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Temu is the top app in the Google Play and Apple App stores, ahead of TikTok, Instagram, and Amazon.
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The super cheap marketplace sells apparel, makeup, electronics, homeware, and even bongs.
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Prices are so low that some shoppers wonder if it’s a scam, but people who have tried it say it works.
In just a few months, the e-commerce app Temu has stormed its way to the top of the download charts and is gaining attention for its bargain prices, which are so low that some shoppers think the website must be a scam.
A recent experience with an Insider reporter ordering a basket of items showed that Temu was indeed legit, though he questioned the quality of certain items. And industry watchers say the company has a long way to go in terms of user experience – something that’s as crucial as it looks to take on the likes of Amazon.
Temu (pronounced tee-moo), which is headquartered in Boston but owned by Chinese firm PDD Holdings, launched in the US in September. It’s listed as the top free app in both the Google Play store and the Apple App Store, ahead of TikTok, Amazon, and Instagram.
Similar to Amazon, it sells a vast array of items – ranging from fast fashion and makeup to electronics, homeware, and even bongs on both its website and app. It operates exclusively as a marketplace where sellers – who are predominantly based in China – sell goods to customers in the US and Canada.
So what do we know about the company and how does it keep its prices so low?
‘Shop like a billionaire’
Temu created a buzz with its Super Bowl ad in February that showed a woman effortlessly purchasing various items on the Temu app on her phone. The tagline, “shop like a billionaire,” suggested that shoppers can buy whatever they want without worrying about the cost.
“The idea is you can just keep your credit card running because your budget can afford it,” Michael Felice, associate partner in the communications, media, and technology practice of consulting firm Kearney, told Insider.
It’s clear from the homepage of Temu’s website that the main focus is price. Graphics advertise a range of promotions on the site, and each item has a listed price and a percentage discount next to it. This is often as much as 80% off. A spokesperson for Temu did not confirm how these percentages are calculated.
What brands say Temu sell?
There aren’t many recognizable western brands to shop on Temu. No results come up, for example, for Adidas, Apple, or Urban Decay – though when you search for the latter, a listing comes up for an eyeshadow palette similar to its famous Naked palette.
There are other examples of apparent knockoff products: a search for Victoria’s Secret’s Pink brand pulled up a host of bags showing the “Pink” label, without any reference to the US brand in the listing. Similar styles also feature on Alibaba and Amazon.
There’s also a black duffle bag featuring Herschel branding that’s listed for $9.79, compared to $110 for a similar bag on Herschel’s own website, and a number of unbranded tote bags priced at under $20 that look similar to ones sold by Marc Jacobs for up to $595 .
Victoria’s Secret, Herschel, and Marc Jacobs did not respond to Insider’s request for comment on whether they were aware of these listings and had tried to get them taken down.
Temu says that it has a strict policy against any listings that violate a third party’s intellectual property rights and would remove any items that infringe on this. On both the Apple and Google app stores, Temu has a 4.6-star rating.
Cutting out the middleman saves costs
Temu says its “next-gen manufacturing model” – where by it shares data on what consumers are shopping for and searching for on its site with its third-party sellers – helps to keep prices low. This enables sellers to better predict trends, plan production, and therefore reduce the risk of overproducing items that consumers don’t want. These cost savings can then be passed on to the consumer, a spokesperson for Temu told Insider.
But experts say there are other factors contributing to its bargain prices. Most of the sellers are based in China, where manufacturing and labor costs are lower, and the manufacturer-to-consumer business model means that there’s no middleman in the chain to take a slice of profits. Temu also provides sellers with free tools like access to its photo studios to ensure content on the site looks aesthetically similar.
“Temu is exposing a white space in the market where brands have been producing at extreme low cost – but along the value chain, there’s so much incremental cost,” Felice said. In other words, most manufacturers sell through so many layers of middlemen — each of whom wants their cut — that by the time an item is offered to a consumer, it’s loaded up with add-on costs; with Temu, the middlemen are cut out of the process.
