Temu to allow local sellers in US and Europe from March 2024

This week, a simple poster has been circulating amongst the cross border ecommerce community in China.

The poster appears to be from Pinduoduo/Temu introducing a new “Half consignment service”.

In Momentum Works Who is Temu report a year ago, we covered Temu’s full consignment model (where manufacturers agree on a price to supply goods to Temu, and the platform does all the rest from marketing, operations, fulfilment to customer service).

Such a model allowed Temu to have almost full control of customer experience, leading to average order value of almost US$40 (even though average item cost is below US$5) and Temu’s month GMV to grow to more than US$2 billion within 15 months of launch.

Competitors such as AliExpress, Lazada, TikTok Shop, Shopee etc. have all been pushing or at least experimenting the full consignment model, with mixed results thus far.

So what is this “half consignment model“? Here is a rough translation of the poster content:

Introduction of Temu half consignment model 
(Local seller to local consumers, self-arranged fulfilment)

1. Brief description of the model 
– Those merchants whose goods are already outside China will process orders and arrange for fulfilment themselves 

2. Phases of implementation
– Launch of the 1st phase: we plan to launch it for the US market on 15 March, and expand to Europe by end March 

3. Roles and responsibilities of merchants:
– Open the shop, and choose “half consignment” option
– Upload product information, fill in the basic information, and maintain inventory
– You can skip steps such as product sample submission, verification and imagery. 

4. Roles and responsibilities of the platform (Temu)
– Help the merchant on pricing, sales and customer service

5. Logistics and fulfilment 
– Merchant will be in charge of: warehouse management, arranging delivery, and reverse logistics (returns etc.)
– The platform can provide: flexible delivery options, including order stacking

6. Advantages
– alleviate merchants’ pressure in marketing and customer service; 
– Use the expertise and resources of the platform to help merchants improve product competitiveness; 
– Increase customer satisfaction through faster delivery. 

From the look of it, the first phase seems to be targeting Chinese sellers and brands which have already been selling on Amazon, and most likely recently, TikTok Shop. They contribute to about half of Amazon’s third party seller GMV and the recent surging growth of TikTok Shop.

With that, deliberately or not, Temu becomes more and more like a competitor to Amazon (in addition to Dollar Tree and Dollar General).

P.S. AI is not good enough

We tried translating the Temu poster above using ChatGPT. Apparently, ChatGPT is not yet good enough to recognise the jargons of cross border ecommerce. In three separate instances it recognised the file respectively as:

1. “TEMU Special Performance Appraisal (Note: For internal reference only)”
2. “TEMU High Level English Proficiency Test (For non-native speakers)”, and
3. “TEMU Professional Ability Improvement (For internal use only)”