Temu has started letting sellers store inventory in local warehouses instead of shipping from China. But there are no US sellers yet. Instead, there are Chinese sellers with inventory in the US. Since Temu launched in the U.S. in September 2022, it has been using a consignment model that requires sellers to agree to wholesale prices and ship bulk commodities to Temu's warehouses. Temu then handles the shelving, marketing, distribution, customer service and pricing of the goods, and pays the seller once someone has ordered their product. This model gave Temu control over quality, selection and pricing, but prevented it from joining sellers in other countries.
According to Marketplace Pulse, Temu currently has 1,000 inventory sellers plus 150,000 consignment sellers in the U.S. Some sellers on Amazon use FBA for warehousing, while others do their own delivery. On Amazon, some sellers use FBA for warehousing, while others do their own distribution, and Temu now has two types of sellers. The new second type, those using their own warehouses or third-party logistics in the U.S., makes Temu a true marketplace comparable to Amazon or eBay. It will also allow Temu to add sellers from the US and Europe (the same feature will be available in Europe soon).
All 1,000 sellers on the Tmall marketplace are in China. Many of the companies already sell their products on Amazon and therefore have inventory in the United States. Some companies have higher prices than Amazon, while others have lower prices than Amazon. However, none of the sites ship as fast as Amazon. That's expected to change because fast delivery is an option Temu doesn't currently have, and that's why Temu is moving away from the consignment model. The consignment model requires inventory to flow through its warehouses in China. Sellers with local warehouses are the target for this goal. Expanding the market has less to do with the geographic location of the seller and more to do with changing the way each package was shipped from China in the past.
Today, 100% of the items sold on Tmall come directly from China - a feat that may be unprofitable, but enables supply chain consolidation through the consignment model. The marketplace allows Temu to reduce its reliance on a single supply source to avoid regulatory risk, offer faster shipping, and expand selection and price points. It will first try to bring all Amazon sellers online, many of which are located in China and almost all of which have inventory in the U.S. It will also target well-known brands. It will also target well-known brands; although its competitor Shein has been adding brands since last July, it has had little success.
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