Why Is TEMU So Cheap – Exploring The Facts

Temu has gained attention of the customers with a lower pricing strategy. Temu imports the items directly from China with lower production and labor costs. They cut off the middleman and save the cost from the supply chain. 

The big discounts on multiple products can be doubtful but not unrealistic. The store has an aggressive marketing strategy that helps them to attract a massive audience. You can directly order the products from the manufacturers.

The app also has non-branded items that are good in quality and lower in price. These products look similar to the branded items. However, the cheap prices do not come from a simple strategy.

There are some concerns regarding this platform that are related to the poor quality of material used in different products. They do save costs on the material and sell cheap products but also compromise the quality and standards.

Why Is Temu So Cheap? – All Facts

Temu now has a million customers in most parts of the world. They are getting orders in huge quantities and also save on labor costs. All these factors are responsible for the cheap prices and discounts on products.

Mass Production

Temu is mostly relying upon mass production and making the items in bulk. There are unbranded items that have low costs. This platform directly trades with China and orders the products in larger quantities.

This method allows them to benefit from economies of scale. It means if you increase the production then it will impact the overall cost of the goods. So the company can sell them at cheap prices.

Manufacturer Connections

The customers are connected directly to the sellers and manufacturers. There are no traditional intermediaries like distributors and wholesalers. The app does not have physical stores as well. All these approaches let them reduce the overall cost.

By eliminating several layers of the supply chain they cut off costs. Moreover, there are no middlemen in the supply chain. They maintain their Inventory which also keeps the prices low.

Promise Large Orders

Temu tries to diversify the cost per unit through various strategies. They negotiate with the manufacturers and promise them large orders. In this way, they efficiently manage the costs of the products. 

Selling For Long Term

Temu does not start earning profit instantly when it enters into the new market. They sell the product at a loss to attract new customers. In this way, the customers become habitual of shopping from their website.

This technique is also beneficial to compete with the other retailers in the market. It can attract a number of customers who are purchasing the competitor’s brands. 

Low Overhead Costs

Temu efficiently manages its inventory and stock. They also reduce waste and improve profitability. There are no physical stores and the app only has an online presence. However, it has warehouses that store the products and ship them to the customers.

Next-Gen Manufacturing

The Temu uses the next-generation model for manufacturing. This allows them to save 50 percent of the cost and offer discounts to the customers. They do not add excess inventory that can drive up costs. They sell the products efficiently and manage stock. 

Subsidized Shipping

The Temu offers free shipping and no minimum spending to attract the new customs. It appeals to a number of customers and automatically boosts its profit. The new customers are repetitive and compensate for the discounts and other costs. 

Market Expansion

Temu uses aggressive marketing strategies to penetrate into the global market. They have high-profile advertisements that polish their visibility. They are using social media marketing for promotion. This strategy also allows them to offer low-priced items. 

De Minimis Regulation

Temu is exploiting the De Minimis Regulation by importing limited quantities. They import goods below 800 dollars which saves them extensive customs inspections and taxes from the US. In this way, they have found a loophole to save the cost.

Parent Company Support

The PDD is the parent company of Temu that is well established. In this way, this company provides customers with insights and valuable data. There are multiple resources that this parent company shares with temu to create a unique marketing strategy.

Pricing strategy

Temu prices are also low due to its standout pricing strategies. They target the North American market that already has many competitors. They lower their prices to compete with Walmart and Wish. A large volume of orders covers their loss on other products.

What are some concerns About the Temu App?

Temu is increasing its customers with the passage of time. However, there are concerns that they are not following ethical practices in manufacturing the products. Moreover, they are accused of low-quality items and child labor.

• Temu ‘s biggest concern is its labor practices. This company was investigated for child labor and illegal activities. There are forced labor cases in this store. The US does not allow goods to be imported that are made with forced labor.
• The minorities in China are forced to make goods from cotton, toys, textiles, and yarn. The Temu also uses several techniques for tax exemptions and avoiding other regulations. Moreover, this company has a history of several deaths as well.
• A 22-year-old lady was found dead a day after work. The other deaths also took place in the next weeks of the first death. An employee also committed suicide after he was fired from the company.
• A delivery driver also set himself on fire after protesting due to unpaid wages. In this culture, the working environment is not good. To keep up with the competition the company is using illegal ways to manufacture low-cost products.
• Apart from these concerns, the store has mixed reviews on various social media platforms. People are complaining about the low-quality products. These products are non-branded and are made up of low-quality materials.
• The app also selects the information of the users and can sell it to other companies. They are using its database to know about the shopping behaviour of the customers.

Conclusion

Temu sells the product at cheap prices and has gained popularity in recent years. There are many factors that let them give free products and discounts. If you order the goods in a bundle then there are more chances of cost reduction. The store heavily imports its goods from China, which is famous for cost saving. They use unique marketing strategies to sell the products at user-friendly prices. However, the concerns and rumors still revolve around the store that how they are using cheap material.

FAQs