Less than a month after its American launch, Temu was already the most downloaded shopping app in the United States. Now the AliExpress rival is also conquering Europe. What makes the app so special?
1 % of the population in 3 weeks
Temu is undeniably part of the new generation of Chinese retailers poised to take over the world. Barclays analysts call it a potential disruptor of note and the latest Chinese retail threat after Shein. The analysts add that companies like Boohoo, Asos and Allegro – but also Zalando and About You – should be very concerned.
Temu launched in the United States in September 2022, and the next month it was already the most downloaded shopping app in the US Google Play store. Since April, the shop has also been available in the Benelux countries, Germany and Spain, and immediately caused havoc there. After only 22 days, 1 % of the German population already had the app on their smartphone, compared to 130 days for the ultra-cheap fashion app Shein. That is a spreading rate that even Covid-19 would be envious of.
The explanation is easy to find: Temu turns out to be even cheaper than Shein, according to a small price comparison by Barclays. Moreover, Temu has a much wider range of products. The platform is better compared to AliExpress, as it also allows customers to find almost everything there: from shower heads for as little as 5 euros over USB chargers from 1.75 euros to wedding dresses at 20 euros. The marketplace itself claims to have more than eleven million suppliers and fulfilment partners.
Children as super spreaders
Temu is closely related to Pinduoduo, an e-commerce company that has now set its sights on the West. Like Shein, the company has its headquarters in Dublin for tax reasons, but also to be closer to European consumers. That European target group is found mainly among the youth, Maarten Leyts explains. The Trendwolves founder wrote about the company in his new book Generation ZAlpha in M(b)eta.
Why targeting children? Like no others, Chinese companies understand the power of social media: for Chinese youth, social networks are the shopping channel of choice and influencers’ opinions are more important than anyone else’s. Therefore, Temu is also hugely present on Snapchat and TikTok, the very social networks of the (impressionable) youth. Enormous amounts of videos circulate on those social media, showing shoppers showing what they bought or even got for free via Temu.
Bazaar with peer pressure
Free? Yes, therein lies Temu’s viral power: the app uses the same gamification and social shopping techniques that made Pinduoduo big. During the pandemic years, that parent company quickly rose to prominence in China as an app for inexpensive group purchases: offering discounts of up to 90 %, provided you get a group of ten people together to order the same stuff. In other words, the task is to share as much as possible and convince others to buy the same things you want to.
Temu then promises free products if you play games in the app, but especially if you can convince enough people to register. Consequently, users forward the app to everyone they know – and so the newcomer spreads like wildfire. The app also calls on the user’s network for promotions and ‘games’. The customer himself becomes the advertising channel, Leyts observes: “I call the Zalpha generation ‘Gen Z on speed’. Certainly ‘instant gratification’ and thus speed also play a hugely important role for them.”
“Pinduoduo is challenging the whole definition of online shopping, by shifting the focus from convenience to experience. Like no other, the start-up – a cross between Groupon and a bazaar – encapsulates the innovative spirit of Chinese retail. It completely blurs the lines between online and offline, between shopping and entertainment and between manufacturer and retailer”, we wrote in the latest edition of RetailDetail’s book The Future of Shopping.
Children for child labour?
Still, the app is not uncontroversial: as to be expected with such ultra-low prices, the quality often leaves much to be desired. Moreover, fake products also regularly pop up on the platform, while customer service is said to be difficult to reach, according to disgruntled customers. Moreover, since everything comes from China, average delivery times of up to fifteen working days are a lot longer than at Amazon, for example.
There are also questions to be asked on an ethical level. How polluting is producing and shipping all that (mostly plastic) stuff worldwide? And how about the production conditions? “My biggest concern lies in the fact that children are going to ignite other children as kidfluencers to order cheap stuff that one cannot say with certainty that it was not made by Chinese children, and thus may be the result of child labour”, Leyts adds. At the same time, the Chinese app collects a lot of data from users, and passes that information on to commercial partners – but equally to the Chinese government if needed.
By the way, it is remarkable how similar Temu is to Wish. That platform, also Chinese, had to downsize substantially last year after disappointing figures, but at the same time it was cautioned by the European Union for false discounts and secretly adjusting prices. In France, Wish has already been banned from app stores and search engines since 2021 for allegedly selling unsafe and dangerous products. Can Temu win over European hearts against all these odds?