This article was written by The Zillennial Zine’s summer editorial intern Dylan Fraize. Find him on Instagram at @fraize.jpg. If you would like to share an article with The Zillennial, send us an email at thezillennialzine@gmail.com.
Likely, you are already familiar with the company Temu. No surprise there, since Temu has flooded social media platforms with advertisements from their start in the Fall of 2022, with no end in sight. The brand has spent over a billion on advertising alone in 2023. For a company so young, how could they already be spending so much capital? Well, the truth is the “Boston-based” company Temu is owned by PDD Holdings, a Chinese e-commerce juggernaut. They sell everything from bicycles to skirts to car parts. Temu is a platform connecting consumers directly to manufacturers in search of the most affordable price regardless of ethical sourcing.
Temu has dwarfed legacy e-commerce brands like Amazon. In just one year Temu was able to reach 51 million monthly active users; it took Amazon a decade to reach 67 million monthly users. When you open the website of Temu you’ll see an amalgamation of different marketing techniques. The time ticker pressures the user to buy before the deal is over. It shows how many of the listed products are left creating a perceived scarcity. Displaying the retail price next to the discounted price to show how good of a deal you’re getting. A personalized section of products hand-picked just for you. Implementing a combination of these tactics is why so many users have been hooked.
If you’re still interested in learning a little more about Temu, here is a link to a great article. Is Temu an ethical company? The article written by Jess Newman explores the ins and outs of Temu as a business and the ethics behind it.
Logistical Adaptations
Behind all the advertising and big corporate backing, how has Temu logistically adapted and grown so quickly? Well like any commerce giant they have employed the latest technological advancements in their business. Including a 2024 buzzword: AI. Now artificial intelligence has come a long way and has been developed to fit certain industries. From language models to AI face recognition software, AI has made inconceivable progress from where it was just 10 years ago.
Companies are implementing AI models and reaching new levels of production while reducing costs in some cases. The most favorable option for any company is to cut costs and increase profit. AI isn’t human, it doesn’t need a lunch break, it doesn’t have a family, and it never sleeps. A Goldman Sachs study showed that about two-thirds of U.S. jobs may be exposed to some degree of automation. Any human regardless of talent or experience will be able to stack up against the capabilities of artificial intelligence.
In the case of Temu, artificial intelligence has improved user experience exponentially. In many ways AI has been used to target, personalize, manage inventory, offer dynamic pricing, and continue customer service. Temu is not alone in these logistical adaptations, but they have seen the largest growth among other e-commerce giants.
AI is used to target users through particular tailored advertisements. The AI model for ad targeting is quite complex. The AI will analyze a user’s information and build their profile based on online behavior, searches, and location. The AI will then group the user with users that share the same characteristics. The effectiveness of this is that every dollar spent on advertising is now optimized. The AI model can identify the perfect consumer of its products through deep user analysis. Unlike a human, an AI model can make a list of perfect candidates for Temu’s advertisements in mere seconds.
AI personalizes a user’s shopping experience with a data-driven approach. Imagine walking into a grocery store just stocked with your favorite items. Many metrics go into building a user’s personalized dashboard. Websites track much more data than you may think to optimize their site. They track things like time spent on a page, bounce rate, cursor position, average order value, and other shopping habits like the time of day you shop and previous purchases. An AI compiles all this data to serve your landing page with the most important products to you.
An AI model built to manage the inventory of an e-commerce platform balances historical sales with forecasted trends. In real time AI models compare the supply and demand of any one given product. To avoid surplus and stockouts the AI has to predict demand accurately. Thanks to machine learning AI can become increasingly smarter over time. The more data given to the AI the even more accurate of a result.
Creating a dynamic price is a unique characteristic of AI models. An AI can find competitors across all platforms and prices. It takes the data about competitors’ sales and prices and allows a company to shift theirs quickly to steal a market share. Jean Ginzburg says “Thanks to advanced machine learning AI evaluates historical pricing data, market conditions, and consumer reactions to dynamically adjust the price”.
One of the occupations most at risk of AI automation is customer service. On many e-commerce sites, their support team is a chatbot. Rather than staff a real human, an AI model can store, analyze, and learn from all the data generated from each interaction. This creates a more accurate depiction of problems within the platform. The AI model can be a diagnostic tool for any website.
What’s Next?
Now that you know how Temu became a giant, what’s next? As Temu leveraged each AI development to its advantage it has furthered the exploitation and overconsumption.
AI has been a hot-button topic for people around the world regardless of age or any other defining factor. It’s easy to be scared of artificial intelligence, its potential hasn’t fully been unlocked. People are still uncertain of how life will be after automation. Most importantly people are concerned with how AI will be used, for good or for bad.
As of 2024, Temu and other lightning retailers have used AI for their benefit. They have optimized Temu to become one of the quickest-growing retailers ever, but what about their impact? While AI has boosted the company in every way imaginable it has altered consumer behavior, increased waste, continued unethical labor practices, and multiplied their carbon footprint.
Rather than investing in ways to dissect and audit their supply chain Temu spends elsewhere. This is the scary truth of e-commerce, there is more money in exploiting the loopholes than solving the problem. Temu could spend even a percentage of their advertising budget towards strategic shipping routes to lower emissions but they don’t. A fraction of that same budget could help implement recycled materials in their products but it’s not. That budget could help find the answers to hundreds of issues plaguing our world but instead, it’s spent on spreading the data-driven retail machine Temu around the world.
What do you think of Temu? Are you familiar with the app? How do you think AI can be used in the future? Have you seen AI in commercials yet? Let us know in the comments below!
Leave a Reply