Temu Dropshipping: A Game-Changer or A Risky Venture? [2023]

Temu is a new player in the e-commerce industry, but it has already made a huge impact. With its low prices and wide range of products, Temu has attracted millions of customers looking for a bargain.

But Temu is not only changing the way people shop online; it is also affecting the dropshipping industry, which relies on connecting online sellers with suppliers. This raises a question: “Can you do Temu dropshipping?”

In this article, let’s examine the implications of Temu’s success on the dropshipping market and how dropshippers can adapt their brands to changing consumer preferences.

What Is Temu?

Temu is an expansive e-commerce hub bridging the gap between consumers, sellers, manufacturers, and global brands.

Within Temu’s versatile platform, you will discover an extensive array of friendly-budget and high-quality products in 29 categories. You can search for and buy anything in fashion, beauty, sports, health, kitchenware, office supplies, etc.

In a short time since its launch on September 1st, 2022, Temu has achieved remarkable success with an astonishing 400 million U.S. dollars in Gross Merchandise Value (GMV). Temu even left established online marketplaces like Shein and Wish behind.

Before the New York stock market officially opened, its shares surged by over 13%. This e-commerce platform announced quarterly revenue of 52.3 billion yuan (equivalent to US$7.2 billion) in June 2023, surpassing the expected average of 43.3 billion yuan. The net income saw a significant 47% rise, reaching 13.1 billion yuan.

Why Does Temu Gain Such a Huge Success?

1. Temu’s parent company, PDD Group

What sets Temu apart and fuels its remarkable ascent is its strategic affiliation with its parent company, PDD Group. Founded in 2015, PDD Group has become one of China’s e-commerce giants.

With a substantial network of global suppliers and an impressive track record of processing over 61 billion orders in 2021, PDD Group generated a revenue of $14.7 billion. The figure could not lie, PDD Group gains a wealth of experience and resources in the e-commerce sector.

Temu is the product of PDD Group’s expansion into cross-border e-commerce, with its sights on the lucrative US market, followed by Canada. This strategic move draws inspiration from the success of the Chinese brand Shein.

Like Shein, Temu offers various items spanning various categories, including men’s and women’s clothing, jewelry and accessories, children’s clothing, and more. However, Temu distinguishes itself by combining the “all-in-one” concept of Amazon with the affordability and social elements making Shein the forefront of fast fashion.

2. Low price strategy

One of Temu’s most captivating features is its commitment to affordability. In stark contrast to other online shopping platforms like Amazon and eBay, Temu’s product catalog has exceptionally wallet-friendly price tags. Most items are below $20.

Temu exploded onto the scene with an irresistible wave of discounts, featuring jaw-dropping “70%-90% OFF” deals and an abundance of “$0.99 specials” across its website. The platform also sweetens the deal with free standard shipping on all orders, ensuring budget-conscious shoppers can fill their carts without incurring additional fees.

3. Enjoyable shopping experience

The Temu app and website are designed with user convenience in mind. The interfaces are intuitive and easy to navigate, ensuring that customers can effortlessly browse various products and find what they need without hassle.

Temu offers free returns within a generous 90-day window, underlining its dedication to customer satisfaction. Besides, the platform always provides attractive discounts and promotions to celebrate various occasions, from St. Patrick’s Day to Women’s History Month.

4. Investment in advertising and marketing

1. Advertising

Insider information reveals that Temu allocated $140 million towards advertising in September alone. The fruits of this substantial investment are evident, as Temu’s advertisements have proliferated across prominent platforms like Facebook and TikTok.

Meta, the parent company of Facebook, notes that Temu has overwhelmed its platform with over 1,000 ads since September. The ads have effectively targeted audiences in both English and Chinese-speaking communities.

Temu with incredible statistics in the e-commerce and shopping industry – Source: Similar Web

2. Marketing

Temu app offers free products to users who invite their friends to join. It uses a social marketing strategy similar to PDD, a popular e-commerce platform in China. Users can get a $20 bonus if they recruit five new members to install the Temu app.

Temu also promotes its app on various social media platforms, such as Facebook, Twitter, and Reddit. It posts product reviews, unboxing videos, and referral links to attract more users. It also collaborates with influencers, bloggers, and affiliates who can earn commissions for promoting Temu.

Temu has gained a lot of attention on YouTube and TikTok, where it partners with influential figures who showcase its products. The hashtag #temuhaul has reached 1.2 billion views on TikTok, showing the popularity of Temu among young consumers.

#temuhaul has created a TikTok trend with 1.2 billion views

Overall, Temu has left an indelible mark on the US e-commerce landscape in a remarkably short period. With its winning combination of affordability, quality, and an expansive product range, it has captured the hearts of American consumers.

