Temu online sales site: dangerously cheap

Temu online sales site: dangerously cheap
Temu online sales site: dangerously cheap

Earrings for twenty cents, a wallet for barely a euro, a hairdryer for ten euros and a smartphone for 90 euros: on Temu, you can find everything. With particularly big discounts of up to 70%, competitions, free shipping and low prices that many other providers cannot compete with, the e-commerce platform attracts customers like magic. And it’s paying off: Temu is enjoying ever-increasing popularity, even though the retailer has only been selling its products in Europe since spring last year. But Temu is increasingly in the crosshairs of consumer advocates, including in Luxembourg.

What is Temu?

Temu is an e-commerce platform that offers merchandise from different categories. You can find furniture, clothing, gardening accessories and even electronics on the site. Temu was founded in September 2022 and quickly rose to the top spot in app downloads in the United States. Today, the platform is active in 59 countries, including Luxembourg. The subsidiary of a Chinese holding company founded in Boston (USA) is now established in Ireland, as indicated in the legal notices.

The Bargain Shop does not have a merchandise warehouse, but only functions as a digital marketplace through which external merchants sell their products directly to customers. This business model is decisive for cheap prices, because there is no middleman. As reported by Handelsblatt, Temu delivers 4,000 to 5,000 tonnes of goods per day. For comparison, this would require more than a hundred Boeing 777s to take off in a day.

Manipulative pricing policy

In addition to products in the extremely low price segment, the online store uses different strategies to attract its buyers. Just take a quick look at the site to realize one thing: under almost every item, we find the words “Almost sold out”, “Limited time offer”, “No more than four” or “Person “X” just bought it”.

Such “dark patterns” – a special pricing policy and marketing strategy – encourage the online shopper to buy because the item may soon no longer be available, or so it is suggested. “We can consider this as manipulation, psychological pressure is thus exerted on the buyer,” explains Bob Schmitz, of the Luxembourg Consumers’ Union (ULC). This is why this sales strategy has also been banned in the EU since the introduction of the Digital Services Act (DSA) in February this year.

This can be considered as manipulation, psychological pressure is thus exerted on the buyer.

Bob Schmitz

Luxembourg Consumer Union (ULC)

Where does success come from?

Temu has enjoyed a meteoric rise in online commerce. Bob Schmitz explains this success by two factors: “It is particularly inexpensive and is heavily advertised via social media.” As a result, the platform is particularly popular, especially among younger people. “The shopping experience at Temu is linked to games, it’s attractive, it’s new, it’s young,” adds Schmitz.

Temu attracts its customers with winning actions like “Spin to win 100 euros”. © PHOTO: Temu

According to Wall Street Journal, Temu was in 2023 the largest advertiser on Meta (which includes Facebook, Instagram and WhatsApp) and one of the five largest on Google. French MP Anne-Cécile Violland (Horizons) criticized “ultra-aggressive marketing” to AFP which, “thanks to artificial intelligence, targets young people who want to change their clothes often and wear models inspired by brands “. The use of AI also makes it possible to make special algorithms that adapt to the shopping habits and demand of each customer.

“Other traders are afraid”

Temu has grown strongly in many regions of Europe. Especially in the easternmost parts like Poland, Hungary or Romania. Bob Schmitz claims that the respective national authorities and consumer protection organizations are acting against Temu. Also in Italy, a complaint was filed against the store, because the ingredients indicated for cosmetic products were sometimes incorrect or even non-existent. Consumer lawyer Bob Schmitz describes that Temu reacts very quickly in such cases of complaints and immediately removes the incriminating products from its site.

The German consumer center VZVB is also hot on Temu’s heels: “The VZVB denounces, among other things, misleading discount amounts and unacceptable use of manipulative designs.” But Temu is increasingly establishing itself in e-commerce and can be seen as a serious competitor for other online giants, as Bob Schmitz from ULC cautiously describes. “This is taken seriously. The other traders are already afraid of attacking Temu like this.”

Bob Schmitz also explains that Temu is still a relatively unknown player in Luxembourg: “So far, there have been no requests or complaints from consumers.” Questioned on this subject, the national customs authority ADA also indicates that there is to date no data concerning checks of Temu parcels. “In addition, it should be emphasized that customs clearance of e-commerce parcels is often carried out by third parties, including in another EU member state.”

Nevertheless, the ULC wants to act. It is planned to contact the Luxembourg competition authority (Competition Authority). “We are going to ask a series of critical questions. I think that’s the way we should proceed, without saying straight away: “What you’re doing here is deliberately wrong”. We try constructively to first give the opposing party the opportunity to provide explanations.”

A rate that exceeds the EU limit value

In addition to the pricing policy and competition, there are other criticisms: the products are often of poor quality, customers sometimes do not receive their orders, according to the VZVB, the customer service is difficult to reach and the environmental and working conditions are bad. The products would also be partly dangerous.

The toys should not be put on sale in Europe.

Toy Industries Of Europe (TIE)

The toy industry association TIE (Toy Industries Of Europe) purchased 19 toys from Temu and sent them to an analysis laboratory. The result was frightening: none of the tested toys fully complied with EU directives. For 18 of the 19 articles, a risk to child safety was even noted, due to sharp edges, small parts that are easy to swallow and a chemical content significantly higher than the EU limit value, for example in slime. The TIE notes: “These toys should not be put on sale in Europe.”

Bob Schmitz sums it up: “Temu is now everyone’s villain and the symbol of what should not happen.”

This article was originally published on the website of Luxemburger Wort.

Adapted by: Pascal Mittelberger

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