Written by
Aurelija Vycaite
Strategy
It took over a decade for Amazon to amass 67 million active users in the US. How long did it take Temu to reach this number? A year.
In September 2022, this highly growth-focused Chinese retailer landed on the US market. It has now outperformed established brands such as eBay, Walmart, and Target, leaving only Amazon, which is experiencing a decline in user base, as its main competitor.
While most experts credit the aggressive paid ads strategy for this massive growth, there is another crucial element making Temu such an important platform to focus on.
Beyond cheap Chinese goods, Temu is exporting the Chinese shopping experience to the Western markets.
How does it look like?
In this article, we are sharing some of the main learnings from our DXP consultant Daan’s analysis.
Employing dark UX patterns to manipulate purchase decisions
Upon landing on the Temu website for the first time, it’s impossible not to notice how crowded the pages are with product options and information. Each item costs probably 30% of what we are used to paying and once you choose the item, Temu does all in its power to make you checkout. It’s desperate.
You’ll see urgency-building elements like a countdown timer before the price cut expires;
There'll be a bunch of notifications showing how many people have recently purchased the item;
Exclusive additional discounts will be offered if Temu detects that you are about to abandon the customer journey.
And before you know it, the item is in your cart. Did you consciously make the purchase decision? Or were you manipulated?
Gamification of the shopping experience
Gamification is already gaining attention in mainstream e-commerce as brands are experimenting with some basic tactics like reward systems or spin-to-win wheels.
But gamification on Temu is on steroids. Some users even started YouTube channels to share their strategies on “how to get free stuff” from Temu by playing its games.
Once you create a profile, Temu won’t let you go that easily. Many customers admit that Temu is as addictive as sugar. You’ll keep getting discounts and offers as a reward for staying in the app: just for being active. The dopamine hits lure customers into coming back. The strategy is that you are literally having to browse and spend time on the app to get your rewards.
Referrals and social selling aspect
Besides promising low prices and showering customers in discounts, Temu is also trying to prove to be a trustworthy retailer. To start, it provides reliable shipping methods, like DHL, and thousands of positive and verified reviews for basically every product.
Moreover, Temu heavily invests in its referral program, giving generous rewards to each new user brought and claiming that one could earn up to 100,000€ per month.
New app users get 100€ worth coupon bundle.
What lies ahead for Temu's future?
The world of e-commerce definitely experiences the impact of Temu's presence in the market.
Amazon has already started taking steps to react to a new competitive threat and has reduced seller fees. It now also offers a broader array of options to merchants who depend on the company's delivery and fulfilment services.
Smaller brands see heavily increased advertising and user acquisition costs.
The third factor will be changing customer expectations. Easy rewards, price cuts, and constant engagement are the norm in Chinese e-commerce and may become significantly more prevalent in Western markets. Temu may also introduce team purchases, a radically different e-commerce business model, proven successful by Pinduoduo.
However, Temu's ascension to the peak of the e-commerce realm hinges not on expanding the user base, but on fostering customer loyalty. The prevailing approach, entailing substantial investments, is ultimately unsustainable.
And even more unsustainable is the whole Temu business model, leveraging on hyper-consumerism and the fear of missing out on the best deals.
Dive deeper into Conway DXP Snapshot of Temu
Prepared and analysed by our digital experience consultant Daan Spangenberg. Feel free to contact, if your brand is interested in a DXP Audit.
