Decode the New Temu
Hightlights:
Three months into the semi-managed service, Temu's seller community is rapidly changing.
"For us smaller sellers, the days of easy money on Temu are over," says Gao Le, a fully-managed seller. "A year ago, we could find hits just by copying images from supply sites and listing them, but that approach doesn't work anymore."
His "Temu Early Bird Group" on Wechat has gone quiet since 2024, with many peers exiting the fully-managed model.
"The semi-managed service was a turning point," he says. The platform is focusing on local goods, and while short-term profits rise for semi-managed sellers, they seem to decline for those fully-managed.
"Small sellers who can't handle risk find it hard to switch to the semi-managed service," says Gao Le.
On the other hand, big sellers are making great strides. "We can control our after-sales rate and keep a steady flow of new products. With our Amazon FBA experience, the semi-managed service allows us to sell more profitable and flagship products on Temu," says a power-tools seller. He is even thinking of moving all their Temu business to the semi-managed model.
Temu is often described as a "fast-moving" platform, acting with remarkable speed: it rolled out its fully-managed model widely within a year and a half, and then shifted to the semi-managed model in just three months, completely changing its business landscape.
However, this rapid change has caused disruption among merchants. Gao Le's confusion is representative of many smaller sellers facing a new wave of competition.
The Semi-Managed Model Transforms Temu's Ecosystem
"In the next six months, semi-managed services will match or even surpass fully-managed services in monthly sales," reveals a source close to Temu's decision-makers.
The rise of the semi-managed model is expected to be even faster and more impactful than the fully managed model was two years ago. The platform is determined to "strike while the iron is hot," aiming to swiftly shift its focus from domestic to international inventory during this critical period.
Temu's semi-managed model has rapidly expanded to nine major regions, including the U.S., Canada, the U.K., Germany, Italy, France, Spain, Australia, and Singapore, in just two months. This is a significant acceleration compared to the fully-managed model, which took six months to move beyond North America.
As for transaction volume, with a target of $60 billion for 2024, the semi-managed model is projected to account for over $10 billion of that total. This nearly matches the entire sales volume Temu achieved in 2023 （CICC estimated Temu’s 2023 sales at $15-18 billion).
According to insiders, Temu has reallocated its top team members to support the semi-managed model, completing a major internal shift.
"We're about to enter uncharted waters for overseas expansion," the insider said. "There's no denying that the pricing standards and profit margins for the semi-managed model are fully aligned with Amazon's pricing system."
China's investors are very optimistic about Temu's ambitious plan. Multiple equity research reports have highlighted that this strategy is a significant move for Temu's growth.
It is expected to "help international business continue to thrive and ease fulfillment challenges" (First Shanghai), "optimize the platform's economic model" (Great Wall Securities), and "reduce costs appropriately for each region" (Zhejiang Securities).
This positive outlook is mirrored by the rise in Temu's parent company, Pinduoduo's stock price, which has increased from $15.12 to $20.62 in the last two months.
The meteoric rise of the semi-managed model has brought about a profound evolution in both the product range and the merchant landscape on Temu.
Bulky products such as furniture, outdoor equipment, garden supplies, and home appliances are increasingly prominent on Temu's homepage. Moreover, product categories like beverages, food, and dietary supplements, which were previously rare in cross-border business, are now making their debut. Remarkably, traditional Chinese items such as Daoxiangcun pastries, Shaanxi cold noodles, Want Want milk, and canned dace are finding unexpected favor among global consumers.
Among all the changes, the emergence of the "BISS" category is perhaps the most noteworthy. ""BISS" stands for "Business," "Industry," and "Scientific Supplies," which are the three major categories.
For business, think commercial kitchen gear, shelves, and lights; for industry, electric tools, moving equipment, and tool storage; and for scientific supplies, measuring cups, reagents, and fume hoods. According to a Temu manager, these categories are really popular now. They're in high demand because people know exactly what they need, which means lots of repeat buys and big orders are coming through, making them very successful.
