Temu’s direct-from-factory approach ushers in affordable quality shopping

By leveraging a unique direct-from-factory model that streamlines supply chain, Temu is redefining affordability, accessibility and customer experience in the e-commerce industry.

Temu’s innovative direct-from-factory model is revolutionizing online shopping by eliminating unnecessary intermediaries. This results in significant cost savings, enabling lower prices that attract more consumers and drive traffic and sales. Sellers on Temu benefit from this streamlined approach, which enhances profitability and operational efficiency.

With low selling fees and no advertising costs, sellers can start without upfront expenses, while Temu’s large customer base ensures rapid visibility—half of new sellers make their first sale within 20 days. The platform helps sellers achieve economies of scale and offers flexible fulfillment options, including local-to-local shipping, enabling faster delivery, boosting satisfaction and sales.

Temu rewards quality merchants with trust labels like “Top Rated Provider,” improving visibility and fostering trust. With global reach across 80+ markets, sellers tap into diverse consumer bases and grow sustainably with data-driven insights and dedicated support. 

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Temu’s international expansion

Temu began operations in Germany in April 2023, after starting in the U.S. the previous year. Since then, the marketplace has expanded its footprint to serve over 80 markets worldwide across the Americas, Europe, the Middle East, Asia, and Oceania. 

Temu is known for pioneering an innovative direct-from-factory model that streamlines the supply chain by eliminating unnecessary layers of intermediaries and their costs. These cost savings result in competitive prices that have made the platform a popular destination for consumers seeking value for their money. 

As a multi-category marketplace, Temu offers products from independent third-party sellers in over 200 merchandise categories, ensuring that customers can find what they need in one place, whether they are shopping for sporting equipment or pet supplies. Temu sells competitively priced daily essentials and everyday basics, while also catering to consumer demand for novelty and niche products that meet a range of needs and wants. 

The popularity has helped Temu expand its geographic reach, and the e-commerce platform now covers all 27 European Union member states. It was designated a Very Large Online Platform (VLOP) under the Digital Services Act by the European Commission in May 2023, subjecting it to more stringent obligations such as the duty to assess and mitigate any systemic risks stemming from its services. 

According to its transparency report, Temu had 93.7 million average monthly recipients in the EU over the seven months ended 31 October 2024. Germany, France and Italy were its top three markets in the EU, with 16.3 million, 12 million and 10 million average monthly recipients respectively.

Direct-from-factory model

At the heart of Temu’s business is its direct-from-factory model, which fosters a more streamlined and flexible supply chain and minimizes the number of intermediaries and handling stages between producer and consumer. This innovative model enables Temu to pass on the savings to consumers in the form of lower prices without any compromise the on quality of the merchandise.

Benefits for consumers

1. Cost efficiency

Traditional retail or legacy e-commerce involves multiple stages from production to sale, each adding extra costs that are passed on to the consumer. Temu optimizes this chain by directly linking customers with quality manufacturers, removing unnecessary intermediaries and associated costs. 

By cutting out intermediaries, Temu significantly reduces the additional costs typically incurred within the traditional retail chain. This direct connection allows manufacturers to sell products at prices closer to their actual production costs, leading to substantial savings for consumers.

A study by the Centre for Economics and Business Research (CEBR) underscores the financial benefits of this model. The research found that UK households could save up to £3,000 annually by shopping on direct-from-factory platforms like Temu.

2. User transparency

With fewer parties involved in the supply chain, consumers benefit from a clearer understanding of how product pricing is determined. This transparency builds trust and empowers consumers to make more informed purchasing decisions. 

Temu leverages real-time data to help customers make more informed shopping decisions. Its platform features trust signals with designations and labels such as ‘Best Seller,’ ‘Top Rated,’ ‘Most Repurchased,’ ‘Direct From,’ and ‘Top Followed’ on product listings, guiding customers toward popular and trusted options.

Temu also provides detailed product information, including star ratings and customer reviews from verified purchases, and sales figures, to enhance transparency and support informed choices. By analyzing historical logistics data, Temu provides an estimate of delivery time, giving customers added confidence in their purchases.

3. Faster time to market

By connecting consumers directly to the producers of the merchandise, Temu enables products to move more swiftly from manufacturers to consumers. This efficiency enables merchants on its platform to quickly respond to changing consumer demands and market trends.

Benefits for merchants

1. Economies of scale

Due to the large order volumes generated by the platform, Temu helps manufacturers achieve economies of scale. This means their per-unit production costs decrease as they produce more, leading to improved efficiency for manufacturers and lower product costs for consumers.

