What is temu? Here’s what eCommerce sellers should know

A new player has recently emerged on the eCommerce scene, and it’s capturing the attention of entrepreneurs and shoppers alike. Temu is a new eCommerce platform out of China that’s taken the USA by storm. It’s promising to revolutionize the way we shop online.

But what exactly is Temu, and how is it reshaping the industry? In this post, we’ll delve into the world of Temu and explore its impact on the eCommerce ecosystem. We’ll shed light on both its promising aspects and potential drawbacks and discuss how to sell on Temu.

What is Temu?

Following its launch in September 2022, Temu quickly became a household name with its unique approach to online shopping. Temu is an online marketplace with a wide variety of products, from clothing to electronics to home goods, all available for surprisingly low prices.

While it’s often compared to other bargain online markets such as Shein, Temu introduces a social aspect to online shopping. The name itself – which stands for “team up, price down” – sums up its mission to bring shoppers together for unbeatable deals.

So how did Temu become a success so quickly? You might recall the not one, but two memorable Super Bowl ads that promoted Temu, urging users to “shop like a billionaire.” These ads caught shoppers’ attention, as did the platform’s strategy of rewarding users who promote it on social media and refer friends and family. Users receive credits for promoting Temu, and many consumers are taking full advantage of this arrangement.

The strategy seems to be working. Temu quickly became the most downloaded free app on both the App Store and Google Play.

Temu boasts an impressive range of affordable products, the majority of which are sourced directly from Chinese manufacturers. This allows sellers to list products for very low prices, attracting buyers on the hunt for bargains.

It’s interesting to note that Temu is owned by PDD Holdings, the same company behind Pinduoduo, China’s second-largest online marketplace. Launched in 2015, Pinduoduo swiftly rose to become the second-largest eCommerce platform in China. It boasts a unique approach that emphasizes social commerce and group buying.

Unlike traditional eCommerce models, Pinduoduo encourages users to team up with friends, family, or online communities to secure greater discounts on products by purchasing in bulk. This approach garnered the platform a massive user base and significant attention from investors.

Temu’s Implications for the ECommerce Industry

The rise of Temu is more than just a trend; it’s a phenomenon that could reshape the eCommerce industry in profound ways. If a large portion of consumers flock to Temu, other online retailers, including giants like Amazon, may be compelled to slash their prices to remain competitive. While this could lead to more affordable products for shoppers, it might also have implications for salaries within the industry.

One of Temu’s core strategies is to connect consumers with products directly from Chinese manufacturers, allowing for incredibly low prices. However, this model might pose challenges for domestic manufacturing in the USA, as local producers struggle to keep up with such competitive pricing.

Temu vs. Amazon

Both Temu and Amazon have their share of advantages as well as limitations. Amazon, as the more established player, has marketplaces around the world. Temu, on the other hand, is newer on the scene and still building up its reputation. According to its website, Temu ships to 37 different countries. Temu’s claim to fame is its generally lower prices, although the extent of this advantage varies depending on the product.

Amazon holds an edge in terms of shipping speed. Most of Temu’s products come from China, resulting in longer shipping times of 7-15 days or more. Temu’s returns policy, which offers 90-day free returns, takes a longer amount of time than Amazon’s 30-day policy. However, Amazon buyers often have to bear the cost of shipping returns unless the item is faulty.

Notably, while Amazon offers FBA (Fulfillment by Amazon) services, Temu does not provide fulfillment options. Additionally, Amazon permits dropshipping according to guidelines, whereas Temu doesn’t allow it.

Backlash to Temu

While many consumers and sellers are excited about Temu, not everyone views it in a positive light. There has naturally been some backlash as Temu’s popularity grows. The backlash is twofold – arising from customer complaints and ethical concerns.

Complaints from customers

There are widespread reports of issues with Temu, including undelivered packages, mysterious charges, incorrect orders, and unresponsive customer service. As of August 2023, more than 790 complaints have been lodged with the Better Business Bureau, resulting in a customer rating of 2.5 stars out of 5. The frustrations stem from instances of customers not receiving their expected packages, a scenario reminiscent of the issues faced by its Chinese sister company, Pinduoduo.

Ethical concerns

Temu also faces a number of ethical objections. Some accuse the platform of selling products manufactured in China’s Xinjiang province, which is known for forced labor. This goes against US import laws and raises moral concerns among conscious shoppers.

The platform has also been criticized for potentially taking advantage of US de minimis shipping rules, which exempt shipments valued under $800 from taxes and customs scrutiny. This could lead to concerns over unfair pricing practices and undercutting local businesses.

How To Sell on Temu

For ambitious entrepreneurs eager to capitalize on the Temu trend, here’s a step-by-step guide to becoming a seller on the platform.

Remember, the majority of products on Temu are sold directly from manufacturers in China to consumers. This eliminates the middleman and allows them to keep the prices very low. Consider if this business model works for you before getting started. You’ll also want to check their list of prohibited products before listing your items on Temu.

Temu’s website directs those interested in selling on the platform to contact them through an email address, but the process that follows is explained below. If you’re already a seller on Pinduoduo, it’s easy to get started on Temu, as your store verification will transfer over. For new sellers, Temu will need to verify your business before you can start selling.

To join Temu as a new seller:

1. Create an account on the Seller’s Center page.
2. Verify your email address.
3. Complete the registration process, which includes selecting your store type (Flagship store, department flagship store, exclusive seller, authorized retailer).
4. Provide essential business information, including the store manager’s ID, distribution/logistics documentation, legal representative’s ID, and international proof of business registration.
5. Temu will verify your business, which typically takes around 3 business days.

Pros and Cons of Selling on Temu

There are a number of advantages and disadvantages to consider when deciding whether to sell on Temu.

Temu offers several key benefits. First, there are no listing fees, which can significantly reduce upfront costs for sellers and allow them to allocate resources more efficiently. Additionally, Temu presents the opportunity to tap into a customer base drawn to the platform’s reputation for low prices. This has the potential to drive sales and brand recognition. Furthermore, the revenue model works on a commission basis. Transaction percentages ranging from 2-5%, enabling sellers to align their earnings with their performance.

However, there are also notable downsides to consider. One major drawback is Temu’s lack of fulfillment services. This means that sellers are responsible for managing their own logistics, including storage, packaging, and shipping, which can add complexity and overhead costs to their operations. Another limitation is the platform’s restriction on dropshipping, a popular business model where sellers don’t hold inventory but instead transfer customer orders directly to suppliers. Additionally, entrepreneurs should take into account that, compared to industry giants like Amazon, Temu has a relatively less established reputation, which could impact consumers’ trust and willingness to make purchases from the platform.

Concluding Thoughts

Temu’s rapid growth in the eCommerce realm has already made an impact on the industry. It’s challenging established players and prompting shoppers to rethink their buying habits. The platform’s promise of unbeatable prices, its social shopping strategy, and the model of connecting buyers directly with Chinese manufacturers, is reshaping how we perceive online shopping.

As entrepreneurs, understanding the nuances of Temu – its advantages, drawbacks, and potential ethical implications – is essential for making informed decisions in an ever-changing eCommerce landscape. Whether Temu’s impact is short-lived or the start of a lasting trend remains to be seen, but its influence is undeniable.