Temu plans to offer solely products from local vendors to American customers for the foreseeable future, eschewing the cheap Chinese import-based business strategy that propelled it to success in the US.
The online retail phenomenon PDD Holdings Inc., which, like Shein Group Ltd., made its debut a few years ago with low-cost goods ranging from kitchen towels to dresses, plans to transition to what it refers to as a “local fulfilment” model.
According to Temu’s emailed statement, the company is aggressively seeking US merchants and will exclusively sell its locally produced goods. The Chinese-owned business stated that it plans to maintain costs for Americans at their current level, which is anticipated to enable it to avoid tariffs.
Temu’s move coincides with Shein and Alibaba Group Holding Ltd. stores facing increased import duties and the elimination of the so-called de minimis tariff exemption for tiny packages.
Prior to the change, prices in the US skyrocketed for e-commerce behemoths like Temu and Shein. President Donald Trump has stated that he expects China to “eat” the tariffs, which he implemented in an attempt to pressure Beijing into negotiating a trade agreement that would reduce the bilateral trade deficit.
Back in February, Temu requested that Chinese firms transfer their products in large quantities to American warehouses under what it refers to as a “half-custody” arrangement, in which it only oversees the online marketplace. However, if taxes on Chinese imports stay high at 145 per cent, prices may eventually rise as factories restock supplies as US inventory gradually runs out.
The prices of the products on the shelves have not yet been increased by major US retailers. However, they are in a difficult situation because Chinese suppliers are refusing to pay tariffs, and it is unclear how long the additional fees will be in effect. The immediate impact on consumers may be lessened if political pressure is applied to companies like Walmart Inc. and Target Corp. to absorb some, if not all, of the cost hikes.
