The latest retailer for low-priced goods, Temu, has made a storming entrance to the US market and is currently investing in UK advertising as well.
The Chinese startup was largely unknown in the US last year but is now reporting sales figures to challenge Shein, a similarly budget retailer.
According to Bloomberg Second Measure, which analyses credit and debit card transactions, consumers spent 20 per cent more on Temu than Shein in May, 2023.
With inflation being felt around the world, it’s perhaps no surprise that shoppers gravitate towards low-priced items like those from Temu.
But just how does the retailer keep costs so low, and what has the reception been like in the UK?
How is Temu different from shops like Wish and Shein?
Temu is generally cheaper than both Wish and Shein, undercutting both on average prices for items like homeware, clothing, and more.
What’s more, Temu offers free shipping and returns at the moment, while Wish adds it on as an extra.
While consumers will of course still be paying for postage, with vendors covertly including these costs in the price of items, the appearance of free postage gives the illusion of lower costs.
Shein is also known primarily as a fashion retailer, while Temu has secured an image of a low-cost Amazon, selling products from various departments more prominently.
The quality is also marginally better, offering Temu an edge over the other low-cost retailer competition.
Why is Temu so cheap?
Temu reportedly managed to keep costs so low by connecting consumers directly with suppliers, handling only the shipping of customers themselves.
This helps to keep operation costs, and therefore product prices, low, especially as the Chinese start-up can make the most of low manufacturing and labour costs in China.
However, its rapid growth doesn’t come cheap. Wired UK estimates the company is losing around $30 (£24) per order at the moment, in a risky bid to take on Amazon and break into the American market.
This accounts for an estimated $588 million (£465 m) to $954 million (£754 m) loss each year, according to analysis of the company’s supply chain costs.
Why has Temu caused some controversy?
What’s more, Temu is also keeping costs down by putting extreme pressure on its suppliers.
Small manufacturers in China are being urged to cut prices to levels that make it almost impossible to turn a profit.
This in turn could easily encourage unethical business practices, such as cutting pay for employees or encouraging long working hours to try to keep businesses afloat.
What’s more, Temu does not have formal affiliations with many major brands, instead selling imitation products that raise concerns about quality control and copyright infringement.
Some examples of these imitation products include buildable models in the style of Lego, or clothing that mimics high-street fashion brands.
Is Temu legit?
While Temu is a legitimate company that sells products directly from suppliers, these issues of quality control raise questions about its legitimacy.
As with any low-cost ecommerce retailer, you likely get what you pay for. Although Temu’s quality is reportedly higher than Wish or Shein, the quality of imitation products is likely far less than the original brand’s items.
Can you shop on Temu in the UK?
Temu has launched in the UK, shooting to the top of the charts in the Apple App Store after its success in the US.
To encourage early adopters, there are currently widespread ‘lightning sales’ from many suppliers, as well as an extensive paid ad campaign for its target market.
Temu reviews in the UK
At the moment, Temu has scored 3.3 on Trustpilot, but a closer breakdown of the reviews highlights polarising opinions.
These include 44 per cent five-star reviews, while 35 per cent are one-star. Key complaints include low product quality and misleading ‘discounts’, while positive reviews applaud the customer’s quick and responsive customer service and low prices.
