Is cheap online retailer Temu really a threat to our local businesses?

You’re probably seeing ads for it everywhere – online retailer Temu has well and truly entered the New Zealand market.

But is it a threat to local retailers, and should we be concerned?

Temu is an online retailer that sells products extremely cheap; owned by Pinduoduo, a Chinese e-commerce company, and launched in New Zealand in March after entering the US market in September last year.

It’s similar to other cheap online stores such as AliExpress, Shein and Wish as the companies have similar business models with thousands of suppliers and no physical stores.

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It had also used social media ‘influencers’ to promote the business, giving them money to shop on Temu in return for an affiliate link to share with their followers.

In the US it even had a SuperBowl advertisement.

Managing director of First Retail Group Chris Wilkinson said Temu had been popular, but he was not sure whether the scale of its advertising had had much of an effect on shoppers here.

“Temu product is largely unbranded and very much falls in the discretionary categories – the nice-to-haves – not must-haves,” he said.

“It has been popular, but I’m not sure whether it’s had the euphoric launch and response that it achieved in the US where it leveraged SuperBowl advertising to engage shoppers there.”

But its persuasive abilities in getting users to refers friends and family was a “differentiator” in the local market, Wilkinson said.

“Its marketing integrations with website and social media channels means that the brand will follow browsers wherever they travel on the internet – achieving dominant visibility and calls-to-action.”

Each new retailer of this scale had a cumulative effect on retail and the NZ economy, he said.

Wilkinson was interested to understand whether Temu was charging GST on transactions into New Zealand, like retailers such as Amazon and Book Depository, which would ensure a level playing field for retailers.

As the country teeters on a recession and people tighten their belts, going for the cheapest option will be front of mind. But Wilkinson said that can have a negative effect on the circular economy.

“The big question is whether Temu and others in this space will be creating a tsunami of ‘tomorrow’s landfill’ as consumers buy lower-cost and quality and often disposable goods, which very much goes against our need for a more circular economy,” he said.

Retail NZ chief executive Greg Harford said big international websites like Temu certainly created challenges for Kiwi retailers because of their scale and pricing.

“New Zealand retailers are working hard to compete with foreign websites, and try to offer great service and good pricing on a range of products.”

He reiterated the saying ‘shop local’ as it had the biggest effect on the country’s economy and shoppers would be protected by New Zealand consumer law.

“We always advise customers to shop from brands they know and trust – and it’s good to know that, when buying from a business in NZ, you have the piece of mind of being covered by New Zealand consumer law; plus you’re dealing with local people and helping keep the economy going.”