Dozens of Chinese traders stormed into the parent company’s offices in Guangzhou this week to protest against Tem’s increasingly tough fines policy.
Frustrated suppliers claim the affordable online marketplace, which sells everything from $10 dresses and sneakers to $15 mattresses, is fining Chinese merchants with increasing frequency.
about 80 merchants entered the office He was released by police on Monday, Chinese media outlet Yi magazine reported on Tuesday.
Temu is owned by Chinese retailer PDD Holdings, which has a market capitalization of $177 billion, whose shares fell about 3% on Tuesday.
Tem has begun considering a major overhaul of its business model.
The company, which competes with e-commerce giants like Amazon and Shein, is reportedly recruiting Amazon sellers who store their products in warehouses in the United States and Europe. According to the Financial Times.
Amazon’s move against sellers is likely an attempt to thwart the imposition of import tariffs on cheap goods, reported in early June. The European Union was drawing up new import plans. Check out Tim and Shane.
The switch to Amazon’s merchant supply chain will reportedly cut delivery times and allow Temu to sell bulkier, more expensive items like furniture.
The company is also considering having retailers cover shipping and warehousing costs that were previously covered by the company, a shift in business model that has upset current Temu suppliers, the report said.
“I feel like Tem’s treatment of its suppliers is unsustainable,” Hong, a leggings manufacturer in Guangzhou, told the Financial Times. “I feel like it can’t last much longer.”
A Tem spokesman told the Financial Times that the company was “actively working with retailers to find a solution.”
Temu was launched in the United States in September 2022. Sales have soared thanks in part to large-scale advertising spending, including a TV slot during the Super Bowl, and cost-cutting supply measures.
PDD Holdings brands have copied the business model of fast-fashion giant Shein, which relies heavily on suppliers to ship cheap, lightweight goods from warehouses in China to customers in the West.
As well as trying to pass on some of the financial burden to suppliers, Tem is also slapping heavy fines on retailers for everything from faulty packaging to product inconsistencies with online descriptions, sources told the Financial Times.
“If you have a customer complaint you can be fined even if it’s not your fault,” one dealer told the Financial Times. “If one item in a lot is faulty you can be fined for the whole lot.”
Sources told the Financial Times that suppliers complained that Temu was pitting them against each other and forcing retailers to slash prices and offer them the best terms.
Initially, Tem attracted suppliers by allowing them to send unsold goods to warehouses in China, a method that attracted many sellers, including some who “had no experience of cross-border trading,” one merchant told the Financial Times.
One merchant said that when Tem first started out, he received between 30,000 and 50,000 orders a day.
Currently, the same merchant said he is only receiving 3,000 orders per day because Tem has partnered with numerous suppliers to keep prices down.
Suppliers also complained that system sales were unpredictable – the cheapest sales items were frequently advertised on the website to attract customers, but suppliers were not informed of upcoming sales.
Many retailers told the Financial Times they were willing to work with System because of surging sales, but said the company’s shift to placing more burdens on sellers was an obstacle.
“Even after incurring all these costs, we may still find that our goods are unsellable when they arrive in the U.S.,” one seller said.