2. Manufacturing efficiency

Under the fully-managed model, Temu helps merchants coordinate a range of functions including logistics, marketing, payments and customer service. It essentially allows manufacturers to focus on what they do best – production. This improved specialization increases efficiency and further reduces costs along the supply chain.

3. Reward for high-quality merchants 

Temu employs a comprehensive set of ranking methodologies to ensure that customers can discover not only trendy and popular products but also those from trusted and high-quality providers.

At the product level, Temu ranks products based on sales, updating these rankings hourly.

At the provider level, consumers can make decisions based on a provider’s historical ratings, repurchase records, follower numbers, and new product releases. These metrics provide consumers with the information they need to choose the best products for their needs. At the same time, they encourage providers to focus on product quality, variety, and building trust with their customers.

Temu’s metrics on recognizing providers are as follow:

• Top Sales Provider: Determined by the sales volume of all providers in the same category in the past 30 days. Updated daily.
• Top Rated Provider: Determined by calculating the number of good comments and ratings of all providers in the same category in the past 30 days. Updated daily.
• Top Repurchased Provider: Determined by calculating the number and frequency of repeat purchases of all providers in the same category in the past 30 days. Updated daily.
• Top Followed Provider: Determined by calculating the number of new followers and sales of all providers in the same category in the past 30 days. Updated daily.
• New Arrival Provider: Determined by calculating the number of new arrival items and sales made of all providers in the same category in the past 30 days. Updated daily.

Local merchants on Temu 

To further enhance consumer choice and shorten delivery time, Temu is actively recruiting local merchants. This “local-to-local” model is available in markets such as the US, UK, Germany, France, Italy, Spain, the Netherlands, Belgium and Austria.  

Sellers can benefit from low selling fees and zero advertising costs, so they can start selling without any initial expenses. With Temu’s high traffic, 50% of new sellers make their first sale within 20 days. Temu has a dedicated team of specialists to support sellers and provide the guidance they need. 

European sellers can manage their own logistics, shipping products from local warehouses. This approach ensures faster fulfillment—sometimes as quick as one business day in some European markets —and enables the sale of bulkier items like furniture and industrial equipment. 

At the same time, Temu provides options for China-based traders to sell to Europe. 

These options include: 

• Consignment Model: Temu oversees logistics on the seller’s behalf, with traders sending goods to Temu-affiliated fulfillment centers in China for onward dispatch.  
• Fulfilled by Merchant Model: Sellers choose their own logistics and warehousing partners in Europe, arranging delivery to local warehouses in their intended market.  

Products dispatched from local warehouses, whether by European sellers or China-based sellers using the “fulfilled by merchant” model, are marked with a green “local” tag for customer convenience.

The introduction of the local-to-local model significantly enhances the consumer experience by reducing delivery times. With merchandise dispatched from local facilities, consumers enjoy faster shipping options, which leads to increased satisfaction and convenience. This improvement in delivery speed allows consumers to receive their purchases more quickly, meeting the growing expectation for prompt service in the e-commerce market. 

Additionally, by expanding its platform to include local merchants, Temu greatly enriches product variety, offering consumers a wider range of choices that cater to diverse tastes and preferences. This variety not only enhances the shopping experience but also allows consumers to access unique products that might not be available through international shipping.

Furthermore, by onboarding local sellers, Temu provides new growth opportunities for businesses, helping them tap into a broader consumer base and connect directly with millions of engaged buyers. This direct connection not only boosts sales potential but also strengthens the relationship between merchants and their customers.

Elevating customer experience

Temu offers year-round competitive prices and runs promotions throughout the year, such as summer discounts, autumn sales, Halloween offers, Black Friday and Christmas deals, giving customers the freedom to shop on their terms. 

Temu also offers one of the most generous return policies in e-commerce, with a 90-day money-back guarantee for items that are not as described, are damaged or do not arrive. Its customer service channels are open 24/7, where customers can contact its customer service through the app or website. 

Customer satisfaction is a high priority at Temu. Its 30-day price adjustment feature ensures customers can shop with confidence, knowing they’ll get the best price even if a product’s price drops after purchase, as Temu will refund the difference within 30 days of purchase.

Since entering the European market in 2023, Temu has actively listened to feedback from stakeholders and adapted its offerings to better meet consumer needs and preferences.

Looking ahead, Temu’s vision remains unchanged, that is to democratize access to affordable, high-quality goods, ensuring people from all walks of life can fulfil their needs and aspirations, regardless of their financial background.

It expects to play a bigger role in shaping the future of e-commerce to bring affordable, accessible and enjoyable shopping experience to all.

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