Why is Temu so Cheap? Find Out in This Comprehensive Guide! (2024)

Temu – the most downloaded app in America, is an online market managed by the Chinese e-commerce company PDD Holdings. Here, you get to find exclusively discounted goods directly shipped from China. The product range is too diverse, including everything from toy hamsters to running shoes and more. But the point is, why is Temu so cheap? Is it worth reliable or just a scam?

If these queries also ignite curiosity among you guys, welcome to our guide! In it, we will explore the key reasons Temu products are cheap and analyze if it’s worth considering purchasing from them. So, without any further ado, let’s begin exploring!

Temu Bonus and Discount Coupon

Temu has emerged as a leading marketplace in the U.S.U.S. in no time because it sells products at the lowest prices. This platform is actually losing billions; yes, you read it right, billions to dominate the U.S. Market. Though the platform has been bearing loss for a while, once its name is on everyone’s lips, it will begin uplifting the benefits.

However, owing to this exceptional strategy, Temu officials release a bulk of bonuses and discounts to attract new customers. The moment you create an account, you will receive promotional emails, and on downloading the app, you will receive a $20 voucher.

Moreover, signing up with a referral code will give you a 50% discount and a $100 Temu sign-up bonus. Even signing up for the text club will offer you 20% off on your first order, along with some other exclusive offers. Isn’t it amazingly amazing?

But this doesn’t end here; you can also use an 8-digit coupon code during checkout to lower the price further. Simply enter it into the designated box and hit Apply to acquire a discount.

High Competition Among Temu Sellers

If they say it’s not easy to be a seller in Temu – they surely mean it. Temu officials asked for samples from thousands of sellers, and only 10% passed the eligibility criteria. The platform has to analyze multiple aspects, such as if the businesses can afford to sell with minimal to no profit without going into a breakdown. If it’s able to meet the quality standards even with less revenue than its production costs, more considerations come into account.

Once you are selected as a seller, you will have to obey the prices fixed by Temu. Temu squeezes the profit on the seller’s end, so sellers have to be competitive to earn more sales, and there’s only one way for it – sell even lower than competitors. The more you lower your price, the more customers you will get; the most tempting thing for a customer remains the cheap price. This, in turn, makes Temu cheaper.

Low Manufacturing Costs

As mentioned above, Temu is in a bid to dominate U.S. markets by offering lower prices. According to Wired, Temu loses $30 per order and $588 to $954 million annually. But the point is, how do they afford the prices that are even lower than the production costs?

Temu ships directly from China – the world’s leading wholesale market for almost every known product. There. The manufacturing costs are much lower because of the supportive government policies, cheaper labor, well-trained workers, efficient machinery, and more.

However, Temu relies on its manufacturing end to design and supply source materials for high-demand products. Also, it keeps a regular check on the sellers and cuts off the prices of whoever tries to list or sell products at a higher price, making a bigger profit.

Economic Small Package Shipping Direct from China

Here comes another thing – economically small package shipping directly from China! Temu bears the shipping cost of every order and relies on maximum orders from the platform to cover the cost. However, the shipping strategies are also worth discussing.

Temu opts for the de minimis exemption for shipping goods directly from China to its customers in the U.S. A de minimis is a threshold that removes the duty or taxes from shipments – the concept differs from country to country. It significantly impacts the overall shipping rates. Any Temu shipment below the $800 de minimis value is neither inspected nor taxed by U.S. Customs.

Knockoff Products

Last but not least, Temu doesn’t sell authentic brand products. All tech products on Temu are duplicates or knockoffs of authentic brand products. Before delving into the details, you need to understand the difference between knockoff and counterfeit products.

Knockoff products are the ones that mimic the physical appearance of the products, but they don’t copy the logo or trademark. For instance, they might have an altered trademark or misspelling of the brand name. These aren’t illegal but can be challenged by the mimicked brand.

Temu knockoff products are manufactured by the units in China in masses. You can find dupes of multiple renowned brands, like the AirPods Max headphones that cost $549 on Apple’s website, but the dupe is even less than $15. You read it right, folk!

Though Temu claims it has direct access to the manufacturing units, cutting the middleman and its profit. This economic model is another reason Temu keeps the prices in check at lower rates. But still, the cheap manufacturing of dupe or knockoff products could better explain that lower price tag.

Conclusion

Temu is an emerging market unit in the U.S. owing to its lower than lowest price. It relies on multiple strategies, including offering bonuses and discounts, maintaining high competition for low prices among the sellers, keeping the overall manufacturing costs low, saving on small package shipments, and selling knockoff products.

By now, you would know why Temu is that much cheaper and how things work on the other end. So, how do you foresee the future of this platform in the coming years? Will its strategy work for it, or will it just wash away because of the rising deficit? We would love to hear from you in the comments section below!

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