Text | Financial Storytelling, Author | Wang Shuran, Editor | Wan Tiannan
"Can small sellers really make money in Temu?"
"Newbies do Temu for three months, sunrise 5000 orders, monthly growth rate of 30%~40%."
"Temu opened the store for 8 days, launched 7 products, and only sold one order, I was a little panicked."
Pinduoduo's cross-border e-commerce platform Temu has soared all the way and has also attracted many gold diggers.
After landing in the North American market in September last year, on March 13 this year, Termu opened its Australian and New Zealand sites, and will continue to deploy the European market non-stop.
Temu's dominance in the app market has also become the norm.
Temu has become one of the most downloaded free apps on Apple's App Store; As of February 23, Temu has dominated the App+Store shopping list and Google+Play shopping list for 69 days and 114 days respectively; In November-December last year, Temu had 41 million unique visitors, surpassing SHEIN, which has been working for more than 10 years, and leaving Kroger, a veteran American retailer, behind.
The GMV growth rate is also staggering, with YipitData data showing that Temu's GMV grew from $3 million in September last year to $192 million in January this year – a 64-fold increase in just five months.
Undoubtedly, this is a huge outlet for cross-border e-commerce sellers. Under the fury, did the Temu seller eat meat?
"Financial Story Club" interviewed several Termu sellers and cross-border e-commerce practitioners, and found that this is an extremely divided world: some people sell millions of orders a month, with a net profit of 50%, feel that Temu is worry-free and moisturized, and some people lose millions and quit sadly, complaining about the ruthlessness of the platform; There are also many people who try the cow knife smallly, selling hundreds to thousands of orders a month, and the profit of a single order is less than one dollar, and they are satisfied with a small wealth and security.
Through the different experiences of these individuals, we can glimpse the rules of Temu's game, which is a bit "overbearing", but it is an important force to support Temu's madness, and for sellers, under the rules, only the fittest can survive.
Low price rule: "ruthless" but "effective"
Before Temu, it was often Shein who was used as a benchmark for the sea, and now, crossing Shein is also one of Temu's phased goals
According to Bloomberg, last month Temu set an astonishing goal for its North American market — at least one day GMV by September 1 this year, surpassing the 14-year-old SHEIN.
At present, Temu's GMV is less than one-tenth of SHEIN's, according to 36Kr, in the first half of 2022, SHEIN's GMV exceeded $16 billion, while YipitData data shows that Temu's GMV in January this year was $192 million - a world of difference.
However, Temu has already made SHEIN feel threatened. The decline in SHEIN's valuation is attributed to the threat posed by Temu. In U.S. District Court, SHEIN launched a sniper war against Temu through a lawsuit.
The driving force behind Temu's fury lies in finding a precise cut in the cost performance. At present, the cost-effective e-commerce track in the United States lacks a leader, and Amazon, which accounts for 41% of the market share, has obvious competitive advantages in the high-end track, while Termu seizes the opportunity of the cost-effective track with the distinctive characteristics of "low price".
Zhejiang Securities made a comparison in its "Pinduoduo: Temu is expected to seize the opportunity of the US e-commerce cost-effective track" released in January this year, the price of clothing and shoes on Temu is more than 30% lower than SHEIN, the price of home department stores is more than 40% lower than Amazon, and some prices are even more than doubled; In terms of average customer price, Temu is about $25 and SHEIN is about $75.
Positioning determines the rules of the game - "low price", although "ruthless" but effective.
At present, Termu adopts a strong control mechanism similar to the self-operated model, the merchant is only Temu's supplier, there is no front-end pricing power of the product, according to some sellers, in order to position at a low price, Termu requires that the supply price is at least 10%-20% cheaper than the same model of 1688.
Not only that, Termu also adopts a price horse racing mechanism, who has the lowest price for the same product, and many sellers have experienced the pain of being underpriced.
Xiao Tao, a post-90s seller who began to try Temu in February this year, revealed, "Temu buyers really understand the market and can keep the price very low, about 10% of my products will be pressed below the purchase price, can only refuse not to sell, the remaining profits are also very thin, no more than one dollar or so." ”
Post-85 seller corn has a similar experience. She purchased a pet small toothbrush at 1688 yuan, the average freight sent to the Termu warehouse was two or three cents per piece, the platform undertook half of it, the supply price of corn was 3.5 yuan for the first time, the buyer directly suggested 1.9 yuan, a single to earn a few cents, corn naturally refused, after bargaining three times, the final 2.4 yuan passed, a single only earned more than one yuan.
