A wedding dress for 28.48 euros, five pairs of socks for 1.97 euros or a neck fan to wear around your neck for 6.98 euros: the Chinese online marketplace Temu provides mini prices, discount offers of up to 90 percent and some rather bizarre products currently causing a stir in German online retail. According to the Appfigures website, the Temu app was the most downloaded free app on Google Play and the Apple Store in Germany in mid-August.
Temu is not without controversy. The Verbraucher:innenzentrale NRW recently warned that the low prices “often go hand in hand with poor product quality and safety”. In addition, buyers would have to reckon with customs duties and import sales tax, which would increase the final price. During test purchases, the West German Broadcasting Company found some dangerous defects in technical equipment. At the request of the German Press Agency, Temu initially did not comment on the allegations.
No control over existence, quality or safety
In fact, Temu probably doesn’t feel responsible for it. The company itself does not act as a seller, but only makes its marketplace available to retailers as a platform. The Temu Terms of Service specifically states that “We have no control over and do not guarantee the existence, quality, safety, suitability or legality of the products”. The marketplace also does not feel responsible for the truthfulness, accuracy or legality of the information contained in the product listings.
But Temu is anything but a little slob. Behind Temu is the Shanghai-based company PDD Holdings. It is known in China for the popular app Pinduoduo, one of the country’s fastest-growing e-commerce platforms. Similar to Temu, Pinduoduo relies on heavy discounts to lure customers. According to its own statements, the platform has more than 900 million users in the People’s Republic.
Criticism of the offer and the working conditions
However, there has always been criticism of the offer. Pinduoduo made the headlines years ago because users accused the company of offering inferior or even counterfeit goods. The company also came under pressure because of the allegedly very high workload at Pinduoduo.
Since last year, PDD has been pushing ahead with expansion abroad. Temu launched in the US in September 2022 and quickly became the most downloaded app there. But the Chinese company quickly became the focus of US politics.
A report by a congressional committee recently accused both Temu and the Chinese app Shein of offering products that were manufactured using forced labor in the western Chinese region of Xinjiang. There is an “extremely high risk” that forced labor could contaminate supply chains, the report warned.
future in Germany?
As far as Temu’s future prospects in Germany are concerned, industry observers are divided. The software entrepreneur and industry expert Alexander Graf recently said: “Temu is not a flash in the pan.” The company offers real innovations in terms of supply chain, goods management and logistics.
Kai Hudetz from the Cologne Institute for Retail Research (IFH) is much more skeptical. “There is much to suggest that platforms like Wish or Temu will ultimately remain niche providers despite the recent hype,” he told the German Press Agency.
“Temu lures with low prices, sweepstakes, huge discounts and an artificial shortage of supply. The platform wants to inspire people to make impulse purchases that weren’t even planned,” Hudetz said, describing the business model. For a certain target group, such a gamification of purchasing is of course exciting. But there is little to suggest that the strategy will be successful in the long term.
“People in this country are not usually looking for the very lowest price, but for a reasonable price-performance ratio,” said Hudetz. They are also spoiled when it comes to delivery speed and returns processing. Temu and Co. face considerable challenges here.
“Turbocharged Ultra Fast Fashion”
“Most consumers think about returns when they place their order – and there are considerable reservations about Asian marketplaces in this area, especially since customs duties can often be added,” said Hudetz. And in terms of delivery speed, Temu and Co. could not keep up with established marketplaces such as Amazon or Otto anyway. In addition, people’s growing awareness of sustainability speaks against the long-term success of such models.
The e-commerce expert Gerrit Heinemann from the Niederrhein University of Applied Sciences has a similar opinion. Temu is “ultra fast fashion with a turbocharger,” says the industry insider. However, the development in the USA shows that ultra-fast often applies to such providers for the life of the business model. “Because their half-life is obviously also ultra-short.” (dpa)