Barely two years after its launch, Temu has already conquered the international market. But its commercial strategy raises questions, because the Chinese e-commerce giant would lose money on each order. First concerned, Chinese suppliers sometimes struggle to make a margin. Reporting from Zhejiang.
With more than 160 million monthly users, Temu has quickly become the world’s number two, just behind Amazon.
The recipe for its success is simple: you can find everything at low prices. Yet this aggressive approach comes at a cost. According to analysts, Temu’s business model is not sustainable in the long term. The company sacrifices its margins to prevail in the face of competition, or even to stifle it.
For Chinese exporters, the platform has become essential, offering an international showcase for made in China, while the domestic market is at half mast.
Almost non-existent margins for suppliers
From Zhejiang on the southeast coast of China, Tikmans Trading ships men’s clothing worldwide. The company sells its products on platforms such as Shein, Amazon, and Temu, where it has been present since 2023.
“The biggest advantage of Temu is the volume of shipments. Currently, we have more than 20,000 orders per day,” explains Jie Weibo, co-founder of Tikmans Trading, on Wednesday in the 7:30 p.m. RTS.
But according to him, the main disadvantage of the platform lies in the prices and the pressure exerted by Temu to keep them very low. The prices offered are sometimes so low that they do not allow any profit.
“For items that could cost 1.20 francs per piece at the factory, they want us to supply them for 25 or 35 cents!” says the Chinese businessman.
Minimalist design and AI to stay profitable
To remain profitable, it invests little in design and relies on artificial intelligence. Its team spots photos of foreign influencers on the internet, integrates them into software, and thus creates 120 new clothing models each month. Through this process, it takes them less than a week to go from design to shipping new garments.
So, for Jie Weibo, this remains a good deal, because since selling on Temu, its orders have increased by 50%.
TV subject: Yena Lee/Viviane Gabriel/Charlotte Onfroy-Barrier
Adaptation web: Miroslav Mares
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