The most downloaded free app on both the App Store and Google Play for much of the past two months wasn’t TikTok, YouTube or Instagram, but a shopping app that didn’t exist just four months ago.
Temu offers steep discounts on a variety of products, mostly shipped directly from Chinese factories or warehouses. In addition to incredibly low prices, Temu can no doubt attribute its popularity to its strategy of giving free stuff to users who promote the app on their social networks and get their friends and family to sign up.
But the company — the American offshoot of Chinese e-commerce giant Pinduoduo — is also starting to develop a reputation for undelivered packages, mysterious fees, incorrect orders and unresponsive customer service. Temu has already been the subject of more than 30 complaints to the Better Business Bureau, and has a BBB customer rating of less than 1.5 stars.
“They make delivery promises, and people don’t get their stuff when they’re supposed to,” Melanie McGovern, director of public relations and social media for the BBB, told TIME.
When contacted by TIME, the company did not directly address questions about customer complaints or the concerns of the BBB.
Temu’s business model – if it catches on – could also have major implications for US retailers and the global supply chain in the coming year.
What is Temu and how does it work?
At first glance, Temu may leave some users wondering if it is legitimate. In addition to really cheap consumables, Temu boasts opportunities to earn credits through spin-the-wheel games or if you convince your friends to join. Over the past couple of months, posts praising Temu have spread like wildfire on Facebook, Twitter and TikTok – though many of them use glowing language that seems to be recycled from one post to the next.
But for now, Temu is very much a real platform, offering a range of genuine, heavily discounted products, from deep fryers to Lenovo wireless earbuds ($8.98), computer keyboards ($15) to clothing ($1.69 for five pairs of socks) . Users turned to Temu this month as a lifeline for holiday shopping in the face of the highest inflation in a generation, making it one of the fastest-growing platforms in the US
What does Temu sell?
The better question is what Temu not sell. Users of the Temu website or app are immediately besieged by deals of all kinds: sneakers for $17.48, universal keys for $4.48, talking hamsters for $6.99. A banner boasts items up to 90% off retail prices, thanks to a New Year sale. The breadth of items and prices is remarkable, and the site’s aesthetic comes across as something like a virtual dollar store.
Temu offers extremely low prices on a variety of affordable consumer goods shipped directly from Chinese factories and warehouses.
But the strategy makes sense when you realize that Temu is a “sister company” to Chinese e-commerce giant Pinduoduo, which has offered similar deals in China in recent years. Pinduoduo has found success in China selling heavily discounted products direct from manufacturers to low-income buyers, as well as agricultural products to farmers. The company now has a market capitalization of $102 billion, and its share price rose during a year in which competitors such as Alibaba suffered severe blows.
Pinduoduo launched Temu in September to curate the US market, and Temu’s website lists an office in downtown Boston. A spokesperson for Temu responded to questions from TIME with a statement from the website: that the company’s prices are made possible by a “deep network of merchants, logistics partners and [Pinduoduo’s] established ecosystem built up over the years.”
How do people get free stuff on Temu?
While Temu’s prices are cheap, many new customers actually pay nothing at all. That’s because Temu has launched a campaign on social media where the more you convince others to sign up, the more credits you get. This has allowed some people who have earned enough credit to receive home goods without even giving Temu their credit card information.
“It seems like they’re being subsidized to be a loss leader to gain market share, which is not unlike what Amazon has been doing for a long time,” said Douglas Schmidt, a professor of computer science at Vanderbilt University.
Brianna Lukey, who lives in Fort Worth, Texas, says she has received $200 worth of merchandise from Temu for free. She first heard about the app from a friend a month ago, and was skeptical at first: “I know there’s a lot of stuff going around that might not be legitimate,” she says. “But this was.”
Lukey posted about Temu on Facebook, TikTok, and Snapchat, eventually convincing friends to join the app while earning a bunch of credits. She used them to order a ring lamp (priced at $25.48) for her small plastering business, Array of Aura’s, as well as an oil diffuser ($5.48), several necklaces and a mouse and keyboard for her daughter ($19.98). Lukey says the keyboard works well: “I didn’t think it would be this good quality. But it’s pretty good to be free, she says. “So I’m grateful for that.”
Temu may have given Lukey many items without her providing money, but the company has free advertising through Lukey’s social networks in return. Temu marks the campaign as a way for communities to band together to save money: their slogan is “Team Up, Price Down.”
The strategy seems to be working: When Lukey posted a photo of her Temu shipment on Facebook, her post was soon inundated with 70 comments from her Facebook friends, mostly people posting their own referral links in hopes about achieving similar moves.
What’s the catch?
However, one of the comments on Lukey’s post was significantly less positive than the rest. Julie Roper Malloy wrote that the package she ordered from Temu with Christmas gifts never arrived, despite the company’s promise that it would be delivered by December 19 at the latest. “Still waiting for my order from November! Thanks, Temu, you’ve ruined Christmas!” she wrote.
In a series of Facebook messages with TIME, Roper Malloy says she spent $178 on gifts from Temu for the family, including two drones and some makeup for her daughter. But the goods never arrived. Malloy says she has contacted the company several times for a refund, which also has yet to come. “I will definitely be more diligent in the future when ordering online,” she wrote.
Roper Malloy isn’t the only one having trouble with a Temu order. Temu himself acknowledges that orders take longer to arrive than those from Amazon – typically 7-15 business days – as they come from “overseas warehouses”. But it seems that Temu has also had trouble delivering within the larger time window. In October, the Boston branch of the Better Business Bureau opened a file on Temu and has received 31 complaints about the site.
Temu currently has a C rating on the BBB, and an average customer rating of 1.4 stars out of 5, albeit from only 20 reviews. (Complaints are separate from reviews, which do not factor into the BBB’s official rating.) BBB’s McGovern says it’s unusual for such a new company to receive so many complaints in such a short time. She notes that Temu has acknowledged and responded to every complaint posted on the BBB website, but many of those complaints remain unresolved.
Temu’s parent company, Pinduoduo, has long been accused of hosting the sale of counterfeits, illegal goods or products that do not match their descriptions. (Pinduoduo wrote in its SEC filings that it immediately removes unauthorized products or misleading information on the platform, and freezes the accounts of sellers on the site who violate the policy.)
There have been no BBB complaints alleging that the items Temu sends are counterfeit or fake.
Additionally, in 2021, the deaths of two Pinduoduo employees spurred an investigation and boycott of the company’s working conditions, according to New York Times.
How Temu could affect the US economy
Schmidt, at Vanderbilt, which specializes in security and privacy, says Temu’s data and privacy practices are not out of the ordinary: The company collects reams of personal data about users and then distributes that data to sell ads. However, he says Temu’s rise could have a bigger impact not in terms of privacy concerns, but in terms of pressure on American companies and workers.
If more and more American consumers flock to Temu to buy goods at reduced prices, it could push Amazon and other competitors to cut prices as well, which would affect wages, Schmidt argues.
“This is an interesting example of the manufacturing base in China becoming sufficiently sophisticated that it no longer feels like it needs to go through distributors. They sell directly to consumers. And there are a lot of people who are financially strapped and looking for a bargain, he says. “This will obviously put pressure on producers of goods to further cut their cost base and profit structure – which could have the consequence of further eroding US domestic production.”
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