Temu has rapidly gained popularity among over 13 million French shoppers with its competitive pricing, but its aggressive tactics and product quality have led to an investigation by the European Commission. The platform utilizes extensive personal data for tailored shopping experiences and engages users through gamification. However, sellers face pressure to lower prices, impacting profitability, while concerns over product quality and safety standards have emerged, prompting further scrutiny of its operations.
Since its introduction in France, Temu has quickly become a go-to shopping platform for over 13 million French consumers. With its unbeatable prices that often outshine competitors, this Chinese e-commerce giant is carving out a significant niche within the hard-discount market. However, its aggressive business tactics and product quality have raised eyebrows, prompting the European Commission to initiate an investigation. A recent report by ‘Sept à Huit’ on TF1 (also available on TF1+) delves into the less visible aspects of this platform.
Personal Data Collection and User Engagement
To attract and retain customers, Temu leverages a highly effective personalization algorithm, which relies heavily on extensive personal data collection. “Upon entering Temu for the first time, your data is immediately captured; your browsing behavior is analyzed to determine your preferences and interests—often through your clicks,” explains Laëtitia Lamari, an expert in online commerce. “This is powered by artificial intelligence, which anticipates your needs for your next visit, showcasing items tailored to your tastes,” she adds.
Additionally, Temu has ingeniously integrated online gaming elements into the shopping experience, presenting users with casino-like games that offer rewards in the form of free items. This strategy effectively enhances customer engagement, and many users find themselves habitually returning to the site.
Challenges Faced by Sellers
To maintain its low prices and generous giveaways, Temu employs ruthless negotiation tactics with its suppliers, predominantly based in China. The platform hosts an impressive roster of over 80,000 merchants. In a recent segment, a factory owner specializing in pet accessories shared his experience with Temu. “We have 500 unique products,” he mentioned. Initially optimistic about partnering with the platform, he soon faced harsh realities. After registering—without a formal contract, only general terms—he was pressured to continuously reduce his prices, jeopardizing his profit margins.
For instance, he intended to sell a small dog coat for 7 euros, which cost him 5 euros to produce. Temu countered with an offer of just 2.30 euros, leaving him with “no margin left.” Frustrated, he decided to discontinue selling on the platform, stating, “It’s unacceptable to offer such a price.” Despite Temu’s promise of a 15 to 20% profit margin, he and other suppliers feel the collaboration is untenable and unprofitable.
Concerns About Product Quality
Moreover, the quality of products available on Temu has come under scrutiny. Although management asserts that random inspections are conducted at their shipping facilities in China, numerous substandard items appear to slip through the cracks. A recent examination by the Swiss toy association revealed that eleven out of twelve products bought from Temu failed to meet European safety standards. Furthermore, French authorities are investigating the platform for counterfeit goods. Despite Temu’s claims of actively combating fakes, its website still features many questionable items, potentially leading to serious legal repercussions, including fines and imprisonment.
In summary, the European Commission’s investigation into Temu’s business practices, initiated last October, highlights the pressing issues surrounding this rapidly growing e-commerce platform.