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Originally published on April 12, 2023, updated November 27, 2023
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In February, a popular Super Bowl ad got people talking about Temu, a new eCommerce app that promises to help consumers “shop like a billionaire.” People didn’t just talk though. Millions went straight to their phones to check it out, making it the most downloaded free app on both the App Store and Google Play. Even all these weeks later—at least at the time of this writing—it still holds those top spots.
So what’s all the fuss, and what do Amazon sellers need to know about this new marketplace? We’ve got a basic primer on what merchants should know about Temu.
Temu is an eCommerce platform owned by PDD Holdings, a company best known for owning Pinduoduo, the second-largest online marketplace in China. The marketplace includes products from a wide variety of categories, from clothing to household supplies to industrial and commercial products. Is Temu part of Amazon? No, it is a separate eCommerce platform.
Temu's big selling point is low prices. By working with the huge network of manufacturers Pinduoduo has developed in China, Temu can offer many products at especially low price points.
The Temu app has created a lot of buzz among consumers. But so far, there’s not as much information on how the marketplace works for sellers. Here’s a rundown of how it compares to Amazon.
Temu launched in September 2022, making it the newest big player on the eCommerce scene. Its parent company, Pinduoduo, was founded in 2015, so its roots go back a few years, but the brand is still in its early days.
Amazon was founded way back in 1994 when the internet was just starting to gain widespread usage. At this point, it’s one of the biggest and best-known brands in the world, with a well-established reputation for delivering convenience and affordability.
While Temu has the buzz of the moment, it's still a long way from gaining the kind of market share Amazon has built over the years. And Temu’s early reputation is mixed. While many consumers seem happy with the products and low prices, a quick look at the Temu reviews reveals some other information. A number of buyers have lodged complaints with the Better Business Bureau citing problems ranging from missing orders, to slow shipping and issues with returns and refunds.
Both marketplaces sell a wide variety of products. The Temu store lists 29 main product categories on the website, with over 250 subcategories.
Meanwhile, Amazon has 33 main product categories and over 25,000 subcategories. Plus, Amazon has been working to become as comprehensive as possible in recent years, expanding into groceries, healthcare services, prescriptions, and streaming video.
Additionally, Amazon has 21 marketplaces across the globe while Temu currently operates in the US and Canada. So, when it comes to being a one-stop shop for most consumer needs, Amazon has a clear edge.
Amazon has long been seen as one of the best options for affordable goods. This is one category where Temu is a worthy rival. Temu, which is said to mean "Team Up, Price Down" strongly relies on its parent company to pass on savings to customers and focuses on year-round discounts instead of one-off deals.
Which marketplace is cheaper will vary depending on the product. But in general, Temu’s prices are lower than most US consumers are used to. For shoppers who care most about price, that makes Temu attractive. For sellers with tight margins who already struggle to compete on price, it may feel more like a liability than a benefit.
Temu offers free returns within 90 days and even covers shipping. Amazon offers 30-day returns but usually requires buyers to cover shipping costs unless there’s a problem with the product.
For consumers, this provides extra peace of mind and convenience. For sellers though, returns are a costly and frustrating part of business. An extended return window could take a toll on overall profits.
As of now, the Temu store offers free shipping on most orders. However, many of Temu’s sellers are based in China, meaning that packages have longer to travel before reaching customers in the US or Canada. That means their free shipping option is much slower than Prime shipping, generally taking 7-15 days (and sometimes longer, according to reviews).
Temu also doesn’t offer fulfillment services, so sellers are responsible for all packaging and shipping. In comparison, Amazon has the FBA (Fulfilled by Amazon) program, which lets sellers offload the work of fulfillment while getting packages to Prime customers, fast.
Sellers on both platforms are expected to respond to customer questions and handle all reasonable customer concerns in a timely and satisfactory manner.
On both marketplaces, sellers can be penalized or banned for failing to meet customer expectations. In this category, both are pretty well aligned: too many complaints, disputes, or negative reviews can hurt your seller reputation and risk your ability to keep doing business on the platform.
One notable difference between the Temu app and Amazon is how they handle drop shipping. Amazon does allow it, as long as you follow their drop shipping policies very carefully. Temu doesn't allow drop shipping and may ban sellers who try it.
Keep reading: Amazon Seller Reputation KPIs: What to Watch
The Temu store may be the shiny new object in the eCommerce industry, and it clearly offers attractive benefits for consumers. Whether it makes sense for sellers though is another story. For now, at least, it’s less established than Amazon.
For many US sellers, it will be harder to compete on price there than on Amazon, especially with the longer return window cutting into profits. And the lack of fulfillment services and dropshipping options won’t be a fit for every business.
Nonetheless, for sellers willing to experiment, venturing onto the platform as early adopters may be worth considering. It probably won’t be replacing Amazon in your business strategy anytime soon though.
If you're an Amazon seller, give eComEngine's tools a try! Increase your feedback and reviews with FeedbackFive, and manage your FBA inventory with ease using RestockPro. Sign up for a free trial of these renowned Amazon seller tools today!
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