Temu
Online budget marketplace From Wikipedia, the free encyclopedia
Temu is an online marketplace operated by the Chinese e-commerce company PDD Holdings, which is owned by Colin Huang.[10][9][11] It offers heavily discounted consumer goods[12] mostly shipped to consumers directly from the People's Republic of China.[13][14]
  | |
| Founded | July 2022 |
|---|---|
| Area served | List
|
| Founder(s) | Colin Huang |
| Industry | E-commerce |
| Parent | PDD Holdings[9] |
| URL | www |
| Launched | September 2022 |
Temu's business model has allowed it to become popular among consumers but has also drawn concerns over data privacy, forced labor, intellectual property, and the quality of its marketplace products. The company has been embroiled in legal disputes with Shein, a direct competitor.
History
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Perspective
Temu is owned and operated by PDD Holdings, a multinational commerce group registered in the Cayman Islands with Dublin also listed as its principal office address.[11][15] PDD Holdings also owns Pinduoduo, a popular online commerce platform in China.[16][17] In the U.S., Temu is under the ownership of Whaleco, Inc., a subsidiary of PDD Holdings registered in the states of Delaware and Massachusetts.[18]
The Temu platform first went live in the United States in September 2022, and ran ads during the February 2023 Super Bowl.[19] In March 2023, Temu launched in Australia and New Zealand.[1] In the following month, Temu launched in France, Germany, Italy, the Netherlands, Spain, and the UK.[3] Temu eventually expanded into the Latin American market.[20] On January 17, 2024, Temu officially launched in South Africa, the 49th country that Temu had entered since its launch in September 2022.[21]
In February 2024, Temu offered US$15 million in giveaways in multiple Super Bowl ads that several congressmen had asked the network not to run.[22] As a result of the ads, the company saw a spike in searches for their name and traffic,[14][23] reaching 100 million active users in the U.S., over 130 million app downloads globally, and approximately 420 million monthly website visits, as per Semrush.[24] Research by Sensor Tower estimated that in the last quarter of 2023 Temu users spent an average of 23 minutes a week on the app, compared with 18 minutes on Amazon and 22 minutes on eBay.[14]
Lawsuits with Shein
In December 2022, Temu was sued by rival company Shein, alleging that Temu had enlisted online influencers "to make false and deceptive statements" about Shein to promote its own goods. Temu later sued Shein in July 2023, alleging that Shein had "engaged in a campaign of threats, intimidation, false assertions of infringement, and attempts to impose baseless punitive fines" on clothing manufacturers thought to be working with Temu.[25] On July 31, 2023, Shein won a temporary restraining order against Temu in a different case, alleging that the company used Shein's copyrighted images in product listings.[26] Later in August, Shein sought an injunction against Temu, filed in London's High Court, alleging the company had "identified thousands of instances" where Temu's sellers copied its listing photos. Shein requested all violating posts be taken down and at least £100,000 in damages.[27]
On July 18, 2023, Temu filed a federal lawsuit, accusing Shein of violating U.S. antitrust laws.[28] Temu stated in the indictment that as of 2022, Shein owns more than 75% of the U.S. ultra-fast fashion market and leverages its market dominance to compel exclusive agreements with apparel manufacturers, restricting them from collaborating with Temu.[28] Temu further contended that in May 2023, Shein mandated that its 8,338 manufacturers supplying or selling on their platform sign exclusive distribution agreements, preventing them from offering their products on the Temu platform or to Temu-affiliated sellers.[28] Temu contends that these manufacturers linked to Shein constitute a substantial portion, estimated at 70% to 80%, of all merchants offering ultra-fast fashion products in the U.S., leading to higher prices, fewer consumer options, and hindered growth of the U.S. ultra-fast fashion market.[28]
In October 2023, Shein and Temu requested that their respective cases against each other be dismissed without prejudice in Massachusetts and Illinois. Neither company offered further explanation or whether a settlement had been made.[29]
In December 2023, Temu sued Shein again, alleging illegal interference with its suppliers.[17]
In February 2024, Temu issues a counterclaim in the London High Court, accusing Shein of breaking British competition law by tying suppliers of fast-fashion products to exclusive agreements, a claim it values at 4.2 million pounds ($5.5 million) and which Shein denies.[30] Temu also alleged that Shein “bullied, intimidated, and even detained” suppliers in China as part of a campaign of “mafia-style intimidation”.[30] Their cases at London's High Court are expected to come to trial towards the end of 2026.[31]
