Temu, Baby Yoda, and Online Advertising
Regulators and consumer groups across the EU have already been expressing concerns about a myriad of potential Temu’s consumer protection violations, including misleading practices when consumers see big differences between what is advertised and what is realistically delivered to them.
A few years ago, I started binge-watching Star Wars’ The Mandalorian, and like many million others, I immediately fell in love with Baby Yoda, also known as Grogu. It just took a few weeks until I saw a really cool ad for a live-action Grogu robot on social media that could move, make sounds, and just looked adorable. I bought it directly from the advertiser via the link provided on social media, and it was shipped from China within a few weeks. Full of excitement when this bargain for 40 Euros arrived, I learned the hard lesson that Grogu was neither a moving robot nor able to make any sounds, and even his colors didn't resemble the little mascot of The Mandalorian. I had fallen for an advertising scam that simultaneously violated all the copyright rules in the galaxy.
The recent rise of the Chinese e-commerce platform Temu and its launch in several European countries makes me wonder how many consumers will make similar bad purchases. The typical ‘we don't like new things’ consumer protection groups are already on the barricades, claiming that Temu is violating several provisions of the EU’s Digital Service Acts in the areas of product safety and deceptive advertising.
This might be actually one of the rare cases where groups like BEUC got it right: this is a clear case of consumers being harmed by a platform. I got so burned after the encounter with fake Baby Yoda that I am staying away from Chinese e-commerce and hence have not used Temu as a customer. The allegation that they make it too hard to delete one's account from the platform and that there are potential copyright infringements of products promoted and sold on the site all sound likely to me.
While there are ongoing investigations against AliExpress, a competitor of Temu, we will soon probably see more complaints against Temu’s marketing practices and product quality. Consumers can now wait for regulators on national and EU level to draft a slew of new e-commerce rules on top of the already heavy-handed Digital Services Act OR just use some common sense and not shop on websites that push aggressive gamification tools to potential buyers.
Regulators and consumer groups across the EU have already been expressing concerns about a myriad of potential Temu’s consumer protection violations, including misleading practices which could violate Unfair Commercial Practices Directive when consumers see big differences between what is advertised and what is realistically delivered to them. Additionally, there are data protection issues within the GDPR framework, competition law and product safety and compliance issues. Temu hit 75 million monthly users in the EU back in April of 2024, exceeding the Digital Services Act (DSA) threshold for very large online platforms (VLOPs), which is 45 million users per month and will soon be listed as one by the European Commission.
Until that happens, consumers need to be more aware of their habits and realize they have to look out for themselves first, as the regulatory safety net, no matter how intense, is usually lagging behind. People might realize that the 89.90 Euros annual membership for Amazon Prime might be the better option. E-commerce platforms will thrive long and sustainably if they shield consumers from bad actors. Places like Amazon or Zalando are able to generate outstanding customer lifetime value because their users don’t feel deceived but are provided with ongoing good value.
Temu’s value proposition is ‘Shop Like a Billionaire.’ I sincerely hope that (at least self-made) billionaires don't fall for deceptive advertising that easily. My lesson from the Baby Yoda debacle is to buy from trustworthy platforms or directly from brands - they have a reputation to lose.