Even if the initial price verification is passed, it is not safe, and if a new seller offers a lower product in the future, they still face the dilemma of reducing the price or being squeezed out.
In addition, Temu uses the "mobile sales mechanism" to further protect the low-price strategy.
According to Blue Ocean Yiguan report, in December last year, Temu Xiaoer asked merchants to reduce the price of slow-selling products with less than 30 pieces and sales of less than 90 US dollars in 30 days, or reduce the price, or remove the link, and withdraw from the supply;
Not only the price, but also the strict quality control, such as "the buyer complains about the product problem, the seller is fined 5 times the supply price", "the product is found to have safety risks, a fine of 10,000 yuan" and other policies.
Screenshot of Temu
According to Li Xu, a cross-border e-commerce practitioner, not only sellers, but also logistics service providers are facing a similar situation, such as Temu will stipulate that if the delivery rate within a few days does not meet the specified standard, not only the fine will be imposed, but the payment collection period will also be extended.
This series of policies supports the attractiveness of products to consumers, and also avoids excessive costs borne by the platform itself, but to a certain extent, it also makes the pressure on sellers and service providers increase sharply.
Even so, it can't stop the eager willingness of sellers to enter the market.
Although the number of Temu sellers has not been announced, it can be seen from the fact that 10 days ago, Termu had to suspend the stocking of goods due to the increase in the number of sellers' supply orders and the explosion of the warehouse in Guangzhou, which shows that the sellers are enthusiastic.
Temu Stop Out Notice, provided by the interviewee
On the one hand, they are looking at the traffic potential of Temu, on the other hand, compared with Amazon and other platforms, the Termu model is relatively worry-free, merchants are only responsible for supplying to designated warehouses, and subsequent design pictures, operations, customer service, etc. are all responsible for Temu, and the entry threshold is low.
Source: Zheshang Securities
A seller of a wall sticker factory said, "I just focus on developing products and ensuring supply, which is very worry-free and suitable for me." ”
Xiao Tao also feels the same, "The cost of this model is controllable, cross-border whites like me, you can sell some small things for a few dollars, even if you lose, you can't lose much, and the platform is currently free of commission, free storage fees, advance freight, and the initial investment is about 5,000 yuan to try." ”
Li Xu believes that Temu's idea is very clear, that is, to select the most cost-effective from a bunch of Chinese white cards, if the seller wants to get a piece of the pie, it is necessary to cooperate with this game, "survival of the fittest".
Supply chain players are in the water
In any ecology, differentiation is always present.
For some merchants, it is not easy to get a cup of Temu.
Maize started working as Temu half a month ago, she has her job, Temu is just a side hustle. Initially, her expectation was to earn 1,000 yuan a month.
Now half a month has passed, and there is no harvest.
She submitted more than 60 products, only about 30 passed the buyer's review, only 3 successfully put on the shelves, and the rest were stuck in different links such as quality inspection and price verification.
Among the 3 products on the shelf, 2 are about to run out of stock due to the conservative initial stocking, just when the platform bursts the warehouse, unable to replenish the stock, only relying on a single seedling support, an average of five or six orders per day, each profit is about one yuan.
Jiang Jiang, who focuses on children's clothing, is not optimistic, listing 10 products, and only issuing orders on the fourth day, with an average of only 3 orders per day, and a single profit of about 5 yuan.
On the Internet, many merchants post their Temu background orders, single-digit, double-digit large people, if the average daily thousands of orders, can be called a god by small and medium-sized sellers.
But on another face, there are also many businesses that are like fish.
There are many sellers around Li Xu who have made money, "They are basically factory sellers in vertical categories, and some small categories you can't even think of, such as wall stickers, ashtrays, auto parts, etc., because it is its own factory, which can control quality and production, and some monthly sales are even as high as one or two million yuan." ”
What's even more enviable is that in Temu's "price reduction" system, their net profit margin still remains high, even higher than platforms such as Amazon.
Last year, Li Xu recommended a wall sticker factory owner to join Temu, and his net profit margin was as high as 50%. The boss is also laying out Amazon, eBay, Wish and other platforms, because it involves various costs such as art, customer service, logistics, etc., the net profit margin is only more than ten percent, "much worse than Temu."
"Termu took over the piece that the merchants in the industrial belt are least good at, and just made a good product plate," Li Xu added.
In the end, the rules of Temu's game determine that in order to make money, the advantage of the supply chain is the premise.
