Since its launch in 2022, Temu has surged to be a leading ecommerce marketplace and the most downloaded app in the US[1]. Known for dirt-cheap prices, free shipping, and free stuff, Temu hasn’t been without controversy. Just months after its US launch, two separate class action lawsuits about data privacy and malware were filed against the company. Ethical and forced labor practices were also questioned.
Amid the ongoing Temu controversy, a recent survey shows that despite the lack of trust consumers have in the platform, 68%[2] of US respondents still shop on Temu.
So, is Temu bad? Let’s unpack the issues the platform is embroiled in and whether it is a legit website for consumers to shop and for retailers to sell.
Overview of Temu
Temu is the sister company of Pinduoduo, one of China’s largest online marketplaces. Both are owned by PDD Holdings Inc., a multinational commerce group founded in China in 2015. Temu was created in response to PDD Holdings’ plan to enter the US market. It was launched in the US in September 2022 and generated $3 million in sales in its first month.
By 2023, Temu surpassed 250 million downloads, with over 40% of the downloads coming from the US and Mexico. In September 2023, Temu registered 82.4 million active users in the US. Temu’s gross merchandise volume reached $15.1 billion in 2023.
During the 2024 Super Bowl, Temu bought six ads reportedly costing $7 million each with its catchy “Shop like a billionaire” tagline and offered a $10 million giveaway, peaking the app’s search volume on Google.
Temu’s ad for Super Bowl 2024 was “Shop Like a Billionaire”. (Source: YouTube)
Temu is often compared to other Chinese-owned online marketplaces like Shein and AliExpress. However, Temu is slightly different. Unlike Shein, which primarily offers fashion and clothing, Temu provides a range of products from clothes, home products, electronics, and even appliances. Unlike AliExpress, which has longer shipping times and a shorter return window, Temu guarantees a 10-day delivery and a very generous 90-day return policy.
Temu’s notable store policies for buyers include the following:
- You must have at least $10 worth of items in your cart before you can check out, this covers the shipping fees for those who qualify or want free shipping.
- You get a $5 credit for packages under standard shipping if they arrive late, while you get $13 for packages under express shipping that arrive late.
- Your items are eligible for Temu’s Purchase Protection Program. If your items don’t look like their online listing, arrive damaged, or don’t arrive at all. Under the program, you are entitled to a full refund if you return your purchase within 90 days of purchase.
- If you buy an item and its price lessens after your purchase, you can request a price adjustment. The difference will be available on your account as a Temu credit within minutes.
Temu’s best-selling items range from appliances and furniture to chain shaws and bass speakers. (Source: Temu)
Is Temu Legit?
The long and short answer to this question is yes, Temu is legit. The platform sells real products. Once a customer places an order, it takes about 10 days to get delivered. And if customers don’t receive their orders on time, Temu compensates for late deliveries, according to its website.
Customers generally receive their orders within the guaranteed time, although there have been complaints about the quality. However, there are thousands of positive Temu reviews on TikTok and the product pages on the Temu platform.
An example of verified purchase reviews on a Temu product page. (Source: Temu)
And if it’s any indication, the Temu app is at the top of iOS and Android app store downloads. If Temu is a scam, the app would have been removed by now, but Temu still enjoys the top spot since its launch in late 2022.
As of August 2024, Temu is the top downloaded app from Google Play Store (Android). (Source: Sensor Tower)
Don’t be misled though, as it has plenty of negative reviews, too, but I can say that Temu is not a scam and is a legit ecommerce marketplace.
As of this writing, Temu is graded B- by the Better Business Bureau (BBB) and has a BBB customer rating of 2.45 out of 5 stars out of more than 1,600 reviews. It has already been subject to more than 2,500 complaints on the BBB website and lacks BBB accreditation.
However, the BBB has not designated Temu as a scam, and the lack of accreditation does not necessarily mean Temu is not legit.
How Does Temu Make Money?
Perhaps the bigger question most sellers ask about Temu is, if it’s a legit shopping platform, how does it make money with all the dirt-cheap prices?
There are a couple of ways Temu makes money—transaction fees, sales commissions, and advertising (ads). Temu charges a sales transaction fee for every order made through its platform and charges for ad space or even promos on its website.
