To understand the low prices on Temu:

• Direct sourcing from Chinese manufacturers
• Absence of intermediaries
• Low labor costs in China
• Aggressive customer acquisition strategy with reduced margins

Temu, the e-commerce platform that has been making waves since 2022, raises many questions about its exceptionally low prices. This Chinese marketplace, owned by the giant PDD Holdings, has revolutionized online shopping with its unique business model.

The Direct Sourcing Model

The main secret behind Temu's attractive prices lies in its direct sourcing system. The platform works without intermediaries, directly with Chinese manufacturers. This approach eliminates the additional costs traditionally added by wholesalers and distributors.

An Optimized Cost Structure

Several factors help keep prices low:

• Reduced production costs in China
• Advanced warehouse automation
• Significant economies of scale
• Logistic optimization for competitive shipping times

Aggressive Marketing Strategy

Temu employs a very aggressive customer acquisition strategy:

• Extremely low introductory prices
• Significant advertising expenditure
• Frequent promotions
• Generous referral program

Quality Challenges

Despite the attractive prices, it is important to note that:

• The quality of products can be variable
• Shipping times are often longer
• Customer service may have limitations
• Some products may not meet Western standards

Sustainable Business Model?

The question of the long-term viability of Temu's model arises:

• Significant current financial losses
• Dependence on subsidies from the parent company
• Future need to increase margins
• Growing competition in the sector

Market Impact

The arrival of Temu has caused:

• A disruption of the e-commerce market
• Pressure on competitors' prices
• A change in consumer habits
• Questions about transaction security