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How are Temu and Shein so cheap?

Link in Bio with Jenny and Alejandro
It seems like everyone and their tía loves Temu and Shein, but how can they be so cheap? Business reporter Michelle Castillo breaks down how the “ultra-cheap” retailers take losses to win, plus what consumers should expect from their impossible hauls.
Show transcript
00:00
Have you heard about Temu?
00:02
I've heard about them.
00:03
I know that they had like some commercials in the Super Bowl
00:06
but I'm not really familiar with them.
00:07
Are you? I haven't ordered from TEMU,
00:09
but I have ordered from Sheen before.
00:12
You know, I know they're very similar.
00:14
So I did some research and it has horrible reviews and ac
00:20
score from the better Business Bureau,
00:22
wait reviews from like the people that purchase things from them or
00:28
so horrible reviews because it's like,
00:30
I'm like, it's so cheap that it's like,
00:32
was it like a per the prices are hard to beat to
00:38
help us get to the bottom of this?
00:39
We have Michelle Steele from tiwwg.
00:45
Hi, Michelle. Hi ladies.
00:48
Welcome. Thank you for joining us.
00:49
Thank you. Why do you think it's so cheap?
00:52
Like how can they afford to sell things for so cheap?
00:55
Well, the companies are really interesting but they have pretty similar
00:58
business models, at least up to a point.
01:01
So one thing is they really rely on manufacture in companies
01:05
sorry, manufacturing in countries where it's a lot cheaper for labor
01:09
This often means that a lot of these workers aren't full
01:11
time employees, they aren't,
01:13
there isn't any regulations,
01:14
they can work longer hours.
01:16
The second thing is they go direct to the manufacturer.
01:19
So instead of relying on a middleman to sell the product to
01:23
them, they can get that direct profit.
01:26
And the third thing really is that they're willing to take a
01:28
loss to really win in the US market.
01:30
So, to,
01:31
has done interviews where they said they're losing about $30 per order
01:35
in the US just to win the US market.
01:37
And we're so interested in this because you know,
01:40
the Super Bowl, we just saw 3 $7 million ads to
01:44
advertise this company. So they're willing to take a little bit
01:47
of a loss right now to sell you those cheap products as
01:49
you're talking about to really get the marketplace here in the US
01:54
So would you say Temu is legit?
01:57
I haven't ordered anything from TEMU.
01:59
I get a little like,
02:00
I don't know, I feel like it's too good to be
02:02
true. So I'm like,
02:03
I don't know, like,
02:04
would you say it's legit?
02:06
Well, definitely. So they claim that they're going to the
02:08
same manufacturers that are making your airpods,
02:11
but they're just using their own products on the side.
02:14
So you're probably getting the same quality.
02:16
However, you can take that with a grain of salt.
02:19
So these companies might be using the same factories,
02:21
but they might not have the standards and checks that you would
02:24
get from, let's say an apple.
02:25
That's so interesting.,
02:28
I mean, we can only hope that they're paying their employees
02:30
like livable wages but chances are they're,
02:33
they're coming from like sweatshops or some,
02:35
environments like that. Correct.
02:37
Definitely. That's one of the big complaints about companies like Temu
02:41
and X and that they work in these countries that don't have
02:43
standardized practices. You might be seeing people make to fulfill demands
02:48
working long hours,
02:50
maybe not even getting overtime.
02:51
So there's a lot of concern and on top of that,
02:54
they're making so many different products that it causes a lot of
02:57
environmental waste. She and I know we're talking mostly about
03:00
TEMU, for example,
03:02
they are using so much plastic and vinyl that they're producing as
03:06
much waste as 100 and 80 coal powered plants a day.
03:09
So you are getting a lot of these products,
03:12
you are getting them cheaper,
03:13
but it is having an environmental cost and it's not normally made
03:16
ethically, although these companies have said that they have an eye
03:19
on making sure that they are going to be environmentally friendly in
03:22
the future. Dang,
03:24
it really makes one stop and think twice about,
03:27
you know, like you're getting a deal but at what cost
03:29
this is affecting the environment,
03:31
you know, other people's lives like what are some other
03:35
options you would recommend shopping at?
03:38
Well, I think you should be conscious about what you buy
03:41
and where you're buying it from.
03:42
So the average, Xian customer spends about $100 of clo
03:46
on clothing a month and you probably don't need that much clothing
03:50
So really buy when you need it,
03:52
buying one piece here and there is probably more sustainable.
03:55
You can also look at buying second hand and on top of
03:58
that, you can look at how companies are ethical.
04:00
There's a lot of different standards to see if they're being green
04:03
and to see if they're being conscious about the environmental waste they're
04:06
causing and you can choose to put your money in those places
04:09
Well, thank you so much Michelle for joining us.
04:12
This has been really illuminating and I hope our audience kind of
04:14
take some knowledge from this.
04:16
If they do want to find out more,
04:18
where can people find you?
04:19
Well, I work for a company called Tiwwg.
04:22
So I'm a media consultant and I work for different publications including
04:26
C NBC Cheddar News and more.
04:28
Thank you so much Michelle.
04:29
We really appreciate you being on the show.
04:31
Thanks. I've never bought it at Sheen.
04:33
But like this last time that I went to Mexico,
04:35
like Miia, we went to the beach last year.
04:37
We went on like a big family trip and she's like,
04:39
oh those Mitra, I know that she in and I was
04:40
like, oh my God,
04:41
like they're kind of cute,
04:42
you know, but then she was literally,
04:44
we were in the water at the beach and she'd be like
04:46
Mira, she in,
04:47
she, she, she in and she was pointing to every
04:50
single person that she literally literally.
04:55
So, or if I go to a boutique,
04:58
oh dude, I have seen some boutiques with shit that's on
05:03
shit. And I'm like,
05:03
damn, they be buying shit,
05:05
taking the tags off and putting it in their store and selling
05:09
it for triple quadruple the price.
05:17
I.