Nine million and counting: The controversial shopping app sweeping Australia

World News

Ebay and Amazon may have Australian consumers at their feet, leading the way in the $55 billion online retail spend each year. When it comes to digital downloads, however, there is a controversial competitor nipping at the heels of Australia’s favourite consumer apps. Meet Temu.
Temu has proven popular with Australian users. Image: Getty

Chinese fashion retailer Temu is Australia’s fastest growing online marketplace and at the time of publication was the number one downloaded IOS app in the country, beating not just shopping applications from Amazon, Woolworths and Shein, but also social media apps from behemoth-tech corporations.

The online marketplace connected with more than 9.2 million Australians in June across its web browser and mobile app, according to recent data from Ipsos, and is currently outranking Meta’s Instagram Threads, Whatsapp, OpenAI’s ChatGPT, and ByteDance’s TikTok in the App store.

Temu’s catchphrase is ‘Shop Like A Billionaire,’ and its promise is free delivery everywhere. And that includes Australia, even for goods sourced and dispatched from overseas.

So what is Temu – and how is it so cheap?

“Temu, which only launched in Australia in April, is now the eighth largest online retail brand in terms of audience,” IAB Australia CEO Gai Le Roy told Forbes Australia. She attributes that growth to strong advertising. “The Temu marketing effort, across social platforms in particular, is driving Australians to at least review its offerings.”

The website currently offers earphones for $1.66, a latte milk frother for $2.64, and a women’s halter top for $4.37.

The price of goods is low, but the volume of transactions that the app processes equates to big dollars – a part of the reason that Temu’s NASDAQ-traded parent company, PDD Holdings, has a market capital of more than US$100 billion.

Temu is not the only subsidiary of PDD. Pinduoduo – a sister company of Temu – operates exclusively in China. And it is also wildly popular.

Image: Getty

According to MIT Tech Review, Pinduoduo took Alibaba‘s crown as the site with the highest number of customers in 2020. In 2021 it had 868 million active buyers in China, generating US$383 billion in Gross Merchandise Value, according to e-commerce intelligence firm Marketplace Pulse.

By 2022, Pinduoduo was achieving 730 million active Chinese users per month – 30 times larger than the entire population of Australia.

Almost 21 million Australian users used a retail website or app in June, according to the Interactive Advertising Bureau (IAB). Amazon was the most popular, followed by eBay, Apple and Woolworths. Temu was number eight on the list.

However, Temu is not without controversy.

The Temu website says the e-commerce company was founded in Boston in 2022. The Apple App Store reveals that Temu’s Seller and Copyright Holder is Whaleco Inc. The owner of Whaleco is PDD Holdings, founded by two Shanghai-based entrepreneurs in 2015.

Earlier this year, PDD filed paperwork to change its official headquarters from China to Ireland. So while the e-commerce site Temu is domiciled in the US, its parent company is of Chinese origin – six months ago, it was headquartered on the Chinese mainland.

The list of company values found on Temu’s website espouse the virtues of Empowerment, Integrity, and Social Responsibility. However these have been called into question by suggestions from the US government of alleged forced labor and customer complaints of counterfeit goods.

These claims counter research undertaken on Australian online consumers by IAB Australia, which found that 47% of those surveyed expressed interest in buying from sustainable brands. Purchasing from ethical brands was also important to 46% of respondents.

The financials of Temu are also not transparent. PDD filed Q1 2023 unaudited financial results in May of this year. There is no mention of its subsidiary Temu.

In the filing, PDD states that its total revenue is up 58% year-on-year from 2022. It attributes that growth to an increase in ‘online marketing services and transaction services.’ It is not known whether that growth is due to Pinduoduo or Temu.

The PDD stock is now trading at just over US$80 a share on NASDAQ, down from a high of US$202 in February 2021. The company is focused on international growth, recently launching Temu in Canada, France, Germany, Italy, the Netherlands, Spain, and the UK., as well as Australia and New Zealand.

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