Temu's Rapid Rise in the French Online Marketplace

The secret behind Temu’s rock-bottom prices 🔗

The Chinese e-commerce platform has emerged as a major player in the market. Critics claim its ultra-competitive pricing relies on unfair practices. Yet its success stems from a powerful business model.

Temu has quickly risen to become the fifth largest online marketplace in France within two years, largely due to its extremely low prices. Critics argue that these prices stem from questionable practices like poor product quality and aggressive marketing. Temu operates under a business model derived from its parent company, Pinduoduo, which uses a Consumer-To-Manufacturer (C2M) strategy and reverse auctions to keep costs down. By avoiding inventory purchases and leveraging favorable customs regulations, Temu manages to offer products significantly cheaper than competitors like Amazon. Despite its rapid growth, Temu faces challenges, including high shipping costs and the need to adapt its model as it expands internationally.

What is Temu's main pricing strategy?

Temu's pricing strategy is based on the Consumer-To-Manufacturer (C2M) model, which involves reverse auctions where manufacturers compete to offer the lowest prices.

How does Temu avoid customs duties?

Temu benefits from customs exemptions for products valued under $800 in the U.S. and under €150 in the EU, allowing most of its products to be shipped duty-free.

What challenges does Temu face as it expands internationally?

Temu faces high shipping costs, especially with air freight, and is transitioning to a semi-managed logistics model to improve efficiency. Additionally, it must adapt to maintaining low prices if it shifts towards a more traditional marketplace model.