Can't roll anymore? Temu sellers lose the free shipping benefit, another Shenzhen big seller settles in

Seven years ago, Pinduoduo emerged under the trend of consumption upgrading and grew wildly under the shadow of Alibaba and JD.com. No one could have predicted that it would carve out a path in the sinking market with its extremely low-price strategy and break through the long-monopolized domestic e-commerce landscape.

Two months ago, Pinduoduo ambitiously launched its overseas business, and its cross-border platform Temu boldly chose the North American red ocean as its first stop. With the lessons learned from the repeated failures of domestic giants such as ByteDance and Alibaba, the industry is full of doubts about whether Temu's low-price killer can work overseas.

Facts have also proved that although the violent low-price strategy has obvious shortcomings, it has come into being in the overseas market where consumption is downgrading under the current high inflation, and the effect is remarkable - Temu quickly topped the shopping APP download list in a short period of time, and its GMV exceeded 1.6 million US dollars in the first month of its launch.

For Pinduoduo, which started its overseas business from scratch, this achievement can be said to have exceeded public expectations. However, although Pinduoduo's unique low-price strategy has worked wonders, the cash cow behind it is not a perpetual motion machine after all. Now, cracks have begun to appear in Temu's three axes.

Since its launch, Temu has launched a series of benefits, including free shipping at 0.1 cents, delivery within 7 days, free shipping if the goods are not received within 14 days, and full refund within 90 days if you are not satisfied. Such a model with rock-bottom prices and emphasis on user experience is hard not to attract consumers.

However, behind the extremely low prices, Temu suppliers are silently bearing the pressure of profits. In order to maintain an absolute price advantage among many e-commerce platforms, the supply price is often reduced to the maximum extent, and the profit margin is constantly eroded.

In fact , the biggest advantage of Temu that attracts sellers to invest is the benefits of no commission, no advertising fees, and free shipping. However, nowadays, the continued low-price subsidies and money-burning marketing seem to be unsustainable, and Temu announced that it will cancel the shipping subsidies for sellers.

According to the official notice, starting from December 12, VMI domestic shipping costs will be borne half by merchants and half by the platform, and deducted from the settlement amount.

▲ The picture comes from Temu official communication group

Currently, Temu is mainly divided into VMI and JIT modes. The former means that the seller sends the goods to Temu's domestic warehouse, and the platform is responsible for transportation and listing, and bears the logistics costs at home and abroad. The latter means that the seller does not need to prepare the goods in advance, but completes the delivery within 24 hours based on the actual orders. This freight policy adjustment is mainly aimed at VMI mode merchants.

This is undoubtedly a heavy blow to low-value sellers. With the supply price pushed to the extreme, the sellers' profits are already very little, and if half of the domestic shipping cost is added, the cost pressure will soar further.

Some sellers expressed their dissatisfaction by saying that after the implementation of the new shipping policy, the shipping cost alone would cost one thousand yuan within a week, even after discounts had been applied.

▲ The picture comes from the seller communication group

At the same time, the excessively low-price model has also led to an increasingly distorted ecosystem on the platform, with many sellers raising their supply prices in order to make their products stand out and catch Temu's eye:

"I previously supplied goods at 3 yuan, but a seller came in and offered 1.2 yuan."

"I also have a batch of small goods. The secondary packaging cost and other costs add up to 10.3. Temu asked me to quote 8 yuan."

"We are about the same. Clothes that cost over 70 yuan are only charged 60 yuan for us. We still produce them ourselves."

However, the brute force low-price strategy is not a long-term solution. Not only do merchants bear the pressure of profit, but the platform is also unable to sustainably burn money to provide blood. As of now, Temu's products have begun to show a trend of price increases.

Some sellers have discovered that Temu has raised its front-end prices this month. Now new products are priced significantly higher, with some of the same products being sold at more than twice the previous price.

It can be seen that after the explosive period of traffic dividend, Temu is now slowly settling down.

In fact, many sellers see Temu as a channel to clear redundant inventory. It is helpful for sellers to relieve inventory pressure, but it is not conducive to sustainable development for the platform. To a certain extent, Temu's adjustment of shipping policy also aims to clear out some low-quality merchants.

Previously, many sellers received notifications to pay attention to sales and rating issues. On the one hand, if a product has no sales in 14 days or has sales of less than 30 pieces/US$90 in 30 days, the sellers will need to reduce the price or withdraw the supply on their own. On the other hand, if the product rating is lower than 4.5 points and has 1-star reviews and quality issues, the platform will remove it from the shelves.

At present, Temu has become stricter in selecting and controlling the quality of products on the platform, and has strengthened its support for high-quality brands, increasing brand exposure through the presentation of brand stores. It is not difficult to see that Temu is also seeking further standardized and refined healthy development based on its low-price model.

To this end, Temu is also working hard to introduce some of Amazon's top sellers. In mid-November, Huakai Yibai responded to investors' questions and said that the company has opened a small number of stores on Pinduoduo overseas, and will actively pay attention to emerging e-commerce platforms and adopt a follow-up strategy to invest resources at the right time.

Recently, Youkeshu also revealed on the investor interaction platform that the company has opened a small number of stores on the Temu platform. Not long ago, another Shenzhen-based big seller, Xinghui Holdings, also expressed its intention to expand Temu's business channels.

From the perspective of big sellers, the lessons learned from the account suspension wave have deepened the implementation of multi-platform and multi-channel operation strategies, and by exploring new markets on various equally strong e-commerce platforms, they can get rid of their high dependence on Amazon. Temu, which is currently in its heyday and has achieved rapid growth in overseas performance, is obviously an emerging channel with great potential.

By introducing these high-quality merchants, Temu will also be able to maintain the platform's business environment, further tap into more development momentum and deepen transformation.

Pinduoduo's overseas story is progressing smoothly amid doubts, but it remains to be seen what chapter it will write in the future.