It's undeniable that the allure of Temu has exploded limits in recent years. In fact, recent data shows that Temu receives over 167 million customers online just in a single month—amazing right?
For sure, the main reason Temu has gone so far in a very short time is thanks to its competitive prices that have exploded the value of the U.S. market—making it one of the most popular websites not just in the US, but also in the world.
Temu is so cheap—that's a true fact, but what makes it to be this cheap than what other retailers offer? That's what we'll be seeing today.
In this article, I'll share with you why Temu's items are so cheap, together with the hidden truth behind these cheap items.
Temu's Business Model
Temu has a very common, but risky business model. It focuses on attracting customers through competitive pricing, gamification, social buying, and heavy advertising.
It is well-known for its discounted items with promo codes, and free shipping, and engages users with games that reward them with discounts and free items.
Why is Temu So Cheap?
When you scroll through Temu's catalogs for the first time, you'll be very amazed by the prices, and when you get to compare them with what competitors like Amazon offer, you'll definitely want to get that item from Temu right away.
But wait, don't just dive heads down. Just like SHEIN's competitive prices, Temu's low-cost items come with hidden truths. That said, there are many things you should know about these cheap prices before even thinking of buying something from Temu.
1. Competition Between Sellers
Temu's aim has always been to dominate the US market by overtaking competitors. Which other way can it overtake existing and established competitors than offering really low prices than its competitors do? In fact, a recent study from Wired showed that Temu is losing an average of $30 per order as it is trying to break into the American market. That's what I call a crazy but effective marketing strategy.
With that said, there's not much profit made on both Temu's and the seller's end. Temu loses billions to make a difference in the market—yeah you got that right, and there's a massive competition between sellers to get their items listed on Temu's storefront. According to some data, only 10% of sellers get selected through Temu's eligibility criteria. So you can just imagine how sellers compete to increase sales.
2. Low Production Cost
Temu's is an online marketplace operated by the Chinese e-commerce company PDD Holdings. Its products are being manufactured in China, a global leader in manufacturing, with a vast network of suppliers and lower production costs thanks to the abundant availability of labor and materials. And we all know how Chinese materials are being made—there's not much spent nor invested at the production level, which is why Temu's products are relatively cheap.
For example, many customers have complained through social platforms like Reddit that tech products on Temu are duplicates of authentic brand-name products. In fact, you get what you really paid for—which are at times knockoffs. These knockoff products look like the original products on the image but typically have altered trademarks or misspellings of brand names.
Also Read: Temu Refund Without Return
3. Direct Sourcing Model
This is another major reason why Temu's items are relatively cheap. Unlike most other stores that use a middleman to get items to customers, Temu connects sellers who list their items on the storefront to buyers directly. Simply put, when a customer places an order on Temu, Temu links the seller directly so they can prepare the package and get it ready for shipment.
4. Economically Small Package Shipping
Temu covers shipping costs, that's true. But that's actually where they get a little win especially when they shop for US customers. Temu ships just like most retailers do—in a high volume and when they ship to the US, they typically don't pay taxes imposed by US customs. They do so by relying on the de minimis exemption, a threshold that removes duties or taxes from shipments below the value of $800 reducing shipping costs.
Is Temu Safe to Buy From?
Yes, Temu is completely safe to buy from. However, you should expect what you really paid for—I mean, when you place an order, expect an alteration in the quality. Don't go ahead and compare that with what you can get at Amazon at a relatively higher price.
Final Thoughts
Temu is a popular online retailer that's gradually winning not just the US by the worldwide market. It offers competitive prices you wouldn't find in any local store in your area and of course, these cheap prices come at a cost—and that's quality.
So before placing an order on Temu, be sure you've understood the different factors mentioned in this guide on why Temu's items are so cheap. With this in mind, you'll be able to shop at your convenience.