In Hungary, Temu turned off advertisements, e-shops rose by tens of percent

At the end of last year, the Chinese marketplace Temu made a raid on Czech e-commerce, when it basically bought out the online space with its huge investments in advertising, and smaller local players cannot keep up in this regard. How big Temu really is and how much it sells is not officially known because it does not share its numbers. But its strength is shown by a recent case from Hungary.

Some experts, when they want to describe what the controversial marketplace selling extremely cheap goods, mostly directly from Chinese manufacturers, brings with it, they even talk about “The Effect”. And a demonstration of this effect took place in Hungary, pointed out the online advertising agency Growww Digital. It also publishes its own index, which monitors how intensively Temu is present via Google Ads.

From around the second of April, Temu stopped advertising on the Hungarian Internet for ten days. “According to the Meta ad library, there is only one active Facebook ad from Temu targeting Hungarian users. For context, in the last six months there were 55 thousand (!) ads of this kind active,” commented László Szabó from Growwww Digital on LinkedIn.

Szabó gave two possible explanations for this – either it was a logistical error, when the market was reporting significant delays in shipments (longer than usual), or problems related to the Hungarian customs administration, which was transitioning to a new system, and not all players in logistics managed to prepare sufficiently for the change.

“The short break (in advertising campaigns – editor’s note) was caused by our rapid growth, which temporarily exceeded our personnel capabilities. We are happy to continue our engagement in the Hungarian market,” responded media representative Temu to CzechCrunch’s question. Even data from Growww Digital proves that it was only an outage for about ten days.

According to a digital marketing expert, the shortfall in Temu’s advertising in Hungary had a significant impact on sales at e-shops that compete with it in some categories. “When Temu turned off ads, those players’ weekly sales increased by at least twenty to fifty percent, seasonally adjusted. In extreme cases, it was up to seventy percent,” explains Szabó for CzechCrunch.

“These data also point to the so-called Temu effect, which affects other players and the entire e-commerce market. It is absolutely essential and, thanks to large budgets, it pushes many smaller e-shops out of the advertising space,” adds Szabó, who also recommends traders to work on their added value for customers. “It is she who can explain your higher prices, you cannot compete with the Chinese in terms of prices,” supplies.

Allegation of non-compliance with consumer rules

At the same time, in Hungary, Temu has to fight with accusations that it does not comply with the basic rules related to consumer rights. As stated by the local office for the protection of economic competition: “The online marketplace (Temu) can use non-existent discounts, psychological pressure and deceptive green news.” The authority thus opened an investigation against the company Whaleco, with its official seat in Ireland, which operates Temu in Europe.

There is a similar market in the Czech Republic. “In connection with the Temu online marketplace, the Czech Trade Inspection received units of consumer submissions for last year and this year (until 18/04/2024),” František Kotrba, press spokesman for the trade inspection, describes for CzechCrunch. The submission should have concerned, for example, missing instructions in Czech, non-delivery of goods paid for and delivery of goods other than what was ordered, and proof of purchase.

At the same time, the Association for Electronic Commerce (APEK), which represents over seven hundred local e-shops, turned to ČOI. According to her, Temu is supposed to advertise discounts in violation of European legislation, and at the same time, it is also supposed to provide inaccurate information about withdrawing from the purchase contract, warranty and complaints procedure.

“APEK recommends that consumers shop at proven Czech or European online stores. And this, for example, in connection with speculations regarding compliance with personal data protection rules, which are being investigated by the National Office for Cyber ​​and Information Security in the Czech Republic. APEK expects that the relevant Czech and European authorities will deal with the protection of the market and the need to comply with the established rules,” the organization said.

The Czech Trade Inspection confirmed the receipt of the initiative from APEK CzechCrunchi, saying that it is currently dealing with it. As part of the control activity, Temu can check the website and then choose the next course of action based on the results. “Given that the e-shop in question is based in Ireland, the first consideration is the transfer of our findings to the Irish supervisory authority for the adoption of further measures under the procedures of the European Regulation on cooperation in the field of consumer protection,” added Kotrba.

He is defending himself against these accusations. “We comply with the laws and regulations in the markets where we operate. Since its launch on the Czech market in July last year, feedback from customers has been overwhelmingly positive. They appreciate our wide range of quality goods offered at affordable prices. We are primarily focused on providing low prices every day through our factory direct sales model. This approach reduces production waste by more accurately matching demand with supply, ensuring lower prices without compromising quality.” media representative Temu responds for CzechCrunch.