly,” said Sekar.

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Low cost, low quality

Janis Wong, 20, said she was first introduced to Temu through her aunt, who had sent referral codes to family and friends. Wong, a third-year student at the University of Toronto in the mental health studies program, said she was skeptical at first.

“It didn’t seem like a regular promotional link,” she said. “It felt like spam.”

But after confirming with her aunt, she decided to download and try the app. It reminded her of Taobao, a Chinese e-commerce site owned by Alibaba. She ordered a wireless keyboard for about $35 — which she says would typically cost her about $60 in similar models — to test it out.

The package arrived in two days — sooner than the three- to five-day initial estimate. But after a few days of use, he was disappointed.

“Some of the keys were chipped, and so some of the words on the keyboard were kind of falling off,” Wong said.

Jackie Dawson, Canada Research Chair in the human and policy dimensions of climate change, recommends that consumers think about quality more broadly.

A person holds a cell phone showing the Temu app.
A user opens the Temu app for a Victoria Day promotion on May 19, 2023. (Aloysius Wong/CBC)

“The ‘shop like a billionaire’ [tagline] promotes buying stuff you don’t need and inexpensive stuff that’s likely to break,” said Dawson, whose work focuses on economic development and shipping.

Dawson also suggests thinking more critically. She gave the example of being tempted to buy a $10 item that’s 50 per cent off.

“The psychology there is, ‘I saved $5,'” she said. “But the reality is, ‘No, you spent $5.'”

Knockoffs, or dupes, are also common on the platform. A pair of sponges resembling the Scrub Daddy retails on Temu for $2.55 — almost three times cheaper than the brand-name item on Amazon. Another popular item is a $20.57 bag mirroring a Marc Jacobs design, which typically retails for at least $430.

Temu did not respond to multiple requests for interviews, but their intellectual property policy states that the company is “not actively involved in the listing and sale of [third-party] sellers’ items,” and removes infringing material when reported.

Don’t get played

One thing that sets Temu apart from its competitors is its game-like shopping experience. New and existing users are frequently prompted to participate in flash sales and chance-based games such as spins to receive free items and coupons.

“The psychological aspects are fairly straightforward,” said Sekar. “You play the game, you get immediate rewards, instant gratification — and then not only do you get the points, but now I can go and buy something.”

Sekar says that these strategies are new in North America, even though they’re common in Asian markets. The fact that users can actually achieve tangible rewards, he said, caught many people off guard.

CBC News tried several of the games shown to new users on multiple accounts and devices, and found that the results were always identical. For example, one referral program guides new users through several seemingly randomized draws. But after a few animations, each one offers a $40 credit and $160 coupon — which the customer can only receive after sharing the app themselves several more times.

A screenshot of a draw-based promotion on Temu.
One game Temu guides new customers to is a series of draws, which eventually lead to some store credits and coupons that users can only access if they share and promote the app a set number of times. (Aloysius Wong/CBC)

The app also sponsors content and reviews. Temu has both campus ambassador and affiliate programs, where participants can earn a commission on orders placed by new users they refer.

Sekar describes the phenomenon as “live commerce,” which he says is extremely popular in China, but not as much in the West.

“Basically you get influencers on TikTok and other platforms to sell products, or at least boost certain brands,” he said.

‘A race to the bottom’

If Temu continues to grow and carve out a larger share of the e-commerce marketplace, it could disrupt the existing ecosystem, according to Sekar.

“My biggest concern is this is kind of starting off a race to the bottom,” he said. “A platform that prioritizes growth over everything else is going to do anything that it takes to get more customers and more sellers on the platform.”

Dawson said he’s concerned about the effects this could have on the shop local movement.

“Local businesses won’t be able to compete with the prices [on Temu],” she said.

There are also fears around data privacy. the US accused of meeting of potential data leaks after its sister app Pinduoduo was suspended by Google in March for “malware.”

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Still, experts say there could be certain upsides, such as Temu’s consumer-to-manufacturing model, which aggregates and analyzes consumer demand for manufacturers to cut down on the costs of middlemen.

“Hopefully it encourages less waste,” said Dawson.

But Dawson is worried about the environmental impact of free shipping and returns, especially when consumers may be encouraged to purchase unnecessary items because the prices are so low.

“We already know through the Amazon example that … it’s not worth the businesses’ bottom lines to deal with the returns, so a lot of these things get thrown out,” she said. “I would suspect it’s going to be an even higher rate of disposal from this site.”

Her advice for environmentally minded consumers? Purchase in bulk when possible, and try to be patient and have orders sent in one shipment instead of multiple. And seek out local alternatives whenever possible.

“Do we need to buy teeth whiteners at $0.92 and then have it shipped over?” Dawson said. “I don’t think so.”

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