‘Unhealthy addiction’: Grim warning for Australian Temu shoppers business expert says
Australian people have developed a new, $1.4b addiction to Temu, which seems harmless, but an Australian business expert warns about its potential risks.
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Aussies have developed a new addiction to Temu, but a business expert warns it’s not without some concerning risks.
Temu, which is an online marketplace known for astonishingly low prices, knock-offs and dupes of more expensive brands, is owned by PDD Holdings.
PDD Holdings started in Shanghai, China, and moved its headquarters to Dublin, Ireland last year.
It also owns China’s Pinduoduo, a similarly successful domestic shopping platform.
And one only needs to go as far as their TikTok or Instagram feeds to show how hugely popular the online store has become in Australia since it launched 12 months ago.
Many Temu shoppers had developed an unhealthy dependence on the online retailer’s gaming-style app, according to Dr Shasha Wang, a senior lecturer at Queensland University of Technology Business School.
Temu users have the opportunity to receive discounts and free products by spinning a wheel, which can promote compulsive behaviour.
“(The app) is mostly based on the mechanism of games — it’s a balance between challenge and reward,” she told Sunrise on Tuesday.
“When people are spinning the wheel, it provides a challenge, they conquer a small challenge, but they get rewards in terms of incentives and coupons they can use that make it more enjoyable for consumers.
“In turn, they shop more and perhaps purchase more.”
Sunrise hosts Matt Shirvington and Nat Barr pressed Dr Wang on how shoppers can deal with their potential “addiction”.
“I would say firstly try to set up a cooling-off period before you make any purchase decision,” she said.
“Secondly, when you provide information online, try to consider what information you want to provide because the recommendations are based on the data you provide.
“(The information) includes your shopping behaviour and also your personal information. So, make informed decisions by reading the policies and privacy policies.”
According to Dr Wang, it is crucial to stay alert to the persuasive tactics implemented by Temu and other online retailers.
The academic also highlighted Temu’s massive marketing budget, which Forbes reported amounted to $AUD755 million last year.
In late April, Roy Morgan Research estimated that over 1.4 million Aussies shop at Temu each month, spending an estimated $1.4 billion annually.
A further 800,000 shop at fellow low cost retail competitor Shein with an estimated annual spend of $1 billion.
Laura Demasi, Roy Morgan’s Retail, Social & Consumer Trends Expert said a pivot to such retailers was spurred on by the impact of interest rate rises and broader cost of living pressures.
“The ‘cost-of-living crunch’ has also created the perfect storm for the rise of surprise winners in this environment – online marketplaces Amazon, Shein and Temu, who together have helped drive a rise in spending online in the last six months and are disrupting retail to the tune of $8 billion in annual sales,” she said.
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