A large number of products were suddenly removed from the shelves! Did Temu cut off a category?

Since its launch in early September, Temu has attracted a large number of users with its ultra-high traffic and ultra-low prices, and has quickly become the most downloaded app in the United States. While it has attracted much attention from cross-border sellers, it has also caused people to complain: "Temu has brought charity to the United States, and cut the sellers."

Products were suddenly removed from the shelves on a large scale without any notice, sellers could not find anyone to contact when encountering problems and could only wait, and 8 times the shipping fee would be charged for returns... a series of problems were exposed, making sellers feel disappointed.

Temu seller Li Kang talked about his frustration from entering Temu to leaving. He lamented: "Such a large enterprise, the internal management mechanism is too chaotic. If no changes are made, this platform may not last long!"

The product was suddenly removed from the shelves on a large scale

Li Kang is a seller who combines industry and trade. He has his own suitcase factory in Zhejiang. In addition to supplying goods, he also develops retail business online and offline, and has online presence on domestic platforms such as Taobao, Pinduoduo, and JD.com.

In November 2022, Li Kang received an invitation from the investment manager of Pinduoduo's main site to join the Temu platform and enter the cross-border track. At that time, Li Kang believed that Temu was a new channel and would have a certain first-mover advantage, because domestic e-commerce generally follows this rule.

At the end of November, Li Kang officially joined Temu and started selling luggage. He became one of the earliest sellers in the category. As the platform has a certain traffic advantage, within one month of joining, Li Kang had made more than 100 orders on the platform. For products with a relatively high average order value, this performance is not bad.

Just when everything was moving forward, on December 25, Li Kang’s products were suddenly removed from the shelves on a large scale. Like him, many other luggage sellers encountered the same problem.

"I didn't receive any news before the product was taken off the shelves. I just saw that I could no longer sell it in my store. Later, I asked sellers of the same type, and they said everyone's products had been taken off the shelves and they didn't know what was going on. The platform also doesn't have merchant customer service, so no one knew what to do. No one responded to the message I sent in the group, so later everyone simply stopped asking," said Li Kang.

Later, Li Kang contacted the investment manager who invited him to join the platform, and received a shocking news: the suitcase category has been temporarily "cut off" from the platform and will no longer be sold.

Li Kang further said that the general meaning of the investment manager was that because suitcases are large in size and the cost of air transportation is too high, the platform is currently looking for carriers for sea transportation. Merchants should wait for news. The platform will respond when there is clear news. After the clear response, the product may be put back on the shelves, but the specific date is still unknown.

As far as luggage products are concerned, whether in China or abroad, the freight is relatively high, and it is considered as a dump cargo. For example, the actual weight of a box is four or five kilograms, but in actual logistics transportation, the freight is calculated according to the size of the outer packaging, which will result in the actual calculated freight cost being much higher than the net weight of the product.

Li Kang was stunned to learn that the luggage category was temporarily "cut". In his opinion, when the platform operated this category, it should have considered the particularity of this category and handled the transportation problem properly, instead of taking action against the sellers and directly removing the products when problems arise.

Currently, many sellers in the luggage category are facing the problem of being removed from the shelves. They have no other choice but to wait for Temu to handle it internally.

However, when Li Kang and a group of other sellers had their products removed from the shelves, other sellers in the luggage category were still selling normally. This inevitably led to questions: the platform policy did not treat all sellers equally. Didn’t it mean that this category could not be sold temporarily? Could it be that the same sellers had a “gold medal of immunity”?

Later, Li Kang learned that these colleagues who were doing normal sales were not under the same investment manager as him.

When Li Kang's investment manager informed him that his category was adjusted due to shipping cost issues, the products in this category were not completely removed from the shelves. This is puzzling. Does the platform have to distinguish between sellers when removing products from the shelves, and are its internal policies completely opaque?

On January 4, Li Kang made another new discovery: some sellers in the suitcase category whose products had not been removed from the shelves were also affected and their products were removed from the shelves.

