China’s answer to Amazon is already the most popular free app in Australia. What makes it so addictive?

If you spend much time online, you’ve probably seen one of Temu’s colorful ads—underscored by the catchy slogan: “shop like a billionaire.”

Temu specializes in selling a variety of everyday items, including clothing, toys and household items, at incredibly low prices. Shanghai-based PDD Holdings launched the online marketplace behind schedule last year (initially in the United States) to meet the needs of overseas customers.

Since then, Temu’s reach has grown rapidly. total value the value of products sold increased from 3 million US dollars in September last year to 400 million US dollars in AprilAt the time of this article’s publication, Temu was the most popular free iPhone app in the US, UK, Australia, and Germany.

Why has Temu been so successful? It’s protected to say that the platform has some winning strategies that keep consumers coming back. But beyond that, like any e-commerce platform, using it isn’t entirely risk- or guilt-free. Here are a few things to consider if you’re thinking about giving it a try.

What are the secrets to Temu’s success?

1. Value

Many Australians may associate “made in China” with low prices and impoverished quality. However, Temu consumers are beginning to see it as offering inexpensive products that don’t necessarily compromise on qualityIn some cases, it is enough to set only 10-20 products you will give me 20-30 USD.

Temu says it can offer these prices by eliminating the middlemen in the supply chain. While manufacturers provide product details and the products themselves, Temu handles everything else, from customs processing to international shipping. This streamlining helps reduce unit costs.

However, achieving this value does not come without cost. There are growing concerns that Temu and its suppliers may operating at a loss. However, it is common for startups to experience negative cash flow in their early years due to weighty investments in marketing, including competitive pricing and marketing campaigns – all aimed at building brand awareness and gaining acceptance.

This is especially true for the e-commerce sector, where success and failure can happen in a flash. Temu and its suppliers, who mostly come from sister company Temu Pinduoduo e-commerce platformare probably aware of this lively.

2. Effective marketing strategy

Unlike other e-commerce platforms that focus on functional benefits like saving money, Temu caters to the emotional needs of consumers. It layers the shopping experience with the idea of ​​“shopping like a billionaire” – which is also in line with its value-based strategy.

Temu entered the market at a time when consumers were struggling with global inflation, which prompted them to look for “value.” In its first month after launching in the U.S., Temu raised about $200 million In the advertisment and planned a budget of $2 billion per year.

Given China’s position as a leader in live streaming influencer marketingThis is what it is now social media influencer recruitmentwhich suggests he can apply his China experience to explore social commerce strategy. Social commerce leverages the sense of “friendship” conveyed by influencers to make online shopping more engaging and product recommendations more persuasive. It also works particularly well for sales promotions.

Sales Promotion Tactics

While Temu uses the typical sales tactics seen on other e-commerce platforms, it probably uses the widest range of these techniques. Here are a few examples:

• Experiences with gamification elements. Advertising with gamification elements is based on two basic elements: challenge and reward. Interacting with the spinning wheel of Temu is a compact challenge, but the significant discount offered is the main prize. Such “games” create the illusion of happiness and therefore generate positive emotions at consumers – the reward encourages them to browse the site more seriously, which increases the likelihood of spending money.

• Flash deals and time-limited offers. One common promotional tactic is to create the illusion of scarcity through supposedly “exclusive” offers that are time-limited and will not reappear. This can create a fear of missing out in consumers.

• Discounts and free shipping Offering elementary price cuts and very affordable sales is a proven way to build a devoted customer base. Temu also has the appeal of offering free shipping on orders with a very low minimum spend.

• Loyalty program. Consumers can opt in to receive marketing emails from Temu in exchange for receiving more promotional content, including email-only promotions. E-commerce companies often have access to your personal information (such as your name, address, age, and phone number) and behavioral data (such as your search history and online sessions). With this data, the company can build a user profile and target ads to you personalized promotions and content to encourage spending money.

• Search engine marketing. Many consumers will see Temu ads at the top of Google search results (in the form of “sponsored” posts) when they search for a product.

• Promotional strategy based on artificial intelligence. Temu’s sister company, Pinduoduo, which operates in China, is renowned for Recommendation based on artificial intelligence system. It is likely that Temu uses similar AI algorithms, using users’ browsing and purchasing history to provide personalized recommendations (practice Amazon also takes part).

Defense against manipulation

Temu’s biggest benefit to consumers is its value proposition. It may still have lower quality items, but that’s common among all e-commerce platforms.

In addition, Temu’s business model is based on highlighting its best-selling products, which helps filter out low-quality products. Its 90-day free returns policy also acts as a buffer against unsatisfactory purchases.

However, Temu’s value-oriented approach may not be a good fit for consumers on all fronts. Exposed to such a wide range of marketing tactics, users may become more susceptible to overconsumption – leading to environmental waste and post-purchase regret.

It is worth considering your actual needs before using an e-commerce platform like Temu. You should also familiarize yourself with the sales promotion tactics that are being used. Research indicates Understanding these tactics, as well as advertisers’ intentions, can even support juvenile children remain skeptical and develop cognitive defenses against them.

Moreover, in featherlight of Temu’s game-based advertising strategy, consumers should temper their enthusiasm for rewards. In the future, one useful approach might be for schools and governments to introduce educational programs or social marketing campaigns that teach advertising tactics and recommend coping strategies.

He did not respond to The Conversation’s request for comment.

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