With the addition of high-value industrial products, large furniture, and home appliances, Temu has successfully moved past an important "price barrier." The site's homepage now features a range of high-end products rather than a flood of $0.99 cheap, small items seen before. Shoppers can now find dedicated sections and banners for items like a $2,000 laptop, a $775 smartphone, a $2,500 marble bathtub, and even $250 caviar.
Despite this shift to higher prices, Temu still maintains its emphasis on cost-effectiveness. For example, the laptop's price is marked with a prominent "-52%" discount and a detailed explanation of the previous price. The caviar is sold in a "large 8-ounce jar," which highlights affordability and Temu's ability to challenge traditional pricing models.
On the other hand, the merchant scene has seen a big change with the rise of semi-managed sellers.
"Basically, the semi-managed sellers are experienced cross-border pros," said Zhao Junming, a Temu seller. "The need for handling overseas fullfillment has pushed out a lot of smaller sellers, so those who are coming in now usually have solid Amazon experience, including top sellers in various categories."
This is no exaggeration. At several Temu semi-managed promotional events held across East and South China, most participating companies had well-established supply chains, channel systems, and overseas fulfillment strategies.
On the other hand, pure domestic factories and single-channel merchants with full-managed service were quite rare.
Another significant change is the influx of China's cross-border brand, most of which are top sellers on Amazon. By mid-June, Anker, Hello Tech , Dreame, Baseus , Thousandshores , and YesWelder, had joined Temu's semi-managed model and launched their store pages.
"Full management sets things in motion, semi-management takes over the operations, and brand merchants join in. For a marketplace to grow, it needs to bring in the top players that shape their specific markets," Zhao Junming explains.
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Beyond cross-border brands, another significant new force is the onsumer goods giants from China. Companies like Midea, Xiaomi, Liby, and Vinda have already teamed up with Temu. Additionally, there are reports that Temu is negotiating with global giants such as Unilever and Lenovo to expand the semi-managed model, with potential plans to open official flagship stores.
A Shake-up Coming for Fully-Managed Sellers?
Temu's semi-management surge could lead to a shift in full management.
The U.S. homepage, once full of gray links for fully-managed products, is now dominated by green markers (semi-managed products with a "Local Warehouse" green tag).
In the Bestseller section, selecting "Top Sellers in 7 Days" shows that green-tagged semi-managed products make up 50-70%. They have multiple direct links for easy browsing: near the search bar on the homepage and as a "Local Warehouse" option on the search results page.
According to Lee Anyu, a full-managed seller, the rise of semi-managed shops adds pressure. "Top search results often come from these semi-managed stores," he noted.
Full-managed sellers are struggling with a crowded market. More sellers mean less room for everyone, and most good categories are already covered. It's getting tougher to find top-selling items.
Chen Kaifeng, a seller, mentions rising competition on Temu over the past year. "I just keep looking for the next hit and try to outpace the others," he comments.
Full-managed sellers also face logistics and customs challenges. As Temu expands, it consumes much of the domestic air cargo capacity, leading to bottlenecks during big sales.
Both sellers and the platform must be ready for changes in international customs rules. Who will survive this reshuffle?
"You need to keep things in perspective," says Lin Guande. Lin runs his overseas warehouse business. "Many blame their slow sales on the market, forgetting their initial success wasn't sustainable." Discounts, not real demand, drove those sales. Once subsidies end, true capabilities are exposed.
On any platform, survival of the fittest applies—adapt or lose out. Lin argues many sellers can't accept the reality that their early earnings weren't aligned with their abilities, leaving them lost when the market cools.
Ultimately, full management aligns with firms boasting robust supply chains, where diversity, rapid evolution, and stable provision are the true strengths. Small traders focused merely on product selection without cultivating supply chain capabilities may falter on Temu. Likewise, factories with limited SKU development and prolonged update cycles may struggle to navigate.
