Online Megastore Tem is obsessed with many Americans. Known for its reduced products, Temu has been shaking the world of online shopping as people are searching for bargains during a tough economy.
However, there are also some controversy regarding the products and transactions that Temu has to offer. That new business model has detractors. The issues of delivery and privacy for popular retailers have also been revealed.
Temu’s Offerings
Online retailer Temu offers you everything you can think of. Its products operate Gambit, from car accessories to clothing, furniture and electronics.
However, Temu has different pricing strategies for other online stores like Amazon.
You can buy a blouse at Temu for $7.92. Steel safety shoes go for $10.39. Alternatively, you can pick up a sturdy portable utility cart for $12.08 on Amazon, with a similar cart priced at $68.85.
Temu is often compared to Wish and Aliexpress, which boast extremely low prices. All three online stores are also known for their low quality items, long delivery times and short return windows.
Temu attracts customers with the catchphrase “Billionaire-like shopping.”
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Additional discounts are hard to resist, such as the frequently changing shocking low prices and Spin the Wheel Game, which offers a variety of merchandise credits of up to $200.
Who owns Temu
Temu is a sister company of Chinese e-commerce giant Pindoudoo.
Pinduoduo had similar transactions to Temu in China. Over the past few years, we have managed to sell discounted products directly from manufacturers to buyers. We also sold agricultural products to farmers.
In September 2022, Pinduodu launched Boston-based Temu. In 2023, Pinduoduo reformed as PDD Holdings and established the parent company of both Pinduo and Temu.
As of January 17, 2024, PDD Holdings’ market capitalization was $105.57 billion.
Initially based in Shanghai, Pindoudoo moved to Dublin, Ireland in 2023. This is not unusual for high-tech companies as a tax strategy.
Off-brand, quality concerns
Temu’s technical products are usually not name brands unless the description that indicates the name brand is checked in blue. You can buy items such as laptops and smartphones from Temu, but they are usually from lesser known manufacturers.
It helps to keep prices down, but it also raises concerns.
Hazardous chemicals
One of Temu’s selling points is cheap clothing, but low costs can be risky.
Tests by the South Korean government, detailed in last year’s report, revealed unacceptable levels of toxic chemicals such as lead, cadmium and phthalate esthetics in the clothing Temu sells.
Phthalates are often added to plastics to enhance flexibility. Certain phthalates are classified as endocrine deblasters. This means that it can mimic, block or interfere with hormones with harmful health effects such as reproductive problems, developmental problems, and cancer.
Regarding the Seoul report, a Temu spokesman said in a statement at the time that “these products had already been removed from the platform through active surveillance before the report was published.”
However, numerous recent reports have linked to chemicals that can cause health problems, from major rashes to reproductive problems to autoimmune disorders, where ultrafast fashion clothing made in China, made in China, can cause health problems.
Avoid obligation and cut off the intermediary
Temu sells products at low prices by cutting back on intermediaries. Distributors are not used. Instead, the goods are delivered directly from Temu’s manufacturers in China.
Shipping directly from the manufacturer helps discount retailers improve inventory and supply chain efficiency. It reduces production costs and offers low prices to users.
Temu’s business model also utilizes the US De Minimis loophole.
The minimum is the price of the threshold that an import must reach before a state obligation is charged. Most countries have this trade rule, but the threshold is different.
In the US, the minimum is above $799. This means that an imported item is subject to obligation if its value exceeds $799.
This loophole helped keep Temu shipping down.
This is because when a customer orders from Temu, individual items will be shipped directly from the Chinese manufacturer. As a result, the cargo is kept below $800, so the obligation does not apply.
In other words, thousands of dollars worth of products can be shipped to the US by Temu, but they are tax-free as they are small quantities.
Uyghur’s forced labor can enter the United States by leveraging De Minimis’ loopholes. This is because it is unlikely that a small amount of cargo will be screened for compliance with the Uyghur forced labor prevention law.
But that will change. On April 2, President Donald Trump signed an executive order to eliminate exemptions from less valuable imports from China. The new rules will come into effect on May 2nd.
Privacy concerns
While many apps mine user data to improve sales, Temu takes this strategy to the next level.
According to a report from the Center for Strategy and International Studies, TEMU appears to be “as much as privacy violation data collection and tools as it is a means of purchasing cheap products online.”
In 2022, more than 80% of Temu’s revenue came from the sale of advertising services to a network of third-party retailers, consisting of advertising, marketing and analytics companies, the report said.
US – A report from the China Economic and Security Review Committee found that, more surprisingly, Pinduoduo’s mobile app for Android phones contains sophisticated malware, bypassing security permissions to access private messages and changing phone settings. Google paused the app from the Google Play Store in March 2023, the report said.
Social Media Influencer
Temu has a prominent presence on social media.
In addition to running advertising, retailers offer affiliate programs that allow social media influencers to earn credits and fees by promoting Temu products and encouraging followers to download the app.
Influencers who are part of Temu’s programmes are usually paid to promote Temu’s products, as well as receiving free products to promote their free products.
Cheap items may come with a higher price
On the surface, Temu may seem quite a bit. You can save money at first, but you can pay in other ways.
First, there is the quality and safety issue. Temu sells out-of-brand items and clothing that can have harmful chemicals.
Next is the privacy issue. Temu sells information to third-party networks.
There is also the issue of economic safety. Avoiding tariffs on small shipments is harmful to the economy.
And finally, Temu’s products may not be all they think are. Retailers rely on influencers who receive free products and incentives in exchange for advertising discounted giants.
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