In recent years, several websites selling products at ultra-low prices have appeared on the French market. Shein, Temu and AliExpress, to name just a few, are revolutionizing the e-commerce landscape.
According to a study by BPCE Digital & Payments, the number of payment cards that register at least one monthly transaction on a discount website increased by 20% between the first quarters of 2022 and 2023.
This is not surprising, given that Temu’s website receives millions of French visitors each month, according to data from the Federation of Electronic Commerce and Distance Selling. By mid-July 2025, low-cost platforms represented 22% of packages handled by the French postal service, up from 5% five years ago. This increase is expected to continue, with the sector expected to grow by 6.5% in 2025.
Of course, the rampant inflation of recent years in France partly explains this boom. But this is not the only explanation for these developments. The use of artificial intelligence (AI), fundamental in the business model of these platforms, contributes to building consumer loyalty.
Behavior profiles
In our latest articles on Shein and Temu, we look at how these platforms operate behind the scenes. By analyzing user behavior data, the AI tools they use can identify customers most likely to purchase and adapt the advertising messages they receive.
Predictive algorithms also analyze user behavior to offer personalized recommendations. This approach seeks to create a need before it even arises, taking advantage of the feeling of scarcity and urgency. This is the famous FOMO, or fear of missing out.
These predictive algorithms have been around for many years, but their new capabilities, powered by AI tools, mark the beginning of a new era, adapting more accurately and quickly to each internet user. At the end of each page, there is a list of “items seen by other users”, similar to the searched product.
This classic marketing technique is taken a step further: algorithms constantly send new content to the customer to analyze their reaction. Each interaction (such as a click to add an item to the cart) is analyzed in real time. The algorithm, with the support of AI, uses this data to encourage the user to buy other products that they were not initially looking for.
Using the game to sell
Gamification refers to the use of game mechanics for marketing purposes to capture customers’ attention.
In the Temu application, the interfaces are inspired by games of chance, known for their high addictive capacity: roulettes of fortune, countdowns with limited-time offers, gifts and promotional codes to unlock, etc. These constant stimuli create a feeling of urgency in the user, while altering the biochemical mechanism of the reward circuit.
AI allows for greater precision and diversification of the games offered, to the detriment of buyers (without them being fully aware).
At Temu, mini-games built into the mobile app (such as Farmland and Fishland) promise free items and discount coupons. Points and coupon systems are used to encourage users to return to the website as often as possible, and personalized notifications are also sent at opportune times, based on data collected about the user.
Additionally, dynamic pricing algorithms (which adjust prices based on changes in demand) offer discounts that can have a big impact on consumers. In this case, AI also proves to be a tool that enhances this effect.
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Personalized online stores
The hyper-personalization of the platforms is another advantage. Thanks to AI, which collects large amounts of data on user profiles, each customer has a different online store, personalized according to their history, likes, preferences and dislikes. This increases the likelihood of one or more impulse purchases.
AI’s most significant contribution to Shein’s success goes much further and precedes the arrival of customers on the platform. Shein has developed its own AI tools and algorithms to collect and analyze data. Using these tools to track customer behavior online (on and off your website), Shein also analyzes online search results, social media posts, and competitor websites.
These tools are fundamental to Shein’s success. They allow you to identify trends (colors, prices, designs) in real or near real time, and adjust the design and production of your products very quickly. This is because all of this data is shared with the suppliers who produce the items Shein sells.
The process is facilitated by a strategy that prioritizes small volume production (100 items or less) for all new products.
The importance of ethical issues
All of these factors raise ethical issues, given the opacity of the algorithms and the lack of transparency regarding the use of the data collected.
In 2022, Shein was fined by the state of New York for failing to inform almost 40 million users of a data breach that occurred in 2018. As mentioned above, the company is also being investigated by the European Commission, which accuses it of at least six misleading or abusive practices towards consumers (such as “false discounts”, “misleading information”, “hidden contact details”, among others).
So, to what extent should AI in online sales and marketing be regulated? What limits should be established? How far should consumer protection go? According to a 2024 Statista report, AI-based recommendation systems influence almost 35% of online purchases, demonstrating their considerable impact.
Both the EU Digital Services Act (DSA) and its AI Law strengthen consumer protection by improving transparency, accountability and security in the digital sphere. The DSA seeks to ensure the protection of users from illegal or harmful online content, manipulative designs and opaque algorithms.
The AI Act prevents the use of high-risk or misleading AI systems, requires clear disclosure when it comes to AI, and applies safeguards against bias, discrimination and abuse.
However, there are questions about their scope and impact: How do these regulations specifically address the risk of opaque or questionable recommendation algorithms? What mechanisms will be implemented to guarantee compliance and application of the rules by digital actors?
And, ultimately, how can we measure the effect of regulations on consumers and their protection?
*About the authors:
Ghassan Paul Yacoub is Associate Professor of Innovation and Strategy at EDHEC Business School; Loïc Plé is Director of Pédagogie and Full Professor at the IÉSEG School of Management.
This article was originally published in The Conversation
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