eCommerce: Platform Feud
German Drugstore CEO Calls for Legislative Action Against Temu
Temu is frequently being criticized for its low-cost approach. Recently, German entrepreneur Raoul Roßmann, CEO of the drugstore chain Rossmann, joined the ranks of critics.
Article by Nadine Koutsou-Wehling | May 08, 2024
Roßmann vs. Temu: Key Insights
Drugstore CEO Criticizes Temu: According to Raoul Roßmann, CEO of the German drugstore chain Rossmann, Temu violates German competition law and should thus be banned.
Temu Is Far Ahead of Domestic Retailers: German drugstore chains Rossmann and DM cannot hope to match Temu's online sales.
In an interview with the German business magazine Handelsblatt, Roßmann called for legislative action against platforms like Temu that operate with large assortments and very low prices.
Calling for Legislative Action Against Temu
Roßmann claims: Temu’s business model violates German competition law. His arguments: The Asian eCommerce platform manipulates consumers and undermines domestic competitors with arbitrary discounts, reviews of dubious origin and misleading website designs.
Verbatim, Raoul Roßmann said that “there is a jester’s license in Germany for questionable digital business models” and that Temu “should simply be shut down” if it can’t play by the rules.
Protectionist Legislation Against Temu in Europe Is Possible
The German entrepreneur is certainly not alone in this view. French lawmakers recently proposed a bill that would fine ultra-fast fashion and fast fashion companies with up to €10 (US$10.6) per item by 2030. The fine would gradually increase each year. Surplus earnings would be made available to fashion retailers with a sustainable strategy.
Similar legislation in another major European economy like Germany, let alone the European Union itself, would have a significant impact on the sales of companies like Temu and Shein, which offer a wide range of products at very low prices.
It is no wonder that established competitors in domestic markets are calling for legislative action to rein in burgeoning online retailers with prices lower than their own. The Rossmann case illustrates how traditional retailers are falling behind with their current online strategy:
Rossmann is already far behind its closest competitor, dm.de, in terms of online net sales: rossmann.de sold US$63.4 million in 2023, compared to dm.de’s US$329.2 million. Both drugstores, however, don’t stand a chance against Temu’s US$13.7 billion worth of products sold worldwide in 2023. Care products account for just over 10% of Temu’s GMV, putting it in direct competition with the likes of Rossmann and DM.
Sources: Guardian – manager magazin – Spiegel
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