VIDEO: Shoppers turning to online retailers

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ALYSIA THOMAS-SAM, REPORTER: The temptation of shopping on Temu, Shein and Amazon has become irresistible for millions of Australians.

CATHERINE JOLLEY, ROY MORGAN:  They're disrupting the market in a way that's shifting consumer expectations.

PETER FERNE:  The quality ain't there, brother, it's just not there.

ALYSIA THOMAS-SAM: These three online juggernauts have surged in popularity in the last 12 months by selling ultra cheap products combined with quick delivery.

It’s now putting pressure on Australian retailers to keep up.

PETER FERNE:  The bad retailers are going, they're finished, but it's their own fault. If you have competition, you should get smarter.

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ALYSIA THOMAS-SAM: After more than three decades in retail, Peter Ferne knows a thing or two about selling discount items, and he’s no fan of global Chinese marketplace Temu.

PETER FERNE:  I bought an item for our dog and when I got it was a load of rubbish. Cheap. Yes, very cheap but rubbish. And I think that's the problem with online.

ALYSIA THOMAS-SAM: Peter is the founder of the Famous Arthur Daley’s, a renowned Melbourne discount store. 

PETER FERNE:  I love my staff and my customers. That's the way it should be. I just don't like the ones who forget to pay at the counter.

ALYSIA THOMAS-SAM: The first Arthur Daley’s store opened on Swanston Street in Melbourne’s CBD in 1992. 

PETER FERNE:  It was an institution. People would come up to me, “Hello Arthur”, and my name is Peter Ferne, and of course I'd just smile and kids would come and take photos with me. That's how well it was known.

ALYSIA THOMAS-SAM:  In 2012, Peter expanded Arthur Daley’s by opening a second store in Ferntree Gully but he then decided to sell the original CBD store in 2016.

Are the online retailers winning?

PETER FERNE:  Oh gee, to some degree, yes, because they're getting rid of a lot of the average retailers, but I don't think they'll win overall. 

CATHERINE JOLLEY:  Well, we've seen some household names just vanish from the market in the last 12 months. So Millers, Noni B, Katies, Rivers have just vanished. The headwinds of online global marketplaces have made it really difficult for these retailers.

ALYSIA THOMAS-SAM:  In the last 12 months, almost 9 million Australians shopped at Amazon, an 11 per cent growth.

Almost 5 million bought from Temu, a jump of 24 per cent while 2.6 million shopped at Shein, which is a Chinese online marketplace for cheap clothing.

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CATHERINE JOLLEY: There's some retailers who operate at that lower end of the market in terms of cost, such as Costco or the Reject Shop, for example, are struggling to hold their average spend per visit because they're competing on price. 

It's a race to the bottom when it comes to price. So, if your position in the market is based on being the lowest in the market, it's a really dangerous place to be.

ALYSIA THOMAS-SAM: Temu and Shein have faced fierce criticism over claims they’ve engaged in unethical practices.

In November, hundreds of people protested the opening of Shein’s first physical store in Paris over allegations the company sold childlike sex dolls.

Last week, a US senator called for a federal investigation into Shein and Temu over claims of intellectual property theft and counterfeit products.

There are also concerns about Temu’s website.

It's bright orange and has a spinning wheel that can give you a discount if you play. Consumer experts believe it's been deliberately designed to be addictive.

ROSIE THOMAS, CHOICE: Temu's app is almost a gamified experience of shopping. So, you're often told that the product is almost out of stock or a lot of other people are looking at it. Now we wonder whether these tactics are fair tactics for consumers.

So these things light up, they contain button batteries and they are small enough that a small child could swallow them. 

ALYSIA THOMAS-SAM: Last year, Choice discovered dangerous products were being sold on Temu and imported into Australia.

ROSIE THOMAS:  We purchased 15 products containing button batteries on Temu. They were all toys or products otherwise targeted at children. What we found was all 15 of them failed the button battery safety standard. Now we know that button batteries can cause catastrophic injuries for children when ingested.

ALYSIA THOMAS-SAM: West of Sydney, in Kemp’s Creek, Amazon’s biggest Australian warehouse is 200,000 square metres.

JANET MENZIES, AMAZON: Customers are increasingly coming to Amazon for everyday essentials. So this is like your toilet paper, your dishwater tablets. People are coming to Amazon for those because it's really convenient.

ALYSIA THOMAS-SAM: But the success of the trillion-dollar company is under fire.

Last month, union members including Amazon workers protested outside the company’s sites across Australia, demanding fair pay, safer workplaces and better regulation of the company.

We asked Amazon’s Janet Menzies about the protests. She spoke about the employee’s she’s met. 

JANET MENZIES:  I spend a lot of time at our fulfilment sites, and I'm inspired every day by the people that I meet. They tell me about, they talk about how they enjoy being part of our team. They talk about our culture. They talk about their above award wages, the benefits we provide and on the job training. 

ALYSIA THOMAS-SAM: Temu declined 7.30’s request for an interview.

In a statement, it said ‘Temu helps Australians stretch their dollar by offering affordable, quality goods’ and in response to Choice’s toy test said, ‘When a potentially non-compliant item is identified through our screening and continuous monitoring, we remove it immediately’. 

Shein did not respond to multiple inquiries.

Catherine Jolley says as more people shop at Temu and Shein, trust in them drops. The latest Roy Morgan data shows Temu is the most distrusted online retailer in Australia.

CATHERINE JOLLEY:  The issue with trust is that it puts brands at risk. So you're at greater risk of the regulatory environment, you're at greater risk of facing external crisises like data breaches. It makes you a fragile brand. And fragile brands are like a ticking time bomb.

ALYSIA THOMAS-SAM: Back in Ferntree Gully, Peter Ferne insists nothing beats the thrill of getting your hands on a bargain.

PETER FERNE:  You've got to feel and touch. You've got to see what you're buying. That's what it's all about. They come into my shop, “Oh, oh, that's good. I need that. I didn't know you had that.” I like to hear it. And you can't do that online