Falling prices, viral app and aggressive marketing: Chinese e-commerce newcomer Temu is blowing up all rankings in Europe and the United States. A direct competitor to ultra-fast fashion platform Shein, the company uses the same methods but takes it one step further. A dazzling success that was not always received positively by its rivals, but also by public actors.
Temu is the most downloaded free application in France today.
“Shop like a billionaire.” The slogan of new Chinese e-commerce platform Temu (pronounced “Ti-mou”) sets the tone. The ultra-low-cost brand, created in July 2022 and gradually distributed in the United States, Australia and then Europe, arrived in France last April. Since then its popularity has continued to grow: in just a few months its app has become the most downloaded app in France.
Behind this success is the Chinese company PDD Holdings, which is also behind another e-commerce site, Pinduoduo, whose turnover exceeded 5.4 billion dollars in the first quarter of 2023. With these results, PDD Holdings applied its winning recipe to conquer a more Western market. This is what it means to compete seriously with already established players in the industry. “In the first figures, we observe that Temu has a large market share in France in brands such as Kiabi and AliExpress, as well as brands such as Shein.”E-commerce analysts Laëtitia Lamari and Adrien Naeem explain to Novethic.
A viral app
An unsurprising analysis. Temu and Shein share many similarities, starting with price. At Temu, dresses start from 3.28 euros, while sneakers start from just 6.11 euros. But as in a big bazaar, customers also find toys, decorations or electronics, all shipped directly from there. “Thousands of factories producing products on demand in China”, points out Adrien Naeem. At this point, Temu differentiates itself by adopting a business model close to Amazon. Unlike Shein, which markets in-house developed clothing and accessories, which represents a cost for the real-time fashion brand, Temu serves as a marketplace where suppliers add their own products.
But there is a difference that ends there: In terms of user experience and marketing strategy, both platforms use the same methods that have been criticized. “Thanks to the gamification system and the endless catalog, the customer is highly engaged and encouraged to stay in the app.”observes Laëtitia Lamari. Temu goes one step further by hosting sponsorship games, allowing buyers to receive free products and encouraging overconsumption. The company also uses “Manipulation techniques in unethical interfaces, such as using customer data or artificial intelligence to analyze consumer behavior and increase virality.”Adrien emphasizes Naeem.
Finally, on the marketing front, Temu applies the same principles as Shein by using micro-influencers to promote its app. The brand does not compromise on its promotional investments. According to data provided by Meta, by August 2023 Temu would have published more than 8,000 ads on Facebook, Instagram and Whatsapp. A little earlier in the year, in February 2023, the platform offered him a spot on the evening of the Super Bowl, a major event in the United States, for the modest sum of seven million dollars.
Product quality survey
So can Temu replace Shein? “He’s already past that.”Adrien believes in Naeem. “It is very paradoxical to see the explosion of such marketplaces today, when ecological awareness is so present. But it is clear that they are responding to a need, especially in an inflationary context.”, he adds. In any case, the war between the two companies has begun. In the United States, Temu sued Shein last July, blaming the brand. “Suppress competition by imposing fines and sanctions on suppliers working with” [Temu]”, reports Time.
Temu is awaited by his rivals as well as authorities who question his practices. Suspected of using spyware via app report Temu from Grizzly Research is also under the purview of France’s Directorate-General for Competition, Consumer Affairs and Fraud Control (DGCCRF). This sparked an investigation into the quality of products sold on the platform. The management delisted the Wish platform in 2020. The reasons for the ban include the fact that some products such as jewelry, toys and electrical appliances are dangerous.
