Temu, a rising star in the world of online shopping, offers a vast array of fashion products, beauty items, and home goods. This Chinese-owned digital marketplace has quickly become the top free shopping app, outshining giants like Shein, Amazon, and Walmart. Temu’s business model connects customers directly to suppliers. By forging strong relationships with retailers, they’ve managed to keep prices low and maintain a vast network of suppliers. But not all is good; TrustPilot reviews reflect mixed opinions with complaints about shipping times and customer service.
The secret behind Temu’s low prices: Next-Gen Manufacturing
At the core of Temu’s rapid growth and competitive pricing is their innovative Next-Gen Manufacturing (NGM) model. Launched in September 2022, this Boston-based e-commerce platform serves markets in the US, Canada, Australia, and New Zealand. The NGM model revolutionises the retail process by enabling manufacturers to produce merchandise with more precision, reducing unsold inventory and waste. However customers do complain about longer delivery times. It is unknown to what extent this is a result of the NGM model.
By connecting shoppers directly with manufacturers and offering real-time insights, Temu is able to cut warehousing and transportation costs, resulting in savings of at least 50% compared to traditional processes. This cost-saving approach allows the company to offer near-wholesale prices, as they remove hidden costs and focus on accurately forecasting sales and demand.
Comparing Temu to other Chinese e-commerce giants
While Temu.com is gaining popularity, it faces stiff competition from other Chinese online wholesale stores like AliExpress, DHGate, Banggood, and DealExtreme. These platforms offer a wide range of products at competitive prices, along with diverse shipping options and payment methods. However, Temu stands out with its NGM model, which empowers manufacturers to create customized products.
The increased visibility of demand and supply accelerates distribution and eliminates the need for large warehouses. Another distinguishing factor of Temu is its claims on sustainability and social responsibility. The NGM model promotes a more sustainable e-commerce landscape by enabling manufacturers to produce merchandise that fits the needs of consumers, leading to lower unsold inventory and waste.
The future of the Temu app and Chinese e-commerce
Despite its innovative business model and commitment to sustainability, Temu still has some areas that need improvement. TrustPilot reviews reveal a 2.9-star average, with the majority of one-star reviews citing long shipping times, low-quality items, and poor customer service. Low quality items can become a sustainability issue in itself, since those products have a higer chance of ending up in landfill. It’s essential for Temu to address these concerns and maintain a balance between low prices and customer satisfaction.
With a lot of consumer goods being produced in China it makes sense more and more e-commerce platforms are Chinese. The success of Temu and its competitors showcases the power of connecting customers directly with suppliers, ultimately reshaping the way people shop online.