?? Is this the Amazon slayer or seller bankrupter?

??? TEMU: A NEW FRONTIER for GROWTH

For Amazon sellers looking to diversify and explore new growth opportunities, Temu—a rapidly emerging U.S.-focused marketplace owned by PDD Holdings—offers a compelling platform.

Launched in 2022, Temu has grown at an explosive rate, leveraging aggressive marketing strategies and a robust financial backing that allows it to prioritize market share over immediate profitability.

Temu’s Explosive Growth and Strategic Positioning

Since its launch, Temu has quickly amassed nearly 700 million monthly visitors, thanks in large part to PDD Holdings’ $38 billion of cash reserves. This financial clout allows Temu to operate with a lean structure, relying on third-party vendors and maintaining a 34% operating margin.

Temu’s aggressive growth strategy is focused on capturing market share, with little concern for short-term profitability. This approach positions Temu as a formidable challenger to Amazon’s dominance in the e-commerce space.

PDD Holdings' decision to forego dividends and stock buybacks in favor of reinvesting in Temu’s expansion underscores its commitment to long-term growth. The company has shown it can sustain losses and invest heavily in marketing to build a strong foothold in the market.

Despite operating at a loss and losing approximately $30 per order, Temu’s strategy has proven effective in scaling its user base and market presence rapidly.

Opportunities and Perks for U.S. Sellers

For U.S. sellers, Temu represents a golden opportunity to tap into a fast-growing marketplace with substantial support from the platform itself. Temu started actively recruiting U.S. sellers in May and has since rolled out an exclusive invite-only program that offers a suite of benefits for established brands.

They are also hosting an invite-only party on September 17 outside Amazon Accelerate’s big event next week (reply to this email for invite).

Key Perks for Sellers:

• Zero Commission: For the first 1-2 years, Temu offers zero commission on sales, allowing sellers to keep more of their revenue and invest back into their business.
• Negotiable Pricing Model: Temu helps you determine a selling price, then offers to pay you a flat rate per sale rather take a standard commission % for each order like Amazon and others do.
• Marketing Support: Temu provides extensive marketing support, including funding for Google Ads, TikTok videos, Instagram campaigns, and more for top-performing products.
• Flexible Fulfillment Options: Sellers on Temu have the flexibility to fulfill orders themselves, use their preferred third-party logistics providers, or even utilize Temu competitors’ fulfillment services. Temu’s planned fulfillment centers near U.S. borders will further streamline logistics, making it easier and more cost-effective.
• Fast Payouts: Temu pays out earnings just eight days after delivery, helping sellers have a steady cash flow.
• Brands Work Best: Differentiated brands, and not “Alibaba sourced products with logos on them” work best say Temu reps.

Success Stories and High-Value Sales

Temu is trying to shake off the perception it only caters to bargain hunters. High-value items are performing exceptionally well on the platform.

A notable example involves a seller who generates $45 million in sales on Amazon and has now expanded to Temu. Specializing in bed-related items, this seller is generating approximately $1 million in monthly sales on Temu with some items priced as high as $500.

Exclusive Access and Rigorous Onboarding

Access to Temu is invite-only right now for US based sellers.. The onboarding process is strict, taking from one week to a month to complete, and requires comprehensive documentation to ensure sellers are thoroughly vetted. If you are doing 7-figures and have a brand, reply to this email if you want an intro.

Leveraging TikTok and Social Media

One of Temu’s most significant partnerships is with TikTok. Temu's willingness to cover the costs of TikTok advertising for high-performing products gives sellers an added advantage in reaching potential customers.

Temu's aggressive marketing efforts are not limited to TikTok. The platform recently launched over 8,000 Meta campaigns in a week, indicating a relentless focus on digital advertising to maintain its app ranking and visibility.

De Minimis Loophole: A Double-Edged Sword

Temu’s rapid growth is also fueled by its exploitation of the de minimis rule. The rule, part of Section 321 of the Tariff Act of 1930, allows goods valued at $800 or less to enter the US duty-free. This threshold was raised from $200 in 2016.

This loophole enables Temu to ship products directly from Chinese manufacturers to U.S. consumers without incurring import duties, giving it a significant price advantage. However, this strategy is not without risks, as increased regulatory scrutiny could challenge this business model in the future.

Temu is exploiting the loophole to build an audience, then hopes to expand by bringing in more “legitimate” US based brands after establishing a marketplace foothold.

Challenges and Market Dynamics

Despite its impressive growth, Temu faces challenges. PDD Holdings’ stock recently took a hit due to disappointing sales and heightened government scrutiny. After rapid growth, Temu’s app downloads have plateaued, suggesting sustaining momentum will require continued innovation and investment.

Competitive Impact on Amazon Sellers

While Temu is not yet an “Amazon slayer,” its impact on the market is undeniable. Temu’s ultra-low prices and aggressive marketing put pressure on Amazon sellers to lower their prices and differentiate their offerings.

Amazon is also creating its own “China-to-customer direct” program to compete, which will likely bankrupt some Western sellers when their factories start to sell direct on Amazon for prices lower than they can source for.

With significant customer overlap—36% of Temu buyers also shop on Amazon—you must carefully consider their pricing and marketing strategies to remain competitive.