At present, there are roughly several types of sellers on Temu: factories, individual sellers without supply, foreign traders, among which, factories with source supply advantages are considered to be the most suitable for Temu, while other types of sellers' goods, often through several sellers, the cost advantage is relatively weak.
"At least those foreign trade merchants around me who take the road of pan-product shop are almost without exception loss-making, and some lose millions and then stop and withdraw," Li Xu said.
Factories distributed in various industrial belts are also the targets of Temu.
Since March this year, the special team of Pinduoduo's overseas support program has gone deep into 100 high-quality industrial belts in Guangdong, Fujian, Zhejiang, Jiangsu, Shandong, Hebei, Anhui, Shaanxi, Sichuan, Hubei and other domestic industries to recruit factory-type sellers to enrich Temu's seller lineup.
When the plan was launched in September last year, it announced that it would "help Chinese manufacturing enterprises achieve transformation and upgrading in the process of going overseas from the aspects of product structure, design and development, manufacturing, and brand building", and would invest tens of billions of resource packages to build 100 overseas brands in the first phase, support 10,000 manufacturing enterprises to directly connect to overseas markets, and help China's manufacturing industry upgrade overseas.
Seeing more cases around him, Li Xu believes that you can't blindly enter Temu, you must first assess whether there are advantages in supply chain efficiency before doing it, and whether you will touch the red line of the rules, "No diamond diamonds, don't take porcelain work." ”
He has seen many sellers enthusiastic and eager to enter the game, but do not carefully study the rules, and only think of solving the problem after touching the red line, "Although the platform system is 'overbearing', the rules of the game are so, sellers still have to find problems from themselves in the end, after all, survival of the fittest." ”
Small sellers take advantage of their luck
Temu's doors are open to everyone, and individual small sellers who are not in the supply are important participants, and on social media, these small sellers are very enthusiastic to communicate, complain and learn.
But do individual sellers without supply chain advantages have a chance of winning?
Little Peach and Corn have the same view on this: other people's views can only be used as a reference, only a try, others can make money, they may not be able to, on the contrary, others can't do it, they may not necessarily not earn.
Corn has successively joined several Temu non-source merchant exchange groups, according to group chats, she roughly estimates that there are many small sellers who earn thousands, or even tens of thousands of yuan, a month.
Among them, someone put 148 products on the shelf, with an average of 1,000 orders per day, "even if a single profit is only one yuan, small profits and quick sales, you can earn 1,000 yuan a day." ”
On Weibo, some cross-border e-commerce practitioners believe that for small sellers without supply chain advantages, they can find blue ocean categories with small competition to find premium space, "as long as they win a blockbuster, they have the opportunity to earn more than part-time jobs."
Xiaotao's personal experience "responds" to this, she has no cross-border e-commerce experience, but among the more than 10 products currently on sale, there are already two or three small explosive models, an average of about 200 orders per day, of which small explosive models contribute about half of the order volume, are kitchen supplies, small household appliances and other small items purchased from 1688 or Yiwu.
At present, although the payment has not been returned, Xiao Tao generally estimates that a single profit is less than one piece, and the monthly income can be about five or six thousand yuan.
However, she regarded the explosion as luck, "I don't have any selection methodology, that is, go to Amazon to look at the goods in bulk, see which one to choose, at most pay attention to the selection of products whose quality is not easy to break, so that it is not easy to have after-sales." ”
However, Peach reminded that you can try it as a side hustle in the early stage, and it is not recommended to do it full-time.
Although corn is not satisfied with the current average of five or six orders per day, she still retains confidence. From her interactions with other sellers, she observed, "Most people continue to work hard while cursing, which shows that there is still something to do." ”
In the past half a month, corn has also figured out some doorways.
At the beginning, her selection of products was very general, not focusing on categories, what sold well on Amazon, such as two or three dollars of special-shaped balloons, pet toothbrushes, pet massage brushes, etc.
Corn incoming pet massage brush
But this category is too niche, and the platform is not equipped with a corresponding buyer communication group, resulting in her problems and unable to find channel communication. In addition, this homogeneous gadget will fall into the price involution, and as more and more entrants become entrants, the subsequent involution will only become heavier.
On the one hand, she observed that foreign countries have demand for holiday streamers and gift box bags, on the other hand, she has her own design ability, and can independently design patterns and materials, and then find factories to cooperate in production to create differentiated products, so as to avoid price involution and generate premiums.
Her expectations are not high, "Keeping thirty or forty products on the shelves and making about 100 orders a day is already good for a small seller." ”
(The interviewees in this article are pseudonyms)
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