Lin Guande asserts that those who prevail in fully-managed model are likely large factories and top sellers deeply embedded within supply chains.
The full management won't be entirely replaced by the semi management. The policies, product sources, and focal points of the two models differ significantly. Categories like small, lightweight, and non-standard items, which require light inventory, are more suited to the fully-managed model.
Semi-Management Advances Despite Challenges
"Temu is transitioning its growth engines," says Mason, a semi-managed seller. "This model needs attention early on, but it won't slow the platform's rapid growth."
For sellers, it's a prime time. "Right now, there's more traffic than products, and this will likely continue for the next six months," notes an insider. "If sellers take advantage of this and lead in niche markets, their growth will be substantial."
However, the rapid acceleration of the semi-managed model comes with its own set of bumps and bruises. The most prominent issue lies in the "beginning and end" of the process—pricing of the products upon listing and penalties after sales—where conflicts between merchants and the platform frequently arise( Social media posts reveal that on the afternoon of the 22nd, many sellers gathered outside Temu's Guangzhou office to protest.)
For instance, Dennis, a semi-managed merchant, experienced a situation where dozens of his orders were flagged as "false shipment" (typically indicating that the seller either did not genuinely ship the product or provided fake logistics information), even though he had diligently fulfilled the orders. He later discovered that Temu has a strict rule: if logistics information isn't updated online within 48 hours, it's deemed false.
"Some cheap and home-based warehouses tend to be slow in updating their online information because of local sorting inefficiencies and limited postal capacity," Dennis explained. "This doesn't mean the goods aren't shipped; it's just that during major sales events, these issues become more common."
On the issue of returns, Dennis mentioned that most are due to minor complaints, like "not liking the color" or "not matching expectations," but merchants still face strict penalties. The good news is that Temu's semi-managed model now requires a minimum value for refunds: for items over $7, merchants can review and deny returns within a set period.
The various issues faced by merchants are partly due to a lack of understanding of the platform's rules. For example, not every merchant can access the 85% pricing standard of Amazon.
A Temu recruitment manager explained the three types of semi-managed merchants:
Temu has replaced the old system of fining each violation individually with a "store quality score" system. The platform rates stores based on their performance and customer service, and uses these ratings to determine fines: stores with scores over 90 get no fines; those with scores between 80-90 get fined at 1.5 times the usual rate; those between 60-80 get fined at 2.5 times; and those below 60 get fined at 5 times.
"In other words, if you keep up your store's quality and reputation, you'll face fewer penalties for any infractions," said a recruitment manager. "Even though we focus on cost-efficiency, we don't support a 'one-time sale' mentality."
Aside from enforcing strict rules, Temu is also tackling operational issues and making adjustments. An insider shared that Temu is working hard to improve its business and is rolling out new service features. The platform is trying to address the three main concerns merchants have—after-sales rates, semi-managed deposits, and bulk fines—by offering more comprehensive solutions.
"The R&D team is developing a 'Product Whitelist' feature that could bring the after-sales rate of approved merchants down to under 2%, which would cut the current overall rate of 4% in half," the insider mentioned. "They're also planning to roll out a deposit refund feature soon, which will give merchants an exit option."
As for handling fines, Temu is speeding up the process from weekly to daily, so that fines are processed within 7 days, avoiding the old system of dealing with fines every six months.
"Temu is making things easier for new merchants by not requiring them to pay the full $10,000 deposit upfront. Instead, they can start with a trial phase and get a feel for the platform without risk. They only need to pay the deposit once their sales hit $1,500 or they get over 100 orders."
"Temu is known for quick action, jumping in with both feet, and making adjustments as they go. This approach might seem risky, but it's well-suited to the fast-moving e-commerce world. 'If you wait until everything is perfect before you start, you'll miss the chance,' Mason said."
(Sources from Yibang and other media outlets)