How Temu Uses Psychological Hacks to Encourage Overspending

A few months after its now-famous Super Bowl 2024 ad, it’s difficult to find people who have never heard of Temu (pronounced teh-moo). Consumers love that the e-commerce platform provides products across various categories, such as cosmetics, clothes, and appliances, for prices so low that they might seem unreal: A $6 skateboard, anyone?

Low prices are not the only feature Temu uses to attract consumers. The platform also relies on principles of psychology that reliably get many consumers to spend more than they planned on products they don’t actually need. One such principle is the illusion of scarcity. Consumer research, for example by Jang and colleagues in 2015, has shown that consumers desire products that they believe to be scarce. This principle is used by luxury brands that sell exclusive and rare handbags or watches, but it can also be created by making products seem scarce. For example, Temu might use limited editions, special prices, and products in various colors and variations to make each individual product seem scarce. That means being convinced that a Valentine’s-themed pair of socks for $1.99 is actually almost sold out if Temu adds the panic-inducing message “Only 3 left!!!” to its page. But there may be plenty more very similar pairs of socks are still available, just in slightly different designs or at slightly different prices. However, consumers who now think the socks are scarce believe they need to buy them quickly, without considering first whether they really need them.

Another principle is gamification. Temu uses fortune wheels, points, and other game-like gimmicks to make it more fun to use the app. In some of my own research, my colleagues and I show that consumers can benefit from using gamified tools because gamification can make otherwise somewhat tedious activities (e.g., counting calories or saving money) more enjoyable. However, when it comes to shopping, gamification can become the focus, and consumers might think more about which products will bring them additional points or wheel-spins rather than whether they really need the product.

Understanding how Temu uses these psychological principles can also help consumers resist the allure of cheap prices, fast deals, and endless options. Of course, consumers could also simply delete the app. If that’s a step too far, another option is to approach it with a good old shopping list. Maybe I need plain socks and a toaster. Then I should only search for these products and select one that matches what I had in mind without any wheel spins or point optimization purchases. Another option is then to simply hold off on my purchase after I select something. If I still want it after a day or two, then I'm avoiding the illusion of scarcity that gets me to make hectic impulse purchases, but I'm still buying a product that truly meets my needs. This waiting strategy can also help to combine orders and thereby save on the resources needed for shipping items across the globe. These are some of the ways that we can make shopping on Temu better for the planet and for our wallets.

Note: After publication, a Temu spokesperson submitted the following comments:

"Temu's innovative features are designed to reflect our unique
direct-from-factory supply chain model, characterized by flexibility and
rapid iteration. The inventory and purchase updates reflect real-life state
of inventory levels and are meant to aid consumers in making informed
decisions, and not meant to be manipulative or coercive. Temu benefits from
well-informed purchases as it reduces the likelihood of returns and their
associated costs, demonstrating our long-term commitment to customer
satisfaction. We do not encourage impulsive purchases, as unnecessary returns can result in
waste for both us and our sellers. We urge customers to make informed
decisions before completing a purchase, and we're pleased to offer affordable
options that meet their diverse needs."