Temu & Co

Every 2nd online shopper buys from Chinese platforms

(Bild: AFP)

Chinese low-cost platforms such as Temu and Shein have finally reached domestic consumers. However, they are increasingly being criticized for poor quality, shipments that are not received, the detrimental climate and environmental impact of the products and manipulative techniques.

"Temu only entered the Austrian market last year. Within a year, they have achieved a market penetration that is unparalleled," trade expert Ernst Gittenberger from Johannes Kepler University (JKU) Linz told journalists on Thursday. Criticism of Chinese online competition is growing across Europe.

Three particularly popular
A JKU survey of around 1,000 Austrian online shoppers found that almost one in two had shopped on one of the Chinese online platforms in the past twelve months. Particularly popular: Temu, Shein and AliExpress. Temu alone sends 30,000 parcels to Austria every day. The target group is mainly young women between the ages of 16 and 24 who buy cheap fashion and cosmetics there. "The platforms are falling on fertile ground due to the rise in prices," says Gittenberger. Consumers are still reluctant to make purchases at the moment.

(Bild: AFP)

Spending is falling
This also explains why the number of online shoppers is increasing, but spending is falling. The share of online spending in total retail spending fell in 20 out of 27 EU countries last year, in Austria to 9.8 percent. In 2022, the share was still at 10.4%, in 2021 at a historically high 11.5% due to the coronavirus crisis.

Spending in Chinese online stores is currently still at a low level. Between May 2023 and April 2024, they are likely to have amounted to EUR 600 to 750 million, according to a JKU estimate. This corresponds to seven to nine percent of Austrians' total online spending, and the trend is rising.

Consumer behavior unlikely to change significantly
Christoph Teller, Director of the Institute for Retail, Sales and Marketing (IHaM) at JKU, does not expect Chinese providers to radically change consumer behavior. "We are Amazon socialized and we will not deviate from this high standard of service." In the survey, poor product quality or long delivery times were seen as the biggest problems when buying from Chinese platforms. On the other hand, a large selection of products and, in particular, cheap products are the main reasons for making a purchase.

Resistance is stirring
However, there is resistance throughout Europe. The platforms are increasingly being criticized for poor quality, shipments that are not received, the poor climate and environmental footprint of their products and manipulative techniques. The EU Commission recently tightened the rules for Shein and officially categorized the platform as a very large online platform. This means that Shein is subject to stricter requirements, for example with regard to precautions to protect against counterfeit products and infringements of intellectual property rights.

 In addition, annual risk assessment reports will become mandatory for the Chinese company, which will have to take a close look at possible adverse effects on the health and safety of consumers in particular - with a focus on the physical and mental well-being of underage users. Temu is likely to be next in line.