'It's very addictive': Temu hooks shoppers amid concerns about online discount marketplace in Canada

A shopper browses products online. Pavel Danilyuk/Pexels

With the rising cost of living forcing more shoppers to hunt for deals, steeply discounted products at the Chinese-owned online shopping app and website Temu have been the main attraction for many buyers since it debuted in Canada almost a year ago.

Marcia McKoy, who lives in Edmonton, admits Temu's online marketplace is so addictive that she recently deleted the app to avoid spending more money.

"I buy a ton of unique pieces of clothing from Temu on a regular basis," wrote McKoy in an email. She was among the Canadian readers who shared their experiences with CTVNews.ca about shopping on Temu. "However I decided I spent too much money on the site. ... It's very addictive even though the prices are unbelievable.”

Selling everything from appliances and clothes to toys and home goods, the Chinese online marketplace advertises itself as a place where you can “shop like a billionaire.” Owned by PDD Holdings Inc., Boston-based Temu launched in Canada in February 2023 and the United States in September 2022.

Since Temu expanded in more than 40 countries, it has ranked as one of the most popular apps in Apple and Google Play, and was Apple's most downloaded free app in the U.S. in 2023.

But its competitive prices have raised questions from observers, governments and the public about whether consumers are trading discounts for lower quality, as well as cybersecurity and privacy risks. Others also worried about Temu’s effects on local businesses and its potentially unethical and unsustainable business practices.

LABOUR CONCERNS PLAGUE TEMU

Markus Giesler, a marketing professor at the Schulich School of Business at York University in Toronto, says people may be paying a price for the deep discounts in other ways.

“So the further away you reach to make a transaction or purchase as a consumer … the higher the risk of actually buying something that's unsustainable or has involved some form of unethical work conditions,” he said in a phone interview with CTVNews.ca. “Somewhere down the value chain or supply chain, there's someone who's paying the price for that. And more often than not, that's totally low-paid labour.”

Temu is accused of breaching a U.S. ban on importing products from China’s Xinjiang province by selling at least 10 items that were linked to forced labour, Bloomberg reported in June 2023. The evidence of Temu’s ties to forced labour is inconclusive, but there’s a “probable risk” since the companies are in Xinjiang, according to Publican, a supply chain vetting platform owned by Tel Aviv-based Ultra Information Solutions, as reported by Bloomberg.

A U.S. Congressional report quoted Temu as saying it “does not expressly prohibit” the sale of goods from Xinjiang and “conducts no audits and reports no compliance system to affirmatively examine” whether its suppliers are following the U.S. forced labour law, The Associated Press reported in June 2023. Temu's only reported measure to prevent forced labour was to make suppliers agree to “boilerplate terms and conditions” that ban forced labour use, the report found.

Moreover, Canada has raised concerns about reports alleging China is violating the human rights of Uyghurs and other Muslim ethnic minorities from the Xinjiang region based on their religion and ethnicity, such as through forced labour, torture and other mistreatment.

Temu calls the allegations “completely ungrounded.”

“We attach great importance to the compliance issue of products related to forced labor,” a Temu spokesperson wrote in an email to CTVNews.ca. “Our current standards and practices are no different from those of major U.S. e-commerce platforms, such as Amazon, eBay, and Etsy.”

Temu mainly credits its competitive pricing to its "streamlined supply chain," eliminating the middleman to make operations more efficient, and says its focus has been offering a broad range of "quality products at affordable prices."

Responding to environmental concerns due to complaints that some products are low quality and thus disposable, Temu said it is early in its “sustainability journey” and removes unnecessary inventory handling and transportation to minimize waste.

"Traditionally, a product might move through three or four warehouses, involving repetitive handling and indirect transport routes," a Temu spokesperson wrote in an email to CTVNews.ca. "Now, it enters a warehouse (in China) only once before being delivered directly."

Ultimately, these concerns haven't affected many consumers' desire to find bargains. Temu recently saw sales reach a new record high, soaring 29 per cent in November compared to the previous month, Bloomberg reported in December.

Linda Romain, a retiree from Victoria, says she buys from Temu more than Amazon because of "mostly great prices, wide selection, fast free shipping and no hassle returns and refunds."

