The number of marketplaces increases yearly, and companies need to spend even more money on promotional campaigns. A good example is the app Temu, the ad of this app flooded almost every social network. Moreover, if you are looking for any product, the website of Temu will appear at the top of the list on Google.
The platform offers customers products with great discounts which mostly are delivered to customers directly from China. Same as AliExpress which provides the same possibilities, Temu almost gained demand but was criticized multiple times. AIN tells about critics and the danger of the platform.
How was Temu developed
In 2022 marketplace Temu, developed by Chinese company PDD Holdings, started its work. PDD Holdings is a parent company of another popular giant – Pinduoduo. Firstly, Temu started its work on the market in the USA in September 2022 but then it quickly spread to other countries. The platform offers everything from clothes to products for home and electronics. It works both as a website and as an app.
The platform uses an aggressive marketing strategy: great discounts, free delivery, and bonuses for new clients. That's how Temu managed to catch the attention of customers.
Screenshot: Temu
Now the app Temu is in the list of the 5 most popular apps in American AppStore and Google Play. Besides, Temu sends free products to those customers who advertise the app in their social networks and encourage new users to sign up.
This marketplace is popular in Ukraine as well. For example, the popularity of Temu rose sharply in May 2024: 222,8 million unique users visited the website Temu 544,1 million times. The marketplace overtook Etsy for traffic and is catching up with AliExpress.
“Not a single marketplace in the world has shown such growth dynamics,” says the CEO of the digital marketing agency Webpromo, Yurii Kopyshynslyi.
What is Temu criticized for
One of the main problems of such marketplaces is delivery, TIME writes. Many users of Temu complain that orders may be sent weeks or months later or may not be delivered at all. There are also cases with no refund.
Besides that, Pinduoduo was claimed to sell fake products which do not match the description. However, this kind of criticism isn't new in the field of Chinese electronic commerce since for the same things AliExpress is judged too.
In September 2023, the Department of Environmental Protection of Seoul found toxic materials in products from Temu and other Chinese retailers Shein and AliExpress.
During the check chemicals such as phthalates, formaldehyde, and lean were found in shoes, hats, toys, and nail polish. Those materials affect reproductive functions, cause liver toxicity, etc. After that, South Korea demanded that these products be withdrawn from sale.
However, Temu is mostly criticized for the attitude towards the employees. For example, they work with a “996” schedule, which means working from 9 am till 9 pm, 6 days a week, 72 hours per week or 12 hours per day. Critics of the "996" schedule claim that it violates China’s labour laws. However, this system's supporters are Huawei, Alibaba Group, and other huge Chinese companies.
There have been no public reports or complaints regarding "996" at Temu yet, but there have been fatal incidents at its sister company, Pinduoduo. In 2021, two employees of the corporation died within two weeks. One of the workers died on her way home. The official cause of death is unknown, but there were rumours on social media about overwork. The second employee jumped from his parents' apartment window. Later, Pinduoduo dismissed another worker after he criticized the company on social media.
So why are the prices so low
At the end of June of last year, the USA Congress published an investigation about Temu. American legislators warned of the "extremely high risk" that products sold on the marketplace might be produced using forced labour.
The investigation was conducted under the USA law prohibiting the import of goods produced with forced labour. The government strengthened this law in 2021 due to concerns that all products made in the Xinjiang Uygur Autonomous Region of China were produced with forced labour.
Regarding Temu, the company does not provide detailed information from sellers about where and how products are made. The marketplace also stated that they are not responsible for the actions of third-party sellers using their platform.
According to the Congressional investigation, products from Temu and Shein account for over 30% of all daily shipments under $800 in the USA. The US government believes this statistic is due to a loophole in customs duty exemptions for products valued under $800.
Personal Data Safety
Temu’s privacy policy states that customer data may be shared with parent and subsidiary companies. In March 2023, Google removed the sister app Pinduoduo from its services due to security issues.
In April CNN reported that malware found in Pinduoduo’s apps had access to users' personal data without their consent. Pinduoduo requested as many as 83 permissions, including access to biometric data, Bluetooth, and Wi-Fi network information.
As a result, in May 2023, the Committee on Economic and Security Review of the USA and China expressed concerns about the safety of the Temu app. Additionally, in Montana, officials were banned from using TikTok, Temu, WeChat, and Telegram due to privacy issues. Similarly, a class-action lawsuit was filed in Illinois.
According to the American non-commercial organization Better Business Bureau (BBB), which focuses on market trust, the company received 900 complaints about Temu in the first 14 months of its operation. Temu has since started working with BBB to address customer complaints.
Moreover, Apple previously reported that Temu had violated the company’s privacy rules. The app misled users about how their data was used. However, after the situation improved, the app remained available in the App Store. PDD Holdings has not yet commented on the data security situation.
Trade of Personal Data
Nevertheless, data security issues at Temu did not end there. In June 2024, Arkansas Attorney General Tim Griffin filed a lawsuit against the app for allegedly secretly monetizing unlawfully obtained user data.
In the lawsuit, Griffin refers to an extensive investigation by Grizzly Research, which analyzes public companies for potential investors. In his report Grizzly Research claims that PDD Holdings is a “fraudulent company” and that “Temu is a cleverly disguised spying app that poses an urgent threat to national security interests of the United States.”
Griffin believes that Temu deceives users with false promises of discounts on quality goods, aiming to collect as much user data as possible. According to BBB complaints, Temu’s products are considered low-quality. Summing this up, Griffin stated that Temu’s goal is “not to become the world’s largest trading platform, but to steal data.” If the lawsuit is successful, Temu could face fines of $10,000 for each violation and forfeiture of profits from data sales.
