In a year and a half, the Temu platform has established itself in Europe. The European Commission has opened an investigation into the commercial practices of the e-commerce giant. Brussels questions the quality of the articles and its “addictive” sales methods.
Clothing, jewelry, decorative accessories… Ago is the online kingdom of bargain prices. Unbeatable prices, items shipped within days, and free delivery: the Chinese e-commerce platform is a hit in Europe with 92 million users each month.
On October 31, the European Commission has opened an investigation against Temu's business practices. Brussels suspects the online platform of not doing enough to fight against the sale of dangerous or illicit products. Consumer associations have, for example, identified baby toys with small parts that can be swallowed. Other articles, which include instructions available only in Chinese or cosmetic products without the list of ingredients, do not comply with European standards. Some were removed from the site, before reappearing a little later.
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« Encourage the consumer to buy »
Brussels also questions Temu's “addictive” sales methods. “ There are two main categories of practices that stand out, notes Marie-Amandine Stevenin, president of the consumer association UFC Que Choisir, which alerted from May the European Commission with the filing of a complaint alongside sixteen other consumer associations. First there is the recommendation system. The consumer is often tracked based on purchases, and when they click on the detail, they have recommendations. We do not know what algorithm will manage these recommendations. »
The associations also warn about “ dark patterns ». « These are these deceptive interfaces where you are shown, “attention, this product will no longer be available in 12 days, 4 hours and 26 minutes”details the president of the UFC Que Choisir. These interfaces are used to get the consumer to buy much faster than if they had not been put in place. »
The European Commission, which suspects Temu of contravening the new EU regulation on online services, the DSA (Digital Services Act), is demanding explanations. If the platform's responses are not satisfactory, it faces a fine: the equivalent of 6% of its global turnover.
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« Windfall effect for the consumer »
Temu is an offshoot of one of China's retail giants, the Pinduoduo group (PDD Holdings). The platform, which arrived in Europe in April 2023, has invested colossal sums in digital marketing to make itself known, but its main selling point lies in its very low prices. “ When you see prices that crush all competitors, sometimes with product purchase rewards and free shipping : it’s a windfall for consumersexplains Franck Rosenthal, trade marketing expert. It can only work very well. »
To offer these discounted prices, the platform relies on bulk orders made by its parent company PDD Holdings, but also seeks to reduce intermediaries as much as possible. “ The model is to go as quickly as possible, to put the factory in almost direct contact with the consumerexplains Franck Rosenthal. Temu will take a very, very low margin, that will make the difference because these are prices that we cannot offer in Europe, because we do not have the same production costs, not the same taxes nor the same standards. »
With very low prices and very low margins, Temu does not make money. According to a study by the American magazine Wiredit would even lose around 30 dollars per order in the United States. The economic model questions, continues Franck Rosenthal, but the Temu teams are banking on 2026 or 2027 to be a beneficiary. Other e-commerce giants like Amazon took fifteen to twenty years before making money. It is unclear how Temu can turn the tide in such a short time. »
In the meantime, the platform is building a huge customer base and capitalizing on the resale of the data of these millions of users.
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