Spend any time on social media recently and you may have come across a new name; Temu. This online shopping marketplace offers discounted goods, mostly shipped directly from China. The platform has seen over 100 million downloads mostly from the United States since it launched in July 2022, fueled by advertising, with the tagline “shop like a billionaire”. And yet, the site and brand hasn’t come without controversy, with some asking “Is Temu safe?”
Temu started to develop a questionable reputation due to packages going missing, a lack of customer service, and concerns around unknown charges, quality and potentially counterfeit products. As well as this, there’s been some larger controversy around the company’s approach to cybersecurity and labor ethics.
How are the prices so cheap and is it safe? Let’s dig in deeper.
Why is Temu so cheap? Temu’s business model explained
Temu, like similar brand AliExpress and Wish, keeps its prices low by allowing buyers to connect directly to sellers, cutting out the middleman and all of the costs associated with retail. This business model is called Next-Gen Manufacturing (NGM) and the company says this is the core reason prices are cheaper than anywhere else.
Consumers can often be unaware of the vast profit margins and the costs and processes across the supply chain associated with selling a product. While very discounted prices on Temu can raise questions, it’s perhaps worthwhile to also consider all of the other retail costs involved in selling products, from staff to storefront rentals, which Temu is not having to account for.
Lower prices can also be explained in part by production efficiency. Manufacturers can often not hit the correct forecasting, meaning that extra products are produced that won’t be purchased by their retail suppliers. The overstocking results in extra products that won’t be sold. However, Temu provides data back to the manufacturer, providing them with more information to be able to produce more products that customers are interested in.
But there’s also another reason stock is cheap on Temu; Temu is able to exploit a customs loophole that applies to goods shipped directly to buyers in the US, meaning they are not liable to taxes from US Customs and Border Patrol, which gives them a cost advantage over competitors who are having to import in bulk.
Is Temu’s business model effective?
Consumer spending has continued to shift towards services rather than goods. There has been a clear trend towards people choosing to spend their money on experiences such as restaurants or gym memberships, and less on items. This trend started in 2021 and was likely spurred on by the pandemic and lockdowns.
Due to these changes, retailers had extra stock of goods that were not being sold, and Temu jumped onto this opportunity.
The understandable scepticism comes from prices much lower than the norm and what we expect as consumers, which makes people naturally question quality and legitimacy.
Temu has been upfront about its business model, and it’s effective in that the company is profiting off this model and that consumers can purchase products at highly reduced rates.
So, is Temu safe?
Temu currently has a trustpilot rating of 3.5 out of 5, and while the majority of reviews are positive, the company has also generated complaints.
Currently, Temu delivers to 23 countries around the world. The company is owned by PDD Holdings, which was based in Shanghai until earlier in 2023 when it relocated to Dublin. It’s a legitimate company and the items are real, however, the intrigue of the company has also increased its controversy.
The short answer is yes Temu is generally safe, but there’s a few points to consider before you decide to click checkout.
But is Temu ethical?
- Not accredited by the Better Business Bureau (BBB) which is used by most retailers including the likes of Amazon
- Privacy concerns as the US government has accused Temu of data risks since its sister company Pinduoduo was found to use malware
- Few well known manufacturers will confirm that Temu is an authorised reseller, making it more likely that name-brand goods could be grey-market or outright counterfeit
- Cybersecurity policies and questions on Chinese technologies role in the West
- Cloned storefronts of Amazon’s third party sellers without their consent, though Temu has now stated that all infringing products have been removed
- Potential forced labour with US lawmakers warnings of it as an “extremely high risk”, though there’s no current conclusive evidence
- Customer complaints on quality, shipping and lack of customer service
Pros and cons of Temu
There’s certainly pros and cons of Temu and the company does not come without controversy. However, it does generally supply affordable products, international shipping, deals and freebies. There’s also upsides to the manufacturer to consumer model which places more control and empowerment directly to the seller and buyer.
There’s always going to be risks with online shopping, which is a consideration across many online stores and marketplaces. The potential ethical concerns are ones to be aware of, and it’s important to do your own due diligence as a consumer.
