Pinduoduo Temu cuts prices at the beginning of the year, and a large number of sellers automatically reduce prices

New Year, New Atmosphere. Say goodbye to the old joys and sorrows of 2022. Many cross-border workers who have returned to work are eager to meet the challenges of the new year. However, accidents always come suddenly. Not long after the beginning of 2023, Temu sellers were ruthlessly "cut" by the platform.

After Amazon’s ban, multi-channel operations have gradually become the main theme of cross-border sales. In addition to Amazon, Walmart, Shopify, and TikTok Shop are leading the way in various e-commerce models, bringing more overseas expansion possibilities for cross-border merchants.

However, surprisingly, Pinduoduo, which suddenly emerged, has emerged as a dark horse and carved out a niche in the fierce competition. Its cross-border platform Temu has topped the list of app downloads in the United States in just one month thanks to its three extremely low prices.

For consumers, Temu's appeal lies in the wide range of cheap goods and endless free benefits it provides. For suppliers, what attracts them to join are the guarantee policies such as no commission, no advertising fees, free shipping, as well as the early development bonuses of the platform.

However, today, consumers still enjoy a high-quality, low-price shopping experience, but the benefits of merchants are gradually disappearing. After canceling the freight subsidy, Temu suddenly took action at the beginning of the year and drastically lowered the prices of sellers' products.

According to feedback from many Temu sellers recently, the platform suddenly adjusted prices automatically without the merchants' consent in the early morning of January 27. If they did not log in to the backend to process the adjustment within 24 hours, it would be deemed as automatic consent. Currently, all links in the entire store of a large number of sellers have been drastically reduced in price.

▲ The picture comes from Temu merchant exchange group

"There are dozens to hundreds of them. We just stocked them up before the New Year."

"Temu's operation was god-level. On the first day of operation, the prices of almost all links were reduced by 20%-30%."

"Most of my salaries were reduced. I was only making a few dollars, but they were reduced by more than 20 dollars. It's a huge loss."

"There was a model that was stocked up before the New Year, and yesterday the price was directly reduced to clear the stock. As a result, the platform directly reduced the price by more than 40 yuan."

▲ The picture comes from Temu merchant exchange group

What makes the sellers even more indignant is that the platform's choice of time to adjust prices in the middle of the night is very "clever". Many sellers are either still immersed in the Spring Festival holiday, or are stuck in traffic on their way home. Most of them do not have time to log in to the backend to check notifications, and miss the 24-hour processing time limit. They can only helplessly accept the reality of lower product prices.

Given that product prices are already far lower than other platforms, how much profit margin will be left after squeezing prices further? Many Temu sellers are deeply worried.

In order to match the platform's ultra-low price model, many merchants have raised their supply prices, forcibly compressing their profits. After Temu recently cancelled the freight subsidy, another heavy cost burden was placed on sellers, making the profit margin even tighter.

Although Temu continues to improve its platform regulatory policies, support and cultivate high-quality sellers to avoid low-price and low-quality colored labels and improve the business environment, it still has a long way to go.

Some sellers bluntly said that the platform’s pricing is low and has not yet been implemented. It feels like watching the market like the stock market, otherwise there will be losses.

Whether Pinduoduo Temu is worth doing or not has been a hot topic since its launch, but there is no definitive answer. Some sellers said that in the context of consumption downgrade, Temu's low-price model has brought more opportunities, while some sellers believe that the abnormal ultra-low-price strategy will not last long and will sooner or later be eliminated in the fierce competition. Some sellers only regard it as a channel for low-price clearance and have no intention of deepening their business.

A seller said: "After one month of using Temu, I sold 628 orders with a sales amount of 19,041.3 yuan, but the amount available for withdrawal is 0 yuan, which means the profit is negative." This seller who returned with nothing also summarized several major "complaints" of Temu:

Although Temu attracted a large number of new customers with its "money power" at the beginning of its launch, it is not a long-term solution if it cannot break away from the limitations of the low-price model. Nowadays, Temu's traffic growth seems to have begun to show a trend of lack of momentum.

According to data from Similarweb, after launching in September 2022, Temu's traffic quickly climbed to 21.6 million, and then doubled to 58.5 million in just one month. However, the explosive growth momentum came to an abrupt halt in December, with monthly visits slightly down 7.93% from November.

In fact, Temu, which has been criticized for its low-price model, has previously tried to raise prices to improve the quality threshold of sellers' products. However, before seeing any results, it raised prices again. For this reason, some sellers inevitably speculated that the platform's traffic growth may have encountered a bottleneck, so it had to cut product prices again.

Temu, which saw a rapid increase in traffic as soon as it went online, attracted a large number of cross-border sellers to try to settle in. However, as the traffic growth slowed down, the drawbacks of the platform have not been improved much. For example, the review mechanism is lagging behind, and some sellers still have no one to review their products half a month after they put them on the shelves; the platform is inefficient, and the communication with the investment manager is often "disconnected", and there is no response when you need to consult. In addition, there are many human control factors in Temu's business process.

In this case, what kind of sellers can go further in Temu?

Some sellers admit that Temu's platform mechanism is not sound for trading sellers, and frequent policy adjustments are also a problem. Sellers do not have much initiative in sales. If they set prices too high, they will be removed from the platform. If they set prices too low, their profits will be limited, which is not conducive to sellers expanding their business scale.

"But for factory-type sellers, Temu has helped them open up C-end sales channels, pushing their products directly to hundreds of millions of consumers, skipping the operational management stage," the seller further stated.

However, at present, those who can adapt to Temu's rules and maintain stable operations are probably more selfless sellers who are willing to clear their inventory. "It has been less than a week since Temu arrived, and I have received about 70 orders in total, about 20 orders per day, with a profit of 0%. I am very happy to clear the inventory that has been accumulated for many years at a break-even price, which is 10,000 times better than throwing it into the trash can."

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