'Buyer beware!' - Concerns raised over Temu's business practices
"Be very careful when doing business with these companies. It is a little bit like the Wild West..."
Gugs Mhlungu spoke to Business Strategist and Columnist, Jon Cherry.
Listen to their conversation in the audio clip below.
For months now we have been bombarded by advertisements on social media by the Chinese online store, Temu.
"The problem is that these companies are very very clever and they are backed by enormous amounts of money. Last year Temu spent $3 billion on its advertising alone - to contextualise that, that's what Old Mutual is worth."
- Jon Cherry, Business Strategist and Columnist
Temu is a platform that represents thousands of merchants in China.
From clothing to beauty products to musical instruments to appliances and everything in between, Temu has it all and it comes at extremely wallet-friendly prices.
Despite only launching in mid-January in South Africa, it has become the most downloaded app in the country.
Cherry explains that Temu is using what they describe in innovation terms as a disruptive approach by selling to a market that is being overlooked.
"...they are offering very cheap value into a market where potentially there are a lot of people who have never bought stuff online but because it's so cheap, I will give it a go, let me try it out but once you've tried it out the possibility of you doing it again is high and that's what they are really banking on..."
- Jon Cherry, Business Strategist and Columnist
In an article in the Daily Maverick titled 'Don’t be fooled by shopping platform Temu’s childlike interface', Cherry wrote: "Its [Temu] debut should be seen as part of the dawn of a new era in consumerism; one where giant marketing megalodons unleash a firehose of propaganda at a region to capture an outsized wallet share for as long as possible."
He adds that Temu is not necessarily an eCommerce company, but a gaming company.
"What's also really fascinating about their approach is that their online shopping is more like going to a casino than it is like shopping on Amazon. There are ways you can almost get free money so if you spin the wheel of fortune you get a R200 credit or if you take a chance on something for a very limited period of time there might be a 50% discount. They are kind of captivating you and keeping you on the app longer so that you buy stuff.”
- Jon Cherry, Business Strategist and Columnist
There have also been reports of Temu facing a class action lawsuit relating to the company's data collection/sharing policies and activity.
"These companies are very very clever, they move far quicker than regulators, especially even regulators in South Africa. Although we have these great laws, POPIA Act, my feeling is that a company like Temu and the holding company can side-step those things very very easily."
- Jon Cherry, Business Strategist and Columnist
"Be very careful when doing business with these companies. It really is a little bit like the Wild West where you take your chances and when it works you get items at a reasonable price and if it doesn't work, you pretty much need to write it off."
- Jon Cherry, Business Strategist and Columnist
Scroll up to listen to the full interview.