The insight: While Temu goes on the offensive to win over Amazon sellers in the US, it and sister ecommerce company Pinduoduo are facing a revolt from merchants in China who say the marketplaces’ relentless push to lower prices and onerous policies are hurting their ability to make a living.
How we got here: Both Temu and Pinduoduo have been able to thrive in challenging markets—including China and the US—due to their abilities to offer shoppers lower prices than can be found elsewhere. But such deals come at the expense of sellers, whose profits have been pushed to the limit by the retailers’ fixation on cost, as well as policies that allow shoppers to demand refunds without returning products and subject merchants to steep fines for minor infractions.
- Some of Temu’s Chinese sellers racked up fines north of 1 million yuan ($141,000) for what the company calls “after-sale complaints,” which are often opaque but can include issues like defective products, per Barrons.