Chinese Shopping App Temu Is Coming For Amazon, It’s Also Ridiculously Addictive. Here’s Why

If you spend a lot time on-line you’ve most likely seen one among Temu’s vibrant advertisements – punctuated by its catchy tagline: “shopping like a billionaire”.

Temu specialises in promoting numerous on a regular basis objects, together with clothes, toys and family items, for very low costs. Shanghai-based firm PDD Holdings launched the net market late final 12 months (initially within the United States) to cater to abroad clients.

Since then, Temu’s attain has skyrocketed. The whole worth of merchandise bought went from US$3 million in September final 12 months, to US$400 million in April. At the time of publishing this text, Temu was the preferred free iPhone app within the US, United Kingdom, Australia and Germany.

Why has Temu been such an enormous success? It’s secure to say the platform has some successful methods that hold customers coming again. But past that, just like different e-commerce platforms, utilizing it isn’t totally risk- or guilt-free. Here are some issues to think about when you’re considering of giving it a shot.

What are Temu’s secrets and techniques to success?

1. Value

Many Australians may affiliate “made in China” with low-cost worth tags and low high quality. However, Temu’s customers are starting to view it as providing inexpensive merchandise that don’t essentially compromise on high quality. In some instances, 10-20 merchandise will solely set you again US$20-30.

Temu claims it might probably supply these costs on account of chopping out the middlemen within the provide chain. While the producers present the product particulars and the merchandise themselves, Temu handles every part else – from customs processing to worldwide transport. This streamlining helps cut back unit prices.

Nonetheless, attaining such worth doesn’t come with no value. Concerns are rising that Temu and its suppliers could also be working at a loss. However, it’s widespread for startups to expertise unfavourable money stream of their preliminary years because of heavy advertising investments, together with gives of aggressive costs and advertising campaigns – all of which is completed to construct model consciousness and achieve acceptance.

This is particularly true within the fast-paced e-commerce sector, the place success and failure occur swiftly. Temu and its suppliers, who’re primarily from Temu’s sister e-commerce platform Pinduoduo, are doubtless conscious of this dynamic.

2. An efficient advertising technique

Unlike different e-commerce platforms that concentrate on purposeful advantages akin to saving cash, Temu caters to customers’ emotional wants. It overlays the procuring expertise with the concept of “shopping like a billionaire” – which additionally aligns with its value-based technique.

Temu entered the market at a time when customers have been grappling with world inflation, main them to hunt “value”. In the primary month after its launch within the US, Temu invested some US$200 million in promoting and deliberate a US$2 billion finances for the 12 months.

Given China’s management in live-streaming influencer advertising, Temu is now recruiting social media influencers, suggesting it’d leverage its Chinese experience to discover a social-commerce technique. Social commerce harnesses a way of “friendship” conveyed by influencers, making the net procuring expertise extra participating and product suggestions extra convincing. It additionally works particularly properly with gross sales promotions.

Sales promotion techniques

While Temu employs widespread gross sales techniques seen on different e-commerce platforms, it makes use of what’s arguably the broadest array of those methods. Here are just a few examples:

• Gamified experiences. Gamified promoting hinges on two core components: problem and reward. Interacting with Temu’s spinning wheel is a minor problem, however the substantial low cost supplied is a significant reward. Such “games” create the phantasm of getting fortunate, and subsequently generate optimistic feelings in customers – whereas the reward offers them an incentive to interact extra significantly with their shopping, growing the chance of spending.

• Lightning offers and limited-time gives. One generally used promotion tactic entails creating the phantasm of shortage by way of supposedly “exclusive” gives which can be time-sensitive and received’t come by once more. This can set off a concern of lacking out in customers.

• Discounts and free transport Offering easy worth reductions and really inexpensive gross sales is a time-honoured approach of securing a loyal buyer base. In addition, Temu has the attract of providing free transport on orders with a really low minimal spend.

• Loyalty program. Consumers can decide in to Temu’s advertising emails in change for receiving extra promotional content material, together with email-only promotions. E-commerce corporations usually have entry to your private data (akin to your title, tackle, age and telephone quantity) and behavioural knowledge (akin to out of your search historical past and on-line classes). With this knowledge, the corporate can construct your person profile and goal you with personalised promotions and content material to encourage spending.

• Search engine advertising. Many customers will see Temu advertisements on the high of their search outcomes on Google (within the type of “sponsored” posts) after they seek for a product.

• An AI-powered promotional technique. Temu’s sister firm working in China, Pinduoduo, is famend for its AI-driven suggestion system. It’s doubtless Temu makes use of related AI algorithms, drawing on customers’ shopping and buy historical past to supply personalised suggestions (a apply Amazon additionally partakes in).

Defending towards manipulation

Temu’s best profit to customers lies in its supply of worth. It should still have lower-quality objects, however that is widespread amongst all e-commerce platforms.

Also, Temu’s enterprise mannequin is constructed round emphasising top-selling merchandise, which helps filter out low-quality merchandise. Its 90-day free return coverage additional acts as a buffer for unsatisfactory purchases.

Nonetheless, Temu’s value-oriented strategy is probably not a great factor for customers on all fronts. Exposed to such a wide selection of selling techniques, customers may grow to be extra liable to overconsumption – which ends up in environmental waste and post-purchase remorse.

It’s price contemplating your precise wants earlier than utilizing an e-commerce platform akin to Temu. You also needs to familiarise your self with the gross sales promotion techniques getting used. Research suggests understanding these techniques, in addition to advertisers’ intentions, may even empower younger kids to be sceptical and kind a cognitive defence towards them.

Also, in gentle of Temu’s gamified promoting technique, customers should mood their enthusiasm for rewards. Moving ahead, one helpful strategy could also be for faculties and governments to introduce academic packages or social advertising campaigns that educate promoting techniques, and advocate coping methods.

Temu didn’t reply to The Conversation’s request for remark.

Shasha Wang, Senior lecturer, Queensland University of Technology and Xiaoling Guo, , The University of Western Australia

This article is republished from The Conversation underneath a Creative Commons license. Read the unique article.