Why Is Temu So Cheap? Everything to Know about Its Prices (2024)

Author Info

Last Updated: June 27, 2024References

Why is Temu so cheap?

Download Article

1. 1

   Cheap manufacturing costs According to a study performed by Wired, Temu pressures its manufacturers to slash prices to satisfy discount-hungry customers, leaving the manufacturers with little to no profits. Meanwhile, Wired reported that while Temu covers most of the company's international shipping costs, it relies on frequent orders from American consumers to recoup the money it loses.^[1]

   • As noted by the Wired study, the incredibly low prices on Temu are not sustainable. An analysis of the company's supply chain costs reveals that Temu is losing an average of $30 per order as it subsidizes its expansion into the American market. China Merchants Securities has calculated that Temu, which also operates in Canada, Australia, and New Zealand, is losing between $588 million to $954 million annually.
   • The company is squeezing small Chinese manufacturers, pressuring them to cut prices to unprofitable levels in order to fuel Temu's rapid growth.

2. 2

   Tax cuts from the de minimis exception Per a U.S. House Select Committee report, Temu exploits the de minimis loophole to ship low-cost goods directly to American consumers. The de minimis exception allows shipments valued under $800 bypass U.S. Customs inspections and duties.^[2]

   • It is estimated that Temu and Shein account for over 30% of all packages shipped daily to the United States under the de minimis provision. Furthermore, nearly half of all de minimis shipments to the U.S. are believed to originate from China.

   Advertisem*nt

   See Also

   I Shopped on Temu: 3 Reasons I'm Not Convinced Temu Is a Big Threat to Amazon | The Motley FoolHow to Invest in New York Life Insurance | The Motley FoolFly trapped in chicken pan. Old food. No sanitizer. Wichita KS restaurant inspectionsMarkets News, June 26, 2024: Nasdaq Leads Stocks Higher; Amazon Market Cap Tops $2T

3. 3

   Fake or “knockoff” items A large majority of products sold on Temu are unauthorized copies or replicas of well-known branded items. Temu's offerings are typically unbranded goods produced in bulk by Chinese manufacturers.^[3]

   • Temu offers low-cost alternatives to many popular products, from insulated tumblers to headphones. Temu claims its direct supplier relationships eliminate the need for middlemen, allowing it to keep prices down. However, the company's ability to sell such deeply discounted goods may also be attributed to the use of cheaply manufactured items shipped at minimal cost.

4. 4

   Competition among sellers As a Temu seller, you must adhere to the prices set by the platform. Temu places significant pressure on seller profits, compelling sellers to be highly competitive in order to drive more sales. The only way to achieve this is by undercutting competitors' prices. The lower you price your offerings, the more customers you will attract, as price remains the primary draw for consumers.^[4]

   • This dynamic enables Temu to maintain a lower overall cost structure.

Advertisem*nt

Download Article

1. Temu is an expansive online shopping destination. Based out of China, it offers a vast array of products, from car accessories and clothing to kitchen appliances, electronics, outdoor furniture, power tools, and baby clothes—virtually anything you can imagine.

   • Temu's standout feature is its incredibly low prices. You can find clothes for $15, jewelry for $1, and electronics for just $10. In fact, Temu likely offers most products for less than $50.
   • While Temu is often compared to e-commerce sites like Shein, Wish, and AliExpress, it offers a distinct shopping experience. Unlike Shein's focus on fashion and apparel, Temu provides a broader product selection spanning plenty of categories. In contrast, Wish and AliExpress are commonly associated with lower-quality merchandise, lengthier delivery times, and more restrictive return policies.
   • Launched in late 2022, Temu rapidly climbed to the top of the shopping categories on both the App Store and Play Store. Heavy advertising made consumers aware of the platform, and its low prices proved to be a major draw.

Download Article

1. Temu is a legit company. PDD Holdings, the company behind the Temu marketplace, has a legitimate and transparent history. Originally registered in China, the company relocated its corporation to Dublin in 2023. Furthermore, PDD Holdings has been legally operating in the United States since 2022.^[5]

   • Given this well-documented corporate background, it is reasonable to conclude that the Temu platform itself is a real marketplace.

Advertisem*nt

Download Article

1. 1

   To purchase items from Temu, the process is similar to other e-commerce sites. First, browse the selection and add any desired items to your cart. However, there is a minimum $10 order value required before you can complete the checkout.^[6]

   • Temu includes free shipping on orders that meet this $10 minimum. Additionally, the company offers credits if your order arrives late—$5 for standard shipping or $13 for express shipping.

2. 2

   Keep your product expectations low. In many cases, the items you order may arrive on time, be of good quality, and look like the online images on Temu's website. However, product quality can be unpredictable, so, in other words, don’t expect a knock-off pair of AirPods to be like the real deal!^[7]

   • If your items arrive damaged, don't match the listing, or fail to arrive, you're eligible for Temu's Purchase Protection Program. This program guarantees a full refund if you return the items within 90 days of purchase.
   • Temu product prices go up and down frequently. If the price drops after you've made a purchase, you can request a price adjustment, and the difference will be credited to your account as Temu credit within minutes.

Advertisem*nt

Download Article

1. Buying from Temu is safe, but not necessarily ethical. Temu has had its fair share of controversy. Both Temu and Shein have faced intense scrutiny over their use of forced labor within their supply chains. Investigations have uncovered concerning reports about the poor working conditions in factories manufacturing products for these e-commerce platforms, particularly in regions where the prevalence of forced labor is well-documented.^[8]

   • The fast fashion business model may be encouraging overconsumption by offering inexpensive, trend-driven items intended for brief use. This results in extensive waste as products are rapidly discarded, ending up in landfills, incineration facilities, or exported to developing countries.
   • Before purchasing from Temu, thoroughly review customer feedback on their website. These reviews can provide valuable insights into the product's true appearance, quality, and fit.
   • For a more sustainable and ethical shopping experience, consider thrifting at consignment shops and vintage stores, or using second-hand apps like Depop and Poshmark.

Expert Q&A

Ask a Question

Tips

How helpful is this?