1. Fully Managed Business Model
Temu operates like Pinduoduo, which is in a fully managed or all-inclusive revenue mode. Under this arrangement, sellers (brands or manufacturers) just need to agree on a price with the platform (Temu) and ship the goods to the platform’s warehouses. The platform will handle everything else: front-end marketing, order fulfillment, and customer service. Even Temu’s competitors are eyeing its business revenue model.
2. Better Bargaining Power with Sellers/Manufacturers
Temu’s business model is lucrative in the eyes of sellers, especially small and medium-sized businesses that will appreciate getting the load off their shoulders—they can just focus on product manufacturing and development. For these merchants, this can be seen as hassle-free and a scalable opportunity, and this allows Temu to bargain for much lower pricing, even extended credit terms.
However, a report from Wired showed that Temu loses roughly $30 per order because of its bid to break into and dominate the US market by offering dirt-cheap prices. Wired also cited that the company China Merchants Securities released an analysis that Temu loses $588 to $954 million a year because of its cost-cutting practices.
The same article said that Temu is shouldering most of the platform’s shipping costs but relies on US consumers to order more frequently to make up for the losses.
3. The De Minimis Exception
According to a report from the US House Select Committee (USHSC) on the Chinese Communist Party (CCP), Temu is “abusing” or heavily relying on the de minimis exception to ship goods directly to American customers for a low price. Under the provision, a shipment below $800 isn’t inspected or taxed by US Customs.
Current Temu Controversies
Despite Temu splurging on its marketing with traditional ads like the Super Bowl ads and digital ads—Temu spent around $2 billion on Meta ads last year and is the biggest advertiser across Meta platforms—it has not been spared from controversies, even going as far as receiving class action lawsuits about data leaks, malware, and hacking one after another.
Data Leaks, Malware, and Hacking
Temu has been under fire lately, facing three lawsuits in less than two years of operating in the US. As of this writing, Temu has claimed to defend their interests rigorously. All cases are still ongoing.
Here is a brief timeline of the Temu lawsuits filed:
- September 2023: Temu faced a class action lawsuit alleging that the platform failed to secure customers’ personal and financial data and didn’t disclose the extent of a data breach and notify customers in a timely manner.
- June 2024: Temu received another lawsuit, this time a consumer protection lawsuit, calling the Temu app “dangerous malware” and saying it can gain unlimited access and data from the devices it’s installed on.
- July 2024: Temu holding company received a class action lawsuit that claims it sent text messages to phone numbers listed on the US national do-not-call registry, according to court documents.
These lawsuits came after its sister app, Pinduoduo, was suspended from the Google Play Store because of malware and the US accused Temu of possible data risks by association.
Missing/Late Packages
Since most of Temu’s products ship directly from manufacturers in China, there have been increasing reports about late or missing shipments. While Temu boasts a very generous 90-day return policy, customers do not receive the full price of the items purchased since sales taxes, shipping, used coupons, and credit are taken into account.
Fake Reviews
While I have noticed tons of positive reviews with Temu, even outside the platform, there have been reports of “glowing” reviews that bear too much resemblance with a bunch of other reviews—in short, they appear to be recycled.
The articles I have read trace this to Temu’s referral promotion. Temu lets you earn shopping credits through spin-a-wheel games or if you encourage or refer other people to join the app and shop. This is why praises for the platform abound on other social channels, mainly Facebook, Twitter, and TikTok.
Moreover, most videos about Temu on TikTok generally fall into two types—videos that share negative experiences about the platform and haul videos to show off purchases. Most of the positive reviews about Temu from TikTok users have affiliate links for Temu, so they are either being paid or getting a discount to promote the company. These are usually disclosed from the videos.
For reviews on the Temu website, I read an article about a customer leaving a less-than-stellar review about a purchased item. The one-star review stayed on the product page, so Temu doesn’t seem to take down negative reviews, but after a few weeks, the customer noticed that negative reviews could no longer be pulled up easily, even with the help of a sort filter.
