Direct-to-consumer brands looking for customers have an opportunity at Temu, China’s fast-growing discount marketplace.

In February 2024, Temu launched a US seller program, effectively opening the platform to American companies. The program gives U.S. brands access to an estimated 185 million domestic and international shoppers each month and counting.

In 2023, Temu became Apple’s most downloaded free application and dominated the iOS and Android app stores in 2024.

US Seller Program

Temu, like its sister site Pinduoduo, mainly works on the commission model.

Chinese and East Asian manufacturers fill Temu’s warehouses with goods and create product lists for the marketplace. When sold, the item is shipped directly from the Temu facility in a familiar, bright orange bag. Clever air freight strategies are used to keep costs low.

The company recently changed its tactics and gave American retailers the opportunity to offer products and optional Use Temu’s warehousing and fulfillment system.

The program is free for small sellers, but for businesses a subscription of 2% to 5% of the sales price is required. At the time of writing, the marketplace also charged a payment processing fee of 2.9% + $0.30 per transaction and sellers paid all shipping costs. Overall, Temu’s fees are similar to other marketplaces.

DTC opportunity

Temu’s low prices may not suit traditional retailers, but DTC brands could have a chance.

A DTC product is unique. There may be similar products in Temu, but none are identical. Additionally, US-made products may have a competitive advantage due to perceived value and quality.

Overall, I see five potential benefits for DTC brands selling on Temu.

Brand building

DTC brands on Temu can introduce the company to buyers and build relationships.

The launch occurs when a Temu shopper finds the brand’s products. The relationship begins with order fulfillment. DTC sellers could include a physical product catalog, a coupon for a free item, or a note describing the brand’s story in the packaging.

For items that require warranty registration, there is an option to collect the buyer’s email address and phone number.

revenue

Every established sales channel is a revenue opportunity. Temu has a huge user base and these buyers, however discount-oriented, present an opportunity.

Temu’s media agency told me that the company does not share estimated or average vendor revenue. DTC shops should test, optimize and iterate the platform.

marketing

DTC brands that offer products on Temu can participate in platform-wide promotions and flash sales, driving traffic to offers and increasing engagement

Chinese expansion

DTC brands can flip the script and offer products to Chinese buyers through inventory stored in Hong Kong or other Temu locations.

Product development

The lack of a Temu listing fee makes it easier to test new items. DTC brands can create small runs of prototype products, list them on Temu, and learn what appeals to buyers.

Marketplaces in general

Selling on Temu should be part of an overall marketplace strategy for DTC brands.

A brand that sells on one marketplace may consider others. Therefore, listing on Amazon, Temu, Walmart, Esty and eBay could be part of a comprehensive marketplace approach, such as:

• Set market-specific goals. Define sales goals, customer acquisition rates, or brand awareness metrics for each marketplace.

• Set up marketplace audiences. Use analytics to learn customer demographics and purchasing behavior per marketplace. A Temu shopper will likely be different than one at Amazon or Walmart.

• Align products with the market. A brand can have multiple versions of similar items. Maybe the highest quality goods are on Amazon and the entry-level items are on Temu. Returns and second goods could be sold on eBay.

• Optimize product listings. Common optimization tactics across marketplaces include high-quality images, keyword-rich descriptions, and competitive pricing. However, be aware of platform-specific practices, conventions and rules.