Temu’s Super Bowl ads may have sparked hilarity among the younger generations for its animated ad series throughout the big game, but it has seemingly had the desired effect of putting the platform’s name firmly in the front of everyone’s minds.
What exactly is Temu?
Temu is the Chinese equivalent of America’s Amazon: an online megastore that shops and ships every imaginable knick and knack known to man. You can buy accessories, appliances, electronics, power tools, furniture, and just about everything else. According to Statista, Temu is downloaded anew 30 million times every month, making it the single largest shopping app in both the App Store and the Play Store.
The attention that Temu’s Super Bowl ads brought them has many curious about the shopping site that promises a billionaire’s shopping experience, i.e. the items for sale are so cheap that anyone can afford the things on offer. Many of the newly interested are already looking up how they can join in on the fun: web searches for the platform saw a steady increase following the game.
Customer concerns
According to these web searches. There are already a few pressing concerns that are on the minds of the people checking out Temu for the first time. Is their information and privacy safe? Are the goods for sale even any good? And exactly how long does the free shipping take? Are they Temu shoppers or Temu victims? These concerns notwithstanding, there are many interesting facets to Temu’s seemingly explosive growth. As with most extremely large entities, Temu’s mere existence exerts a great weight on the world in one sense or the other.
Target audiences and ethics
According to the Wall Street Journal, Temu was the fifth-biggest digital advertising spender in the last three months of 2023. Analysing this advertising spend and the data gathered to fuel it shows that the older generations—mothers in particular—are the key demographic to whom these ads are targeted. The younger generations are not entirely sold on the platform/app, however.
The platform promotes fast fashion retailing, a concept that is increasingly coming under fire for being both unsustainable for the planet as well as exploitative of workers. While this would be enough for most people trying to keep their interactions with the economy as ethical as possible, the criticism against platforms such as Temu is seeing pushback with the rise of the idea that there is simply no ethical consumption under capitalism. This idea too is not without merit—the capitalistic system always tries to maximise profit while achieving the highest possible economies of scale, which is inherently exploitative of the resources both the people and the planet provide.
The strategy behind it all
Temu’s success in the space quite simply depends on a multi-pronged strategy that provides its customers with the cheapest possible products at the lowest possible price. Temu, Shein—all these companies source the products they offer directly from the manufacturer, which helps eliminate much of the costs along the supply chain. Involving middlemen to handle sourcing on Temu’s behalf will only incur more operational costs (operational that is, for what is essentially a logistics company much like Amazon) that would have to be passed on to the customer.
As with most successful businesses, Temu also depends on an aggressive drive to maximise economies of scale (the difference between companies like Amazon and Temu is what they do with the money saved in this manner—Amazon keeps it for themselves, while Temu passes on these savings to the customer.
Free shipping is one of the more attractive services this allows them to provide. For one, Temu’s cross-border e-commerce model allows them to bypass the international markups that affect other retailers—it also helps them bypass the associated handling/labour costs. Temu’s parent company PDD Holdings is also an important gear in cutting down on logistics costs, given that it’s not the only retail website in their portfolio. As can be inferred, many of these strategies depend on bulk purchases and bulk shipping to achieve the scale of operations necessary.
According to a report presented at the U.S. Congress in 2023, Temu and Shein shipped about 600,000 packages into the country every single day. According to Cargo Facts Consulting, Temu ships around 4,000 tonnes of packages every day. Temu is not the only company employing these tactics to great effect either—the TikTok Shop ships 800 tonnes, Alibaba.com ships 1,000, and Shein ships 5,000 tonnes of goods every day.
The big picture
When it comes to the big picture, shipping goods over international waters on this scale eats into all the commercially available cargo space. Recently, one shipping executive spoke to Reuters to complain that “when the Suez Canal (crisis) hit, there was no capacity to be bought, because e-commerce has bought it all”.
To put the actual figures into perspective, it’s important to note that even a Big Tech company like Apple ships only 1,000 tonnes worth of goods a day. According to Marc Schlossberg, the Executive Vice President of Air Freight at Unique, Temu is already looking to lease 12 wide-body freighters. Some of the other options being considered are the purchase of warehouse space in the U.S., in order to speed up shipping times.
Temu is also currently looking into collaborating or having sellers based in the countries that they ship to. Despite these alternatives, the model itself therefore can hardly be sustainable in the long term, both for commerce in general as well as for the planet. Although ethical consumption is a myth, the impact of consumption on this scale is very real.
(Theruni M. Liyanage)