Temu have exploded onto the ecommerce scene over the past year and built amazing traction around the world. We’re in awe of the prices on offer (e.g. compared to Amazon) and the low cost of goods is due to how Temu have built their D2C offering for Chinese factories. Now we’re starting to see dropshipping on Temu in the UK
In it’s simplest form, Temu have looked at marketplaces such as Wish and Amazon and taken the best of all to power their marketplace. They’ve taken the gamification and low ASP goods that Wish excel at and combined with with their version of Amazon FBA. But the real disruption has been their D2C offering for manufacturers.
Rather than have the equivalent of FBA warehouses in the West, Temu have built their distribution warehouses in China, effectively right outside the factories. This has enabled them to go to Chinese manufacturers with spare capacity and get them to place goods with Temu that are then sold without any retailer mark up or UK/EU storage costs. When a sale happens, orders are consolidated and shipped direct to the UK consumers, often with Evri (sometimes Royal Mail) who handle the final mile delivery.
Now we are starting to see dropshipping on Temu with products flagged as ‘Local Warehouse’ and ‘Free shipping from this provider’. We’re still seeing hugely competitive pricing – on the product highlighted in the image above from Temu the cost is £124.99 (Left in image above) compared to the exact same product on Amazon on sale for £172.99 (Right in image above).
However, Amazon can have the product with you tomorrow while Temu (bearing in mind it’s a Bank Holiday weekend) are offering delivery within 6-9 days. If you’re not in a hurry the savings are impressive.
We’re not sure exactly how ‘local’ the retailer of this product is – the brand AIRAJ is only sold by third parties on Amazon but dropshipping on Temu is a good indicator that the marketplace is starting to accept third party retailers shipping from their own factilities.
It’s still early days for Temu, but all the signs are there (plus their stated intention) that they are ready to start opening up their marketplace to UK/EU and US retailers.
We’ll be watching to see which brands start to appear on Temu first, and as was the case in the early days of eBay and Amazon we suspect that they’ll be unknown or white label brands to start with – you’re unlikely to see the high street brands selling on Temu any time soon. However, just as the high street brands have eventually adopted eBay and Amazon it’s not unreasonable to predict Temu might become so embedded in the consumers shopping journey that in the future the big names will be forced to adopt this new marketplace.