Temu entering the U.S. only a few months ago is perhaps the most aggressive marketing approach yet and it shows how much demand is still out there for these types of offerings.

 

– Juozas Kaziukenas, founder and chief executive of Marketplace Pulse

Temu is a rising star in the online shopping scene, offering unbeatable value and convenience to its customers. With just a few clicks, you can find amazing deals on a wide range of products, from household essentials to electronics. Some might say that Temu is revolutionizing the way Americans shop.

But behind the skyrocketing development, Temu is still a young platform, relying on the financial support of its parent company, PDD Group. Temu does not charge enough to cover the costs of marketing and shipping, let alone make a profit. With PDD’s extensive network of suppliers, Temu is able to sell products at very low prices, sometimes even at a loss.

Temu’s strategy of attracting customers with rock-bottom prices has been successful so far, but it cannot last in the long term. Sooner or later, Temu will have to face the challenge of balancing its books and becoming sustainable.

The Pros and Cons of Temu

Temu has many advantages that attract budget-conscious consumers, yet a realistic view is only perfect with some drawbacks.

We will delve into the specific advantages and disadvantages of shopping on Temu, helping you make better decisions when considering this e-commerce option.

1. Which advantages of Temu will you enjoy?

1.1. Low Prices

Temu stands out for its incredibly cheap products. It can offer such low prices because it connects you directly to the people who make or sell the products, cutting out middlemen. If it can maintain good-quality products, they might become as big as AliExpress and Amazon.

1.2. Loads of Choices

Temu excels at offering many products, catering to customers who love the convenience of finding everything in one place. Temu’s extensive catalog can cover from bathroom brushes to gym shoes. With no specific niche, it has room to expand, attracting a global audience and fueling its growth.

1.3. Easy to Use

Navigating Temu’s website and app is a breeze. Its light theme and sorting features make it simple to find the best products. Also, the number of sales displayed next to the product’s price helps you filter quality products. While there’s room for improvement, Temu’s interface welcomes first-time visitors.

1.4. Big Discounts

Temu consistently fascinates customers with exclusive discounts. From special occasions like Mother’s Day to fun spin-the-wheel opportunities, Temu’s already low prices are further sweetened with frequent flat 99% off deals, practically making products free. These enticing promotions keep customers coming back for more.

1.5. Fair Rules

Whether refunds or shipping, Temu treats merchants and customers fairly. The return policy allows you to return a product after 90 days of purchase. After three months of product testing, you can return the product and receive a full refund. Temu also offers free shipping on orders over $129, adding more value to your purchases.

2. Which drawbacks of Temu should you know?

2.1. Inconsistent quality

While Temu offers various buyer protection measures, some users reportedly receive low-quality products from Temu. User reviews also frequently highlight concerns about the consistency of product quality. It is essential to exercise caution when ordering from Temu, especially considering the low prices.

2.2. Not guaranteed fast shipping

Another drawback is that you might have to wait for Temu’s delivery for quite a long time. Some customers have reported waiting up to a month for their orders, even though Temu promises an average shipping time of 2 weeks. Delays in shipping are a common issue associated with Temu’s logistics services.

2.3. Poor customer services

Although Temu provides 24/7 customer support, customers frequently encounter subpar experiences with their support team. Some users say that the support team needs to be more responsive or sluggish in handling customer inquiries and problems.

Does Temu Do Dropshipping?

The answer is NO. Temu does not allow dropshipping on its platform.

Sellers who are caught trying to use Temu as a dropshipping supplier are banned. Temu has a strict policy against dropshipping to ensure the quality and legitimacy of its products, as well as the security and satisfaction of its customers

You might think you can find products on Temu and list them on your own website. Then, when someone buys from you, you could order from Temu and ship it to them. However, you will face the consequences of getting detected and banned by Temu.

And even if you’re capable of carrying our Temu dropshipping business, you’ll face other problems, like:

• You cannot change the packaging. Temu uses its own boxes and labels, which have its logo and name on them. Your customers will see that they are not buying from you but from Temu. This can make them lose trust in you and your brand.
• You cannot ask Temu’s sellers to use your packaging. They have to follow Temu’s rules, which are made to protect them. Dropshipping from Temu might work if your customers do not know about Temu, but it is not a long-term solution.

Can Dropshippers Use Temu as a Supplier?

Temu dropshipping is a tricky business, and it’s hard to say whether it’s possible to have Temu as a dropshipping supplier.