In August 2024, Shein filed a copyright infringement lawsuit against Temu in U.S. federal court.[32]
Business model
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Temu allows China-based vendors to sell and ship directly to customers without having to rely on intermediate distributors in the destination country, making products more affordable.[33] Some sellers have stated that Temu asked them to lower their prices, even to the point of selling items at a loss.[34] Temu offers free goods to some users who successfully refer new users via affiliate codes, social media, and gamification.[12] Temu also uses "family warehouses," fulfillment centers run out of personal residences, often those of overseas Chinese immigrants.[35] Online purchases on Temu can be made using a web browser or through a dedicated mobile app. Temu uses large-scale online advertising campaigns on Facebook and Instagram.[36]
Temu requires its sellers to offer their products at prices lower than those found on AliExpress.[37] When multiple sellers offer the same product, Temu authorizes only the one with the lowest price.[37] Items not meeting Temu's minimum sales requirements (30 pieces and $90 in 14 days) are removed from the platform.[37]
Competition between Temu and Amazon has led each company to match the other's supply chain strategy in 2024, with Temu onboarding warehouses in the United States to shorten delivery time, sell larger items, and diversify away from de minimis shipping, and Amazon signing up sellers in China to ship products directly to buyers as an alternative to using its existing "Fulfillment By Amazon" warehouses.[38]
In September 2024, the Biden administration announced that it would propose a new rule to close the $800 de minimis exception to import duties and institute additional information disclosure requirements.[39] The plan raised concerns that small sellers could be hurt disproportionately compared to larger platforms such as Temu.[40]
In October 2024, Indonesia asked Apple and Google to block Temu from their app stores to protect small businesses in the country.[41] In November 2024, Vietnam stated that Temu had not been authorized to do business in the country and suspended it the following month.[42][43]
Criticism
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Advertisements
In 2023, five Temu ads were banned by the Advertising Standards Authority (ASA) in the UK for showing a bikini-wearing girl estimated to be aged eight to eleven in a pose that was "quite adult for her age," jockstraps that emphasised "the outline of the genitalia", cycling shorts that "appeared as underwear" with cut-out bottoms, and pictures of dresses that left out the models' faces. Temu said the picture of the girl violated the company's policy and would not be shown again but disputed the other findings by the ASA, saying not showing models' faces was not meant to objectify women and that other retailers had similar photos.[44][45]
Temu is facing two class action lawsuits in the U.S. over unsolicited texts to numbers on the National Do Not Call Registry that continued even after recipients replied "stop".[46]
Consumer complaints
According to Andrew Chow writing for Time, in 2022 Temu customers experienced a rash of undelivered packages, product discrepancies due to false advertisements, and mysterious charges, as well as unresponsive customer service.[12]
According to Sarah Perez, writing for TechCrunch in relation to Temu's advertising campaigns, "These ads appear to be working to boost Temu's installs. But dig into the app's reviews and you'll find similar complaints to Wish, including scammy listings, damaged and delayed deliveries, incorrect orders and lack of customer service."[36]
In October 2022, the Boston branch of the Better Business Bureau opened a file on Temu; by the end of 2022, they had received 31 complaints from customers regarding the website's service. As of January 2024 the company has a BBB rating of C+, though the company is not BBB accredited.[12]
Product quality
Some merchants use Temu as a clearing house where they attempt to sell off low quality, expired, or outdated products.[47]
In August 2024, Seoul authorities discovered that products sold by popular online retailers Shein, Temu, and AliExpress contained toxic substances far exceeding legal safety limits. Inspections revealed alarming levels of harmful chemicals, such as phthalates, formaldehyde, and lead, in various items like shoes, hats, toys and nail polish. These substances pose significant health risks, including reproductive harm, carcinogenic effects, and liver poisoning. In response, South Korean officials demanded the removal of these products from sale, while the companies involved initiated internal investigations to enhance their safety compliance measures.[48][49]