"Our own company went to check the sales situation of our peers at the front desk. On January 4, almost the entire category was taken off the shelves. Many of our peers were affected on this day, which seems to confirm what the investment manager said about the category being suspended. However, there are still a small number of products on sale. As a seller, you have no idea what the platform's policies are!" said Li Kang.

Return fees are 8 times higher

It is understood that many luggage sellers such as Li Kang use the form of stocking up and warehousing, that is, first send the goods to Temu's Guangzhou warehouse, and then start selling them on the shelves. Many people have a large amount of stock, and Li Kang himself has goods worth tens of thousands of yuan. Now the sellers' products have been suddenly removed from the shelves, and the goods can only temporarily lie in the platform's warehouse.

Li Kang also thought about defending his rights, but he bluntly said that it was too difficult to defend his rights against businesses and he could not find anywhere to complain.

"I called Pinduoduo's domestic merchant customer service phone number, because when we were running the main site before, we would ask the merchant customer service to solve any problems. This time, I made four calls, all at different times. The customer service replied that they would contact me in two days, but kept pushing it back, and in the end no one contacted me. This time, the customer service said they would talk to me after New Year's Day, and later it was left unresolved. I couldn't find anyone to solve the problem at all." Li Kang said.

Since the product was removed from the shelves on December 25, all Li Kang could do was wait. Now that the product has been removed from the shelves, everything has become empty talk.

Because tens of thousands of goods were lying in Temu's warehouse, Li Kang didn't know whether he would be charged storage fees, so he thought about temporarily pulling the goods back. However, he couldn't find anyone to contact about this matter, and he also received no response from the investment manager he had contacted before.

"My product has been taken off the shelves, so I don't have to do anything or worry about anything. The goods are still in the platform's warehouse. Even if they are not valuable, I can't give them up. Things have to be resolved eventually. Even if I don't do it, you can return my goods, or give me a deadline for when the problem can be solved. The current situation is that when the investment manager contacts you, once the internal policy of the platform changes, this person will be completely unavailable, and he won't even respond to messages or phone calls." Li Kang seemed a little agitated.

When talking about the goods returned to the warehouse, Li Kang said frankly that the platform's return system is complicated and the process is cumbersome. The return fee is relatively high. If the seller does not pack and ship the goods in a standardized manner, or there may be problems during the delivery, the Temu warehouse will return the goods to the supplier at an outrageous price.

Taking the luggage category as an example, the platform sometimes returns goods through express delivery, and sometimes through other channels. If it is an express delivery channel, the return shipping fee for a suitcase that sells for less than 200 yuan is close to 100 yuan. For example, the logistics of domestic channels, from Zhejiang to Guangdong, the logistics express fee by land transportation is about more than 20 yuan. Temu's logistics also uses land transportation, which is about 3-4 times more expensive than the ordinary logistics fees on the market.

If the seller has a third-party logistics partner that they frequently cooperate with, the price for the same distance will be even lower. A fee of more than 20 yuan may only cost a dozen yuan, while the platform exit fee will be about 100 yuan, which is about 8-9 times higher.

Moreover, the platform will directly deduct the fees for returns from the seller's account without notifying the seller. Therefore, as a seller, there is no room for questioning or manipulation.

In order to avoid being charged high return fees, after the products were removed from the shelves, Li Kang wanted to use his own logistics to pull the goods out of Temu's warehouse in Guangzhou. In order to deal with this matter, he contacted the platform's customer service for several consecutive days, asking how to return the goods, but he never received a reply.

"This operation of the platform is not a big problem anymore. I can go to the Consumers Association or the Municipal Supervision Bureau to file a direct complaint, " Li Kang said bluntly.

A loss of tens of thousands of yuan in one month of operation

Now that the products have been removed from the shelves and the goods are still in Temu's warehouse and cannot be pulled back, Li Kang is in a very low mood. Looking back on the more than one month he has been working on Temu, he has invested a total of about 60,000 yuan and made more than 100 orders, but received only more than 2,000 yuan in return . He began to doubt the platform's settlement mechanism.

