How is Chinese e-commerce giant Temu shaping a new standard on the Czech market ?
At the end of last year, the Chinese marketplace Temu experienced a significant increase in activity on the Czech e-commerce scene. Huge investments in advertising meant that Temu essentially dominated the online space, while smaller local players lost pace. The exact size and sales volume of Temu are not officially known as the company does not publish its figures. However, a recent case in Hungary suggests just how powerful Temu really is.
When experts talk about the controversial marketplace that offers extremely cheap goods, usually directly from Chinese manufacturers, they even talk about the “Temu effect”. A demonstration of this effect recently took place in Hungary when online advertising agency Growww Digital monitored the intensity of Temu’s presence through Google Ads.
From the beginning of April, Temu stopped advertising on the Hungarian internet for ten days. László Szabó from Growww Digital commented on LinkedIn that during this period only one Facebook ad from Temu targeting Hungarian users was active. This is a significant drop compared to the previous six months, when 55,000 ads of this type were active.
Szabó offered two possible explanations for this outage – either it was a logistical error that caused significant delays in shipments, or it was a problem related to the Hungarian customs administration, which was switching to a new system, and some logistics players did not have time to prepare for the change.
According to digital marketing experts, this shortfall in Temu’s ads in Hungary has had a significant impact on the sales of e-shops that compete with it in some categories. On a weekly basis, sales of these players increased by at least twenty to fifty percent, even after excluding seasonal effects. In extreme cases, there has been an increase of seventy percent.
This data illustrates the “Temu effect” that affects other players in the e-commerce market. It is crucial because, thanks to large advertising budgets, Temu is pushing smaller e-shops out of the advertising space. The recommendation for merchants is to work on their added value for customers, as this is what can explain the higher prices that Temu is unable to compete with.
In Hungary, Temu is facing accusations of non-compliance with consumer rules, such as providing non-existent discounts, psychological pressure and misleading information. The Competition Authority has opened an investigation against Whaleco, which operates Temu in Europe.
A similar situation exists in the Czech Republic, where the Czech Trade Inspection Authority has received complaints from consumers about non-delivery of ordered goods, missing instructions in Czech and delivery of goods other than those ordered. The Association for Electronic Commerce (APEK) has also criticised TEMA for advertising discounts in breach of European legislation and for providing inaccurate information about consumer rights.
The APEK recommends that consumers shop at verified Czech or European online stores. The organisation expects Czech and European authorities to address market protection and compliance. It counters this by complying with laws and regulations in the markets where it operates and citing positive feedback from customers.
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