Three times a day, 39-year-old Ashlee Nordquist, an optician in Fargo, North Dakota, logged in to the shopping app Temu to feed her fish.
If she fed enough fish, by tapping on a floating bag of fish food on her phone screen, Temu had promised to send her a free product of her choosing. But Nordquist kept running out of fish food. To get more, she needed to refer a new user to the app. So, she introduced Temu to her close friends and coworkers. “It’s not charity. They are not just giving away free things to be nice,” Nordquist told Rest of World. “Referrals are the secret ingredient to winning the games.”
After making more than a dozen referrals, and playing countless rounds of Fishland as well as other games on Temu, Nordquist won a bounty of freebies: a family hotpot-and-grill combo, a small hotpot-and-grill combo (she found the first one too big), a camera drone, a storage organizer, and a meat slicer. Most recently, in February, her fish-feeding routine landed her a free guitar — a gift for her friend’s daughter.
Temu, the U.S.-based subsidiary of PDD Holdings, which operates a sister site in China as Pinduoduo, has topped app store charts since its launch last September. In less than six months, the app has achieved 24 million downloads, thanks to aggressive advertising, cheap pricing, and addictive referral campaigns in the form of mobile games. In February, Temu informed suppliers about its Canada launch. “The goal of Temu is to bring Chinese supply chains to the world, beginning with the U.S. site,” the company said in a message to suppliers, according to a screenshot seen by Rest of World.
Pinduoduo, founded in 2015, had used a similar strategy in its home market of China — rock-bottom pricing and the gamification of the shopping experience — to become one of the country’s most popular e-commerce platforms. In one game, users grow virtual fruit trees with their friends to earn real boxes of fruits. In another, they spin a wheel to win cash handouts, after bringing in new users to the app. The site also introduced the “give me a cut” campaign, where users earn free products by making others click on their Pinduoduo links.
While these tactics enabled Pinduoduo’s fast growth during the pandemic and subsequent global economic headwinds — its active user base briefly eclipsed Alibaba’s in 2020 — they also gave the company a controversial reputation, raising concerns of possible regulatory risks. Chinese internet users have complained about being pestered by friends and family to click their referral links. Others have accused Pinduoduo of tricking them by making the games look much easier than they actually are. In 2021, a lawyer sued Pinduoduo after he remained stuck 0.9% away from winning a prize on the app — Pinduoduo later clarified the percentage needed to be 0.9996427% if displayed in full. The court ordered the company to pay 400 Chinese yuan ($59) as compensation for infringing upon the consumer’s right to know.
Despite controversies, several other Chinese e-commerce companies have gamified their shopping experience. Following Pinduoduo’s lead, e-commerce giant JD.com, Alibaba’s shopping platform Taobao, and delivery app Meituan have all introduced their own virtual fruit farms. Overseas, fast-fashion platform Shein also allows users to earn points through games and referrals.
Along with these strategies, Temu has introduced a factory-to-consumer model that keeps prices low. It sources products from Chinese suppliers, then sells them directly to U.S. consumers. Temu handles all international shipping, then pays suppliers after consumers have received their goods.
Temu supplier Awan Yang, who manages a bag factory in the southern manufacturing hub of Guangzhou, told Rest of World he started working with Temu shortly after its launch because he believed PDD Holdings would invest heavily in overseas growth. Between October 2022 and February 2023, the factory sold around 3,300 women’s bags through Temu, on a profit margin of 15% to 25%, Yang said, noting that Temu would sell the bags at 2.5 to three times the original price.
Just as Pinduoduo succeeded in a Chinese market once dominated by Alibaba and JD.com, Temu could establish itself in the U.S. as a “low-priced supermarket,” said Ashley Dudarenok, founder of China-focused digital marketing agencies Alarice and ChoZan, to Rest of World. Temu is not out there trying to replace industry bigwigs like Amazon and Shein, but simply offers an additional channel for American consumers to shop online, she said.
Compared to their Western counterparts, Chinese tech companies are more willing to grow their products through massive marketing campaigns, wrote Connie Chan, a general partner at venture capital firm Andreessen Horowitz, in an analysis of Temu. Earlier this month, the company made its Super Bowl debut, with an advertisement that showed viewers how they could “shop like a billionaire” on the platform. Having a large number of early customers has helped train Temu’s recommendation algorithms and create personalized product lists as addictive as TikTok’s “For You” page. “It’s literally shopatainment … consumers are far more likely to spend time — and consequently money — with apps that they enjoy spending time with,” Chan wrote.
Although introducing games to the app can help boost engagement and increase downloads, Western shoppers may be less willing to pay for games than their Chinese counterparts, Allison Malmsten, a China market analyst with Daxue Consulting, told Rest of World. After all, Nordquist called the games “a hustle” — although they were fun, the ultimate goal was to win rewards, which required spending a great deal of time and effort.
In North Dakota, several of Nordquist’s friends have become avid Temu users. They even created a group chat to exchange gaming tips. While feeding her fish for freebies, Nordquist also bought many items herself: fishing gear, an organizer, a portable washing machine, some hooks, a pack of sponges, an electronic iron, a vacuum sealer, and other homeware — which cost her a total of $450.
Nordquist used to buy these products from Amazon or Walmart, but now prefers Temu for its low prices. They can go as low as one-eighth of what her local supermarket charges, she said. “I felt like I was getting robbed, shopping at other places.”