Temu, the online marketplace of impossibly cheap Chinese-made goods that Boomers and Gen X-ers can’t seem to get enough of, is opening up its platform to U.S. and European sellers, though it declined to comment further because “many of the business details are still in the process of being finalized.”
The news, first reported in English by the Associated Press on Thursday, signals another growth spurt for the rapidly expanding e-commerce platform, which followed its swift dominance of the U.S. market with similar forays into Canada, the United Kingdom, France, Germany, Italy, the Netherlands, Australia and New Zealand. It didn’t take long before America’s most downloaded shopping app became locked in a turf battle with former No. 1 Shein, at turns becoming litigious. “The U.S. market is the primary theater of this war,” Whaleco, the legal entity that operates Temu from Boston, declared in one lawsuit, which it dismissed, that accused its rival of anticompetitive behavior. In a resurrected filing, Whaleco slammed Shein for using “mafia-style intimidation” of suppliers to impede its ascent.
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Not that the “Shop Like a Billionaire” destination, which has committed to several Super Bowl ad spots next month, has much to worry about. Since its debut in late 2022, Temu’s web and mobile traffic have catapulted by more than 700 percent year over year to an average of 92.2 million monthly visits, according to Similarweb. Boomers and Gen X-ers shop more frequently and shell out more at Temu than their younger counterparts, Chicago research firm Attain told Bloomberg earlier this week. The platform was particularly sticky during its first year for people aged 59 and older, who placed roughly six orders over 12 months, or twice as many as those aged 18 to 26.
PDD Holdings, which also owns the popular Pinduoduo “virtual bazaar” in China, launched Temu with a plan to “connect 10,000 manufacturers to global markets and support the creation of 100 international brands.” It began with 15 categories, from women’s clothing to pet supplies. Today, it boasts twice as many, throwing smart doorbells, percussion instruments and automotive parts into the mix. According to Marketplace Pulse, an e-commerce intelligence firm based in New York City, it offers the wares of some 100,000 suppliers, all based in China. Sellers dispatch their goods to Temu’s warehouses at wholesale prices. The e-tailer handles listing, pricing, marketing, fulfillment and customer service.
This will change with its U.S. and European sellers, which will manage fulfillment from their domestic distribution centers, Chinese media has reported. Temu will also relinquish pricing and marketing, serving more like an eBay or Amazon third-party marketplace.
Juozas Kaziukėnas, founder of Marketplace Pulse, surmises that this change is less about broadening its seller base beyond China and more about “evolving past shipping each package from China.” Writing on his website, he noted that “adding quick delivery, an option absent on Temu today, is why Temu is evolving past a fully managed marketplace. Sellers with domestic warehouses are the lever to get that.”
Whether it’ll be successful is another matter.
“While the change removes the technical and operational hurdles for U.S. sellers to join Temu, it will face the same uphill battle as its predecessors did when trying to grow beyond Chinese sellers,” Kaziukėnas said. “Wish, AliExpress and other marketplaces built on supply from China have tried similar strategies to diversify their seller base. However, they were largely unsuccessful in both attracting a significant number of domestic sellers and repositioning themselves in the eyes of consumers.”
Temu has another challenge to contend with: the penetrating gaze of U.S. lawmakers who see the marketplace as a threat to the country’s competitiveness and a potential back channel for forced labor goods from China. Referring to a report issued by the House Select Committee on the Chinese Communist Party last June, Representative Mike Gallagher, the Wisconsin Republican who chairs the bipartisan group, criticized Temu for doing “next to nothing” to keep its supply chains free of forced labor and lacked “any system” to ensure compliance with the Uyghur Forced Labor Prevention Act, or UFLPA.
It’s “all but guaranteed” that forced labor products from Temu are entering the United States on a “regular basis,” the report said, though the company itself has denied this. The biggest sticking point for Temu—and Shein’s—congressional critics has been the de minimis trade provision that allows shipments valued at under-$800 to avoid paying import taxes, duties and fees. While low-value packages are not exempt from scrutiny under the UFLPA, the limited level of customs information they provide makes doing so a challenge, as does their volume. The committee estimates that Temu and Shein likely account for more than 30 percent of all packages shipped to the United States under the cover of de minimis, making up some 600,000 per day or 210 million every year. Altogether, de minimis shipments topped 1 billion in 2023.
The House Select Committee on the Chinese Communist Party stepped up its demand for de minimis reform this month with a letter to Homeland Security Secretary Alejandro Mayorkas calling for stronger enforcement of the UFLPA.
“[The] de minimis provision has created a major avenue for goods made by forced labor—as well as fentanyl, counterfeit products and other unsafe goods—to enter the U.S. market,” the letter said. “We therefore request DHS’s written assessment of the potential effect on UFLPA enforcement efforts of altering de minimis eligibility for textile and apparel and other high-risk items, including determining whether exceptions to de minimis treatment are warranted for certain high-risk items to prevent unlawful importations.”