Although he is a Temu seller, Li Kang said frankly that he does not understand the settlement mechanism of the platform at all. In his opinion, the settlement cycle of the platform is very long and it is difficult for sellers to control it, because the platform will settle with the seller only after the goods are successfully delivered overseas, but the seller does not know when the delivery is completed.

Li Kang said that he has sold more than 100 products, but the actual sales volume in the background does not match the number of customers. It has been almost a month, and up to 80% of the orders have not yet started shipping . So the current settlement amount is only more than 2,000 yuan. Now the products have been taken off the shelves, and the tens of thousands of yuan of goods invested are still in the warehouse, which is a loss.

As for profits, Li Kang said frankly that after more than a month of operation, there was basically no profit for every order. First of all, the platform kept the price very low; secondly, compared with domestic e-commerce, Temu's packaging is relatively cumbersome, and someone needs to keep an eye on it, which requires investment in labor costs; finally, it depends on the nature of the platform. The route taken by the platform is to sell a small number of best-selling products and attract customers with these special products. For example, products that cost less than $1 can be seen everywhere, especially when they are just launched.

With big discounts and generous coupons, Temu has become the "new favorite of bargain hunters." Low prices have become Temu's label, and many of them will become repeat customers. For example, a consumer was attracted by the cheap prices when she first browsed Temu's website and bought 14 items in one go. A few days later, she came to Temu again and spent $223 to buy as many as 34 items.

Consumers who love low prices helped Temu achieve $7 million in sales during the Black Friday shopping season, and also caused its revenue in November 2022 to surge by about three times from the previous month.

In terms of the nature of the platform, Li Kang believes that Temu is actually continuing the old routine of Pinduoduo in China, which is to attract customers with low prices. Even so, he still thinks that there is no big problem with Temu's low-price strategy. Because this point was mentioned during the investment promotion introduction, he also wants to persist slowly and increase the supply. As a self-made factory, it can control costs and make up for the profits later.

According to Li Kang, compared with domestic e-commerce platforms, Temu's profit is 30%-40% less . In addition, since it is aimed at overseas markets, there is no profit at all. In particular, the platform suddenly cancelled logistics subsidies, which directly impacted the profits of sellers.

At the beginning, the platform subsidized all shipping costs, and sellers made concessions on supply prices. Later, the platform suddenly changed its policy and asked sellers to bear half of the shipping costs, which caught many sellers off guard. The key is that after sellers bear half of the shipping costs, their profits are affected, and some people want to raise prices to make up for it, but the platform told sellers that they cannot raise prices .

Li Kang did not dare to raise the price. In his opinion, a new platform should run volume in the early stage, and should not pursue profits excessively. Another key point of no profit is the problem of internal circulation mentioned by many sellers. Li Kang believes that it is mainly reflected in the following two points:

First, the competition among sellers on Temu is indeed fierce, especially in some categories with lower prices that are supported by the platform. Sellers are competing fiercely over supply prices, and the platform selects the merchants with the lowest prices.

However, judging from the small category of suitcases, the degree of competition is not too bad. Firstly, there are not so many domestic merchants engaged in this category. Secondly, it is not easy to sourcing goods for this category. Finally, the proportion of capital is also relatively high.

Second, it depends on the pricing mechanism within the platform . Suitcases are under the category of bags. In this large category, the pricing mechanism of the platform is very strict and requires sellers to give discounts again and again.

It is understood that for the same product, if 2,000 sellers apply to Temu, only 10% of them may pass. These sellers will send samples to Temu for a second round of screening. Temu will select the 20 with the lowest prices among similar products. These 20 must ensure the lowest product prices. Once a new factory moves in and can provide similar products at a lower price, Temu will get rid of the higher-priced supplier.

Sellers who work with Temu must minimize costs. As Temu grows, many factories will compete fiercely, and the few winners who survive will get all the profits of the market. Therefore, Temu requires sellers to ensure the lowest price and quality of their products.

