Temu

Temu: The Online Marketplace with a Controversial Past

Is Temu the future of online shopping or just another player in the crowded e-commerce market? This question has been on everyone’s lips as the platform, operated by PDD Holdings and owned by Colin Huang, continues to grow rapidly. With its promise of heavily discounted consumer goods shipped directly from China, it seems like a no-brainer for bargain hunters. But is there more to Temu than meets the eye?

Temu’s business model has raised eyebrows due to concerns over data privacy, forced labor, intellectual property, and product quality. These issues have led to legal disputes with other companies, such as Shein, which has accused Temu of violating US antitrust laws.

The Battle Between Temu and Shein

One of the most notable conflicts is between Temu and Shein over exclusive agreements with apparel manufacturers. Is it fair for one company to dictate terms that limit competition? According to Temu, Shein mandated exclusive distribution agreements with its 8,338 suppliers, preventing them from selling on Temu’s platform or to affiliated sellers. This could account for up to 70-80% of ultra-fast fashion merchants in the US market.

In response, Shein filed a copyright infringement lawsuit against Temu in U.S. federal court. In turn, Temu countersued Shein in London High Court, claiming that Shein broke British competition law by tying suppliers to exclusive agreements and allegedly bullying suppliers in China. The cases are ongoing, with some expected to come to trial towards the end of 2026.

Temu’s Business Model and Its Drawbacks

While Temu operates on a business model that allows Chinese vendors to sell directly to customers, making products more affordable, this approach has led to concerns about price fixing. Additionally, the use of ‘family warehouses’ fulfillment centers run from personal residences raises questions about data privacy and working conditions.

The dispute between Temu and Amazon has also intensified, with both companies matching each other’s supply chain strategies in 2024. This competition is not just limited to the US market; it extends globally as both companies seek to dominate the e-commerce landscape.

Legal and Ethical Concerns

The legal battles are just one aspect of Temu’s controversial history. The company has faced criticism over its advertisements, including five ads banned by the UK’s Advertising Standards Authority for objectifying women and children. It is also facing two class action lawsuits in the US over unsolicited texts.

Customers have complained about undelivered packages, product discrepancies, and unresponsive customer service. The Better Business Bureau reported 31 complaints against Temu by the end of 2022. Products sold on Temu have been found to contain toxic substances exceeding legal safety limits, including phthalates, formaldehyde, and lead.

The European Consumer Organisation has launched a complaint against Temu with the European Commission over breaches of the Digital Services Act. The company is also facing an investigation by the European Commission amid concerns over illegal and counterfeit products sold on the platform.

Data Privacy and Forced Labor Concerns

Temu’s data privacy has been raised as a concern, particularly after Pinduoduo, its sister app in China, was suspended from Google Play due to malware. Greg Gianforte, the governor of Montana, banned Temu on government devices state-wide in May 2023. Apple was fined due to privacy rule violations and misled consumers about data use.

Temu faced class action lawsuits over private data handling in Illinois and New York, a South Korea investigation, an Arkansas lawsuit alleging malware and deceptive trade practices, and criticism for forced labor concerns, intellectual property issues, and employee working conditions. These issues highlight the complex web of challenges Temu faces as it tries to establish itself in the global market.

As we navigate through the ups and downs of online shopping, one thing is clear: Temu’s journey is far from over. Will it rise above its controversies or fall by the wayside? Only time will tell. But for now, the question remains: Can a company built on such a controversial foundation truly thrive in today’s competitive e-commerce landscape?