In a separate investigation conducted by Toy Industries of Europe (TIE) in early 2024, none of the 19 toys purchased from Temu complied with EU safety regulations, with 18 posing significant risks to children. The toys failed to meet critical safety standards, leading to potential hazards such as choking, strangulation, and chemical exposure. TIE highlighted the ongoing issue of third-party sellers on non-EU platforms, like Temu, who bypass stringent EU safety laws. This prompted calls for stricter enforcement and revision of the Toy Safety Regulation to close legal loopholes and ensure better protection for consumers.[50]
In March 2024, BabyCenter did a review of the app Temu and said that the website had found products that have been recalled, could be counterfeit or circumvent U.S. safety standards and features that are important in preventing issues like choking.[51]
Digital Services Act
In May 2024, the European Consumer Organisation launched a complaint against Temu with the European Commission alleging breaches of the Digital Services Act concerning trader traceability requirements and algorithmic transparency and accountability.[52][53] In October 2024, the European Commission launched an investigation against Temu amid concerns over the sale of illegal and counterfeit products on the platform, the reappearance of previously banned sellers, and the app's addictive design.[54][55][56]
Data privacy
In May 2023, the United States–China Economic and Security Review Commission raised concerns about risks to users' personal data on Temu after Pinduoduo, its sister app in China, was suspended from Google Play because some of its versions, not available on Google's app store, were found to contain malware.[57][58][59] Two days after releasing an update to remove the exploits, Pinduoduo disbanded the team of engineers and product managers who had developed them. According to a CNN source, most of the team were transferred to Temu, working in various departments, but a core group of engineers remained at Pinduoduo.[60]
On May 17, 2023, Greg Gianforte, the governor of the US state of Montana banned Temu on government devices state-wide, along with ByteDance applications (including TikTok), WeChat, and Telegram.[61][62]
According to Politico, "Apple said the company previously violated the company's mandatory privacy rules and misled people about how it uses their data."[63]
Separate class action lawsuits were filed against Temu in 2023, located in Illinois[64] and New York, each in regards to Temu's handling of private data collected via accounts made on their platform.[65][18]
In February 2024, South Korea's Personal Information Protection Commission launched an investigation into Temu and other e-commerce platforms regarding the handling of user data.[66] In June 2024, the Arkansas Attorney General filed a lawsuit against Temu alleging malware and deceptive trade practices.[67]
Forced labor concerns
In June 2023, the United States House Select Committee on Strategic Competition between the United States and the Chinese Communist Party stated that Temu did not maintain "even the façade of a meaningful compliance program" with the Uyghur Forced Labor Prevention Act to keep goods made by forced labor off its platform.[68][69][70][71] The committee's report delivered a critical evaluation of Temu, suggesting that there was an "extremely high risk of forced labor contamination within Temu's supply chains."[71] The report also found that Temu had exploited United States de minimis rules to evade customs enforcement.[72] In 2024, Temu faced renewed criticism referring to the 2023 report from US Senator Tom Cotton, and US House representatives Kat Cammack and Michelle Steel after the company aired commercials during Super Bowl LVIII.[72] In August 2024, over 20 U.S. state attorneys general requested information from Temu on its labor conditions, compliance with the Uyghur Forced Labor Prevention Act, and alleged connections with the Chinese Communist Party.[73][74]
Intellectual property concerns
Sellers on Temu face recurring accusations of infringing upon intellectual property rights.[75] Instances of design theft have also been reported.[76]
Work concerns
Temu has been criticized for having an intense workplace culture and encouraging a 996 working hour system.[77] This workplace culture has been connected to incidents of PDD Holdings employee deaths that have made international headlines.[77]
In 2024, the Financial Times and The Wall Street Journal reported that Pinduoduo sued several former employees for violating non-compete clauses. The evidence Pinduoduo submitted to court includes video recordings of the former employees going to work for Pinduoduo's rivals. The company said it had obtained the evidence legally.[78][79]
See also
References
External links
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