Temu does not support dropshipping on its platform, and it can ban sellers who try to use it as a source of products. This means that you have to be very stealthy and careful when ordering from Temu for your customers. Temu is not dropshipping-friendly either, and it might take a long time for that to be possible.

So, is Temu dropshipping a good choice for you? It depends on your goals as a dropshipper.

• If you want to make some quick cash online, you might be able to do Temu dropshipping. But you should be ready to face some difficulties and risks along the way.
• If you want to build a long-lasting and valuable brand for your customers, you might want to avoid Temu dropshipping. It would be best if you looked for other ways to stand out from Temu and other competitors.

Let’s go into more detail about what you should consider about Temu dropshipping.

1. Using Temu’s packaging

One of the things you need to consider before choosing Temu as your dropshipping supplier is their packaging policy.

Unlike other dropshipping platforms, Temu does not allow you to customize the packaging of your products. This means that your customers will receive their orders in Temu-branded boxes, bags, or envelopes.

This can be a problem for your Temu dropshipping business, as it can undermine your brand identity and customer loyalty.

Your customers might feel confused or deceived when they see a different name on the package than the one they ordered from. They might also think that you are just reselling products from Temu, which can lower their trust and satisfaction.

2. Temu’s low prices are just a short-term strategy

Another thing you need to think about before deciding to tap into Temu dropshipping is their pricing policy.

Temu’s low prices are not guaranteed to last forever. They are part of a short-term strategy to attract and retain customers, which depends on the financial backing of its parent company. Temu can afford to sell products at very low margins or even at a loss, but only for a while.

Eventually, Temu might have to change its pricing strategy to become more profitable and sustainable. This means that the prices of the products you are dropshipping might increase without warning.

This can affect your dropshipping business negatively, as you will have to adjust your prices accordingly or find other suppliers. Managing a Temu dropshipping business with Temu as a supplier can be very challenging and risky, and it might not pay off in the long run.

3. Quality and stock can be a concern

The last thing you need to be aware of before starting a Temu dropshipping business is their quality and stock issues.

Temu operates on a model where sellers are responsible for supplying and delivering their products to Temu’s warehouse. Temu then takes care of everything else, such as pricing, marketing, logistics, and customer service.

However, this means that sellers have little control over how much they can charge for their products. Temu might lower the prices to attract customers, but this can hurt the profitability of high-quality suppliers.

As a result, Temu might have a lot of low-quality or unreliable suppliers, who use the platform to sell off their excess inventory at cheap prices.

These suppliers might not be able to restock their products quickly, leading to frequent out-of-stock situations in Temu. This can be frustrating for you and your customers, who might have to wait for a long time or cancel their orders.

Moreover, the quality of the products you are dropshipping from Temu might not meet your or your customers’ expectations.

You might receive complaints or requests for refunds from unhappy customers, who feel cheated or disappointed by the products they received. This can damage your reputation and brand image, and make you lose customers in the long run.

What Should Dropshippers Do In The Competition With Temu?

Temu is not a suitable platform for dropshipping, as it might become a rival in the e-commerce market. However, you can still succeed and grow a dropshipping business by following some key strategies:

1. Elevate product quality and customer service

One of the critical points helping Temu win customers’ hearts is its low-priced products. However, there must be a compromise between quality and profitability. Good things cannot be cheap at a price.

You can see the room to stand out right there. Target customers who prioritize high-quality goods and outstanding service to set your business apart. You should ensure your dropshipping products meet or exceed expectations and go the extra mile with exceptional customer support.

2. Collaborating with reliable suppliers

As a dropshipper, you act like the middleman between sellers and customers. So, if you want to mark your brand with high-quality products, you need to partner with trustworthy suppliers who also prioritize quality over prices.

Besides, you should discuss the shipping time and the during-the-delivery product guarantee your suppliers can commit to; hence, the products that customers receive come on time and are in a good state. It will help your brand gain more love, satisfaction, and loyalty.

Conclusion

Temu has become one of the fastest-growing shopping apps in the e-commerce industry. Its power includes a low pricing strategy across diverse product categories. These features appeal to online sellers to consider starting a Temu dropshipping buisness. 

However, the astonishingly low prices that Temu offers are in a short-term strategy. Product quality on the platform is not consistent. Dropshippers also have to use Temu’s packaging instead of brands when delivering products to customers.  

Such limitations explain why Temu is not ideal for dropshipping business. It now becomes a competitor instead. Thus, dropshippers should develop effective strategies to set them apart in an ever-evolving e-commerce landscape. 

We hope the analysis and suggestions above provide helpful insights and tips on how to improve your dropshipping business and avoid the pitfalls of Temu dropshipping!