With the recent growth of the Chinese-owned online company known as Temu, numerous shoppers are wondering about the insanely low prices of the platform and how the company is able to sell products at such low prices especially compared to other online market places such as Amazon, eBay and many others.
Sure you are here seeking to know why Temu is so cheap right? whether or not the company is legitimate, and even cover if you need to consider purchasing items from Temu or not.
Table of Contents
What is Temu?
Temu is an online marketplace operated by the Chinese e-commerce company PDD Holdings. It offers a wide range of products at heavily discounted prices, often shipped directly from China.
Here are some key features of Temu:
Low prices: Temu is known for its competitive pricing, making it attractive to budget-conscious shoppers.
Wide selection: It offers a diverse range of products, from clothing and electronics to home goods and beauty items.
Direct shipping: Many items on Temu are shipped directly from Chinese manufacturers, which can sometimes lead to longer shipping times but also lower prices.
While Temu has gained popularity due to its affordability, there have also been concerns about product quality, shipping times, and data privacy. It's important to research and consider these factors before making a purchase on the platform.
ALSO READ: Temu Affiliate Program (A Comprehensive Guide on How to Join)
Why is Temu So Cheap?
With respect to information gotten from Temu, the items on the site are so cheap because each product goes directly from buyers to sellers, without anything in between the two, Temu is able to slash prices. Nevertheless, the use of third-party sellers has caused some to start doubting Temu's ethics.
Reasons Why Temu is So Cheap
Below are some of the few reasons why Temu is co cheap:
1. Unfair Working Conditions For Sellers
Just like several other low-cost Chinese marketplaces, such as AliExpress, Temu and Shein has been accused of selling products produced by people working in unfair conditions. These workers typically work long hours and have extremely low pay, no employee contract or benefits, no days off, and no compensation overtime.
2. Cheap Manufacturing Costs
From a study performed by Wired, Temu pressures its manufacturers to reduce prices in order to please customers, and this actually end up leaving the manufacturers with little or no profits. It was also reported by Wired that while Temu covers most of the international shipping cost, it relies on frequent orders from American customers to make up for the money loses.
According to Wired study, the amazing low prices on Temu are not sustaible and more to that, a look into the company's supply chain cost shows that Temu is losing an average of $30 per order as it expands into the American market.
3. Fake or "Knockoff" Products
Temu primarily sells counterfeit or knockoff versions of popular brands. These products are typically mass-produced in China and are often of lower quality. While Temu offers significantly cheaper alternatives to well-known brands, its low prices may be due to the use of inferior materials and production methods.
The company claims to eliminate middlemen to keep costs low, but it's possible that its ability to sell such discounted products also comes from sourcing cheap goods directly from Chinese manufacturers.
4. Heavy Competition among sellers
Temu sellers are required to follow the platform's pricing rules. This means that sellers have limited control over their profit margins, making competition fierce. To attract more customers and increase sales, sellers must offer lower prices than their competitors. Since price is a major factor for consumers, offering the lowest price possible is often the most effective way to increase sales.
5. Tax Cuts from the Minimis Exception
In one report by the U.S. House Select Committee, Temu's shipping uses the de minimis exception, which allows shipments valued under $800 to bypass U.S. Customs inspections, to ship low-cost goods directly to American customers.
ALSO READ: Where Does Temu Ship From and How Long Does It Take
Is Temu a Legitimate and Safe Website?
Yes, it is of no doubt that Temu is a legit company. PDD Holdings, the company behind the Temu marketplace, is quite easy to find information about. Originally registered in China, the company relocated to Dublin in 2023. It is good you keep in mind that PDD Holdings has been legally operating in the United States ever since the year 2022, and this means that Temu is safe.
Closing Remark: Why is Temu so Cheap?
Temu’s low prices are the result of a highly efficient business model that emphasizes direct sourcing, bulk purchasing, and streamlined logistics. While the platform is a great option for shoppers looking to save money, it's important to weigh the trade-offs, especially in terms of product quality and shipping times.
Ultimately, Temu’s success lies in its ability to offer affordability at a scale that many traditional retailers cannot match, making it a go-to destination for budget-conscious consumers.