Product Quality
Like other ecommerce websites, there are bound to be complaints about product quality and how a purchased item is not what has been advertised or depicted in the product photos. Such is the case of some customers expressing product quality concerns with their Temu purchases. Most complain that the items look different from the website or are of lower quality than expected.
An example of a verified purchase review on Temu. (Source: Temu)
To be honest, I would not expect so much from goods that only cost a few bucks—they are usually too good to be true. Much of what Temu sells is generic, too—they may look a bit similar to brand-name products, but they are more often not.
Temu sells brand products, too, and these are identified with a blue checkmark on their product listings. Xiaomi and Lenovo are two brands I know that sell on Temu.
Temu Problems: Ethical Considerations
On top of Temu’s ongoing legal controversies, it also faces inquiries about unethical practices on labor and sustainability.
Environmental Impact
Ethical consumerism is a growing concern for consumers, with most preferring retailers that practice ethical sourcing and sustainability. Temu’s sustainability page, according to environmental advocates, is just greenwashing Greenwashing is a marketing tactic used to portray an organization as environmentally friendly when they’re anything but. as most of its practices prove otherwise.
For one thing, Temu can be held responsible for encouraging overconsumption and overproduction. Studies show that Temu and another Chinese marketplace fast-fashion brand Shein roughly ship roughly 600,000 packages to the US on a daily basis.
And since most packages are less than $800, they are under the de minis provision—sellers won’t be subject to import duties or even required to provide information about their packages.
Related:
- Ethical Sourcing: A Small Business Guide
- Ethical Consumerism for Retailers: The Ultimate Guide
- Retail Sustainability Trends
Labor Concerns
While Temu does not share information about its labor practices, advocates say that because of its dirt-cheap prices, it is safe to assume that garment workers are not paid the cost of living wages.
Temu has also been questioned by a US congressional committee in May 2023 about its compliance with US anti-forced labor laws, specifically the Uyghur Forced Labor Prevention Act. It is also noted that Temu doesn’t have any audit processes in place to assess that risk.
Do US Shoppers Trust Temu?
In a nutshell, American consumers trust Amazon more than Temu (86% vs 7%), according to a recent Omnisend study. But despite this reported mistrust, 68% of them still shop on Temu. People say they shop on the platform for the prices (53%), ease of use (31%), and deals and discounts (29%).
Temu is constantly pitted against ecommerce marketplace giant Amazon, with the study even saying that 17.5% of respondents believe that Temu could overtake Amazon as the leading ecommerce platform. Another research by Probolsky noted that 45% of consumers think that both platforms offer the same product variety, with Temu being cheaper than Amazon.
Temu’s retention rate of 28% is double the retention rate of Target and Walmart, according to a recent report from Earnest Analytics. However, the emerging marketplace giant’s retention rate is just around half of Amazon’s.
One thing is clear though—while the number of consumers trusting Temu is low, the spending patterns show otherwise. Value for money is a big draw amid ongoing inflation, and Omnisend’s study shows that Temu is going to be a mainstay for online shoppers and should not be considered a passing fad anymore.
Frequently Asked Questions (FAQs)
Click through the questions below to learn more about the most often questions about problems with Temu.
Yes, it is generally safe to purchase from Temu. However, safety practices, such as using strong passwords, not storing card information, and avoiding clicking links in any pop-ups or suspicious emails, are recommended.
Online shopping always carries some level of risk. Temu is a legit ecommerce website and there are legit user-generated reviews about the site and its products, contributing to the credibility of the shopping app.
Temu has been embroiled in controversy recently, facing three action class lawsuits less than two years after its 2022 launch in the US. Data leaks, malware, hacking, and forced labor are the allegations against the platform. All cases are still ongoing.
According to Temu, it connects consumers directly to the factories that manufacture products, most of which are based in China so they are able to cut plenty of middlemen and deliver wholesale prices to consumers.
Temu refers to this as “teaming up”, hence their name “Temu”, which pushes prices down—Team Up, Price Down.
Bottom Line
Even with all the controversies, Temu shows no signs of stopping. Temu is still a new online shopping platform, so it needs to improve and show transparency in its operations and logistics to increase credibility. As retailers, Temu can be a place for learning pricing strategies and product sourcing.