“Sometimes their sizing is off—inaccurate—and sometimes their quality is lower, but is the same as one would get from any local discount store such as a Dollar Store," she said in an email to CTVNews.ca, admitting it can be impulse shopping.

As for the forced labour accusations against Temu, she thinks any products from China or developing countries may face the same concerns. A low daily wage for North Americans may not be considered low in developing countries, she pointed out. "Another way of looking at it—many (most) third world countries would rather earn this wage than nothing at all to feed their families,” she said.

IS TEMU LIVING UP TO THE HYPE?

Francesca D'Angelo, a professor and program co-ordinator of the fashion management program at Humber College in Toronto, says so far Temu is living up to its hype of being “everything for everyone,” in part because consumers are struggling with high inflation, while image-conscious shoppers, especially younger ones, are facing social media pressures to have the latest trendy looks. Engaging influencers to promote the products and the “gamification of the rewards” provide fun, interactive ways to lure shoppers, she added. Temu allows users to play games to get deals, for instance.

"What seems to be working for Temu is the way in which they do their gamification, their pricing, the way they engage the consumer through rewards … so that really creates that loyal growing customer base that are really deeply engaged," D'Angelo said in a phone interview with CTVNews.ca.

Giesler says Temu stands out for its aggressive growth strategy.

"You can see that pretty much out of nowhere, this brand, this platform has appeared," Giesler said. "And it's doing very aggressive sort of promotions and advertising on social media platforms to become known."

Although Giesler hasn't seen any studies on Temu's impact on Canada yet, he says Temu has attracted "a great deal of measurable hype” but the service and products must satisfy customers in the long run.

"The thing with hype is it's a short-lived thing," he said. "This might change in six months. And whether or not consumers might continue to shop there has a lot to do with how reliable those value chains are."

At the same time, the "extra, extra good deals" present risks for shoppers, such as products not meeting expectations, he added.

Sue Singer of Carleton Place, Ont., is among the shoppers who aren’t pleased with their Temu experience. After making two orders from Temu, Singer says she won't be purchasing from it again. Among the items she bought were bed sheets, a duvet cover and pillowcases, which she described as "poor quality" with "very thin fabric." She also bought a mousepad that was "very thin with no grip side," and cat-shaped window screen repair patches that "fell off after the first rain."

"I was told about Temu from a friend who places many orders (mostly for jewelry beads) and was 'sucked in' to the allure of their pricing," said Singer, 63, in an email to CTVNews.ca. "I consider myself a savvy shopper (especially when purchasing online) and should have known better. … Overall, the quality is extremely poor."

IS TEMU A THREAT TO LOCAL BUSINESSES?

Meanwhile, Canadian independent businesses view any online giant as a threat.

"Look, there's no question that many online giants have had a profound effect on small companies (and) that was really sped up during the pandemic," said Dan Kelly, president of the Canadian Federation of Independent Business, in a phone interview with CTVNews.ca. “And online giants have the scale to be able to undercut the prices of small- and medium-sized firms."

Smaller businesses find it harder to compete with online retailers who ship goods from overseas at a much lower price and often don't comply with Canadian taxes, duties and other rules because they are hard to enforce due to the large volume of products, he said.

A major frustration for independent businesses, Kelly added, is the showrooming trend, where a customer will go into a small business, try out a product and ask staff questions about it with the intention of buying it online from overseas in order to save a few dollars.

"They have all the costs of running the store and yet they don't get the courtesy of the sale,” he said. “And that of course is just deeply unfair."

Retail Council of Canada national spokeswoman Michelle Wasylyshen told CTVNews.ca in an email that the advocacy group is still "assessing the full impact of the China Factory Direct model on the retail industry in Canada."

Observing the rise and fall of many e-commerce apps, Showcase CEO Samir Kulkarni says since Temu's main competitors are other online retailers, Temu "has little to no impact on Showcase's business." Showcase has been operating trend and lifestyle stores in Canada and the U.S. since 1994.

"Just like food delivery did not replace restaurants, e-commerce apps do not replace the discovery-based, high-quality, social experience of retail stores," he wrote in an email to CTVNews.ca. "We believe the customer will continue to reward strong retailers with their business."