But for the average North American shopper, such low prices can actually be disconcerting, especially when they don’t know much about Temu.
“With a site like Amazon, there’s a degree of confidence… if something goes wrong, they’ve got your back,” Neil Saunders, managing director of GlobalData Retail, told Insider. “I think with Temu, people don’t have that confidence because it’s not as well known,” he added.
The low prices, combined with the fact that many of its items are shipped to the US from China, “automatically raises suspicions over whether it’s genuine or not,” Saunders said. Some Twitter users have expressed concerns that the site could be a “scam.”
Erica Miller, a YouTuber who runs the account OneCuteCouponer, showing shoppers how to use coupons and get the best deals online, told Insider that she first heard about Temu from her 16-year-old nephew. “Immediately, I thought it was a scam,” she said. “Even though I’m a bargain shopper, I still wasn’t convinced.”
Temu later contacted Miller – who is known for posts on discount retail – to make a sponsored video for his subscriber base. Miller was given up to $140 to spend on Temu and paid to post a video on his YouTube channel, reviewing his purchases. She ordered a bunch of products including apparel, kitchen tools, and an LED clock, and said she was impressed by the quality of these items.
“The price scares people at first, of course you think it’s a scam, but once you know someone who’s using Temu and getting all these bargains, everyone is hooked,” Miller said.
“You get what you pay for” when it comes to quality
Insider’s Danni Santana was also skeptical and recently tested shopping on the site, ordering four items, including a charging cable and a handheld electric blender. He concluded that while Temu was not a scam, as all the items he ordered showed up, the quality of the products he ordered was not great.
His sentiments are shared by other consumers online:
“The quality is so bad that u wouldn’t buy it for a dollar at the dollar store,” one shopper wrote in a review on the Better Business Bureau’s website. “You get what you pay for,” another shopper said.
The company currently has a 2.09-star rating out of five on the BBB. Though there are positive reviews, its rating has dropped slightly since earlier in the month. There’s also a new alert on the BBB page, informing shoppers that most items are shipped from China despite Temu being registered in the US.
In other reviews on BBB’s site, consumers say they are frustrated by Temu’s lengthy shipping times and the overwhelming amount of marketing emails they received once making an order – Insider’s Santana shared similar grievances in his Temu review.
Temu says that customers should expect to wait between 7 and 15 business days for delivery, as most items are shipped from China – though it notes that this is mostly free. It also offers an express delivery option that adds $12.90 to an order. A spokesperson for Temu told Insider that it uses its parent company’s supply chain and logistics network to ship these items.
If orders are running late, it says it will give customers a small store credit, and free returns are available within 90 days of ordering.
But given that Americans are accustomed to Amazon’s same-day or next-day delivery service and free returns, it could be a challenge for Temu to compete, Felice said.
The website ‘feels a little makeshift’
Saunders said that Temu is currently hell-bent on driving app downloads. As well as its huge Super Bowl spot, it’s recruiting influencers to promote the brand with offers of commissions and free products. Temu is also asking users to encourage their friends to download the app and use a code with the promise of free items.
But despite the efforts to drive customers to the app, its interface is letting the side down, experts say.
“I think the visual merchandising of the site doesn’t really meet what Americans are used to,” Felice said, adding that it was “overwhelming to the senses … and sometimes feels a little makeshift.”
A search on its website doesn’t always produce you the results you’d expect. For example, under women’s shoes that cost less than $3, the first result is an item listed as a “toe corrector” and “bunion straightener,” followed by a pack of insoles. Other items have confusingly long descriptions.
Felice says it will take more than heavy discounting to woo the American consumer.
“We make that sacrifice occasionally in some off-price shopping, because it becomes a scavenger hunt. But there’s always the question, is it too cheap to be good? Is it going to fall apart after one use?” he said.
“American consumers might not even be ready to accept some of these price points as actual viable products,” he added.
Read more: I ordered my first 4 items off Chinese e-commerce app Temu and came away annoyed with the dozens of marketing emails sent after making a single purchase
Read the original article on Business Insider