In only two years, Temu and Shein have become household names among Americans, with more than 70 percent of U.S. consumers having shopped on Temu in the last year, according to a recent survey.
Despite the proliferation of Chinese-owned and operated e-commerce stores, most consumers say they do not trust these platforms, citing a lack of transparency and data security as the biggest risk.
Only 7 percent of American consumers say that they trust sites such as Temu, but 68 percent of them still shop there. Around one in five respondents shop on a Chinese-owned marketplace at least once per week. In Canada, only 3.5 percent of consumers trust Temu, with at least 39 percent and 35 percent, respectively, using sites such as Temu and Shein.
Opinions surrounding the support for these retailers vary across the board. Many shoppers have said that the cheap prices have made it almost impossible to shop anywhere else. Other top reasons for favoring these platforms include a wider assortment of goods and fast delivery times.
However, the price of shopping cheaply comes at the expense of handing over vast amounts of Americans’ personal data to Chinese-owned companies, some of whom are directly related to the Chinese Communist Party (CCP).
Cheap goods, priceless data
Temu and Shein have won over the wallets of Americans. Years of rising inflation, and elevated prices have forced many to retreat their spending or change to more affordable alternatives.
Each company's business model is straightforward. Temu and Shein partner directly with a network of manufacturers, cutting out the middleman, retailers, and storefronts. This, in turn, allows the sites to offer unmatched deals and price tags that are often near zero.
In one report, analysts found that goods are often spruced from a factory in China via a network of more than 80,000 third-party suppliers. The ultra-low prices have attracted millions of shoppers worldwide. In 2023, Temu made more than $54 billion in annual sales. Shein sales soared by 43 percent between 2022 and 2023, with the company generating over $32.5 billion in sales.
However, in more recent years, consumers, along with industry leaders and regulators have begun questioning the business practices of Temu and Shein. Reliance on data tracking has become a major component for online retailers, with plenty of consumers complaining about the lack of security they have when shopping online.
Companies collect an immense amount of data on their customers, allowing them to create more personalized shopping experiences and target customers with more tailored messaging and product recommendations.
Collecting customer data plays a key role in developing products within a changing consumer environment, however, a lack of regulatory action has now meant that Chinese companies have access to millions of American consumers’ personal information.
In the past, retailers such as Shein have come under fire for mishandling customer information. In an investigation of Zoetop, the owner of Shein, and a Hong Kong-based LLC, authorities found that the company had mishandled the credit card and other personal information of more than 39 million customers following a cyberattack.
Over 800,000 New York consumers were among this crowd, and according to the office of the New York attorney general, the company purposely misled consumers regarding the extent of the data breach it had experienced.
Shein isn’t alone in this. A review by the Center For Strategic & International Studies (CSIS) suggests that Temu, and its sister application, Pinduoduo act as commerce sites, when in reality both these platforms are malware and data collection platforms.
Temu was previously banned from the Play Store in 2023 following the uncovering of malware in versions of the mobile application. Furthermore, CSIS cites a string of data mispractices directly tied to the app and its parent company PDD Holdings.
For one, some believe that Temu, through its parent company, is currently working with the Chinese government, including the CCP’s Central Committee. Collecting the data is only one part of the process. Research has shown that Temu or PDD Holdings will sell customer data to another vendor, which then uses the information to dictate media and data on e-commerce sites.
There are those that suggest that companies such as People’s Data, a company directly linked to the Chinese government are using the connection of e-commerce platforms with consumers across the world as a way to further fuel propaganda efforts.
However, this isn’t anything new, and in 2023, the U.S.-China Economic and Security Review Commission issued a report warning, claiming that weak or insufficient data protection efforts are being applied on both Temu and Shein.
Cybersecurity experts have warned that consumers should be cautious when using any of these applications, as they often request to have access to a large amount of data stored on devices.
Despite all the warning efforts, the reward of cheaply manufactured goods outweighs the risks of losing personal information to an unknown foreign entity or organization.
Seasonal savings, shopping scams
Americans are planning to spend big this holiday season, with the majority of shoppers expected to spend more on experiences, while cutting back on spending for things such as gifts.
This holiday season, Americans are estimated to spend an average of $1,778, per shopper, an increase of 8 percent from last year, according to a survey by Deloitte. More than this, retail sales are expected to grow between 2.5% and 3.5% over last year, with total retail sales estimated to reach more than $980 billion.
The rosy economic outlook brings to question how Americans will be shopping this year, and by the looks of it, more consumers are planning to shop online this year, despite the wider threat online scams and fraudulent activities pose to shoppers during the holiday season.
In fact, recent findings suggest that around 23 percent of consumers will be shopping on sites such as Temu, with 10 percent planning to do their shopping on Shein. Brick-and-mortar stores will see increased support from American shoppers this year, with around 59 percent planning on buying gifts at big-box discount stores, and 42 percent shopping at small businesses.
Yet, security experts are warning shoppers that this year, the increased online activity could expose them to a number of digital threats, including viral scams shared on social media, malware attacks, phishing scams sent via emails, and several other well-known tactics used by malicious cybercriminals.
This isn’t only important to keep in mind when shopping on sites such as Temu and Shein, but should be considered in the broader context of online shopping, and the threat of unsophisticated cybersecurity infrastructure can pose to individuals and their personal information.
Online scams are plentiful around this time of the year. In 2023, more than 34 million Americans were victims of online scams, according to recent research by ExpressVPN. Besides this, the Better Business Bureau (BBB) 2023 Scam Tracker Risk Report found that around 41.9 percent of all reported online scams result in 82% of shoppers reporting losing money when targeted online.
For many consumers, online shopping over the holiday season poses immense risk, potentially exposing themselves to bad actors and a series of fraudulent activities. Elsewhere, rising prices and inflation have pushed many consumers into a corner, with no other option but to opt into shopping for cheaper alternatives such as Temu and Shein.
This relentless see-saw between regulators and security experts, which hasn’t delivered a viable solution for the industry, means that Americans are being forced to give up their personal information to foreign entities, all in the hopes of saving a few extra dollars on their holiday wish list. The solution now isn’t to keep the threat out, but rather dealing with the threat from within.