The label of the Temu platform itself is low price, especially when it is just starting out, it must be very aggressive. From the perspective of merchants, no one wants to miss a new sales channel, even if it is not profitable in the early stage, they don’t want to miss the opportunity.

No contract spirit to sellers

In Li Kang's opinion, Temu is backed by Pinduoduo, which has been developing rapidly in China, and its business philosophy must have some merits.

As a seller who integrates industry and trade, Li Kang also agrees with the business philosophy of Huang Zheng, the founder of Pinduoduo, including Pinduoduo's price reduction and focusing on the cost-effectiveness of products. From the seller's perspective, although their profit margins have been greatly compressed, the beneficiaries of the profit concessions have returned to consumers, and ultimately consumers are the core of the business.

Li Kang said that, relatively speaking, a company of Pinduoduo's size should have a complete management mechanism, and there will be relatively standardized handling procedures when problems arise, but in the cross-border channel, its processes and mechanisms are speechless.

First, the investment manager seems to be never there. After the product is removed from the shelves or the channel policy changes, the sellers can never get any information from the investment manager. Moreover, if there is a problem in their business, they can't find anyone to help deal with it. When attracting investment, the investment manager will give the seller some bad checks, and the subsequent docking is completely different from the original verbal promise.

Second, the process mechanism . Sellers can’t find anyone to connect with, and there is no channel for them to report bad experiences. Apart from the investment manager of the platform, there is basically no one else in charge, and there is no one who can check and balance the investment manager.

Third, the policy is not transparent . The internal policies of the platform are not unified, and the forms, methods and time of delisting of similar products are all different. There is basically no advance notice of product delisting and policy adjustments. Sellers are easily tripped up by unexpected problems and have no idea what to do next.

As a Pinduoduo seller, Li Kang has been with the company for many years. He said frankly: "It is hard to imagine that such a large company would be so lazy when doing a new business. From the seller's perspective, it is a bit hard to understand. There is no sense of mutual cooperation between Temu and sellers, and there is no contractual spirit towards sellers.

As a new sales channel, the underlying logic of Temu's entire operation is actually to use the supply chain of domestic small and medium-sized businesses to compete internationally. The real cornerstone it relies on is domestic small and medium-sized businesses, but the platform's cooperative attitude towards small and medium-sized businesses is difficult to understand , and it is also difficult to infer what the platform's real intention is. "

However, Li Kang believes that the operation direction of Temu's senior management is good, but the internal management mechanism of the platform is too chaotic. Previously, when talking about overseas business, Pinduoduo's Chen Lei mentioned: "We will not repeat what others have done. We will start from the needs of consumers and create unique value. Overseas business will not be achieved overnight, and the accumulated experience will be very valuable to the team."

Like Li Kang, thousands of small and medium-sized sellers have joined Temu with the original intention of not wanting to miss out on new sales channels and seizing more growth opportunities . They temporarily sacrifice their own profits and bet on a future with the platform.

As for the future of the platform, Li Kang said that he could not judge the long-term operation, but the key now is that the platform needs to solve the problem. For example, the luggage category will not be sold for the time being due to shipping costs, and sellers' products will be removed from the shelves in large quantities.

When the freight costs are high, the platform should control the freight costs at the overseas end. For example, in addition to air freight channels, it can find some sea freight channels with higher efficiency and lower prices than air freight, instead of continuing to look for suppliers to lower prices. Instead of haggling with suppliers on prices, it is better to find a sea freight carrier with reasonable prices to solve the fundamental problem.

"From the way the platform handles things, I think a company that can maintain high growth or can truly go long-term should not be like this," said Li Kang.

The seller dreams of betting on the future with the platform, but is left behind halfway!

Now that Li Kang's products have been taken off the shelves and the goods are piled up in the warehouse, he decided to take back the goods and withdraw from the Temu platform. However, he received no response and could not find anyone to contact him. He said frankly that he had no idea about the future of the Temu platform.

(Li Kang is a pseudonym in this article)

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