Why is Temu so cheap compared to Aussie retailers
Temu is capturing global attention, particularly in the e-commerce sector. It offers affordable online shopping for those seeking a budget-friendly experience. It offers a wide range of products from clothing to homewares and gadgets, and the costs of the products frequently seem to be mind-blowing. But every Aussie is intrigued to know why is Temu so cheap than other retailers. Let’s see what Temu is, why Temu offers products that seem too good to be true, and why Australians are drawn to it.
What is Temu?
Temu is an online shopping marketplace known for connecting buyers directly to sellers and manufacturers. It offers a wide range of products from fashion and beauty items to home décor. It works through a website or mobile app. It is well-known for low prices and frequent promotions. Nevertheless, some of the products were sampled for safety purposes and supply chain issues.
The basic aspect of Temu’s format is its capacity to sell products at lower prices. Temu frequently offers prices below what appears to be a standard retail price, along with various promotional features. Temu’s e-commerce format connects the online buyer (often located in other parts of the world) directly to the manufacturer or seller, and this allows for lower pricing.
Why is Temu so cheap?
Temu is so cheap for various reasons, including its direct sourcing from manufacturers, aggressive advertising, low workforce costs, international shipping assistance, little profit margin with high volume sales. Below is a more detailed breakdown of why Temu is so cheap:
1. Direct-from-manufacturer business model
One of the reasons for the low prices of Temu is that the products frequently come directly from manufacturers, Wholesalers, distributors, and occasionally multiple layers of suppliers are included in the conventional retail chain. Obviously, everyone in this chain wants to make a profit and contributes little to the tag price. When the products reach the customer, it has been amplified multiple times. However, Temu eliminates many of these middlemen by directly operating with the manufacturers.
2. Huge economies of scale
‘Economies of scale’ might sound like corporate jargon, but the idea itself is pretty straightforward. Temu works on a massive scale. When a Temu seller does a brisk trade, they can produce more at once, minimising the cost per unit. This idea also applies equally to the other aspects of Temu’s business, such as logistics, shipping, and marketing.
3. Extreme introductory prices
The welcome deals are one of Temu’s favoured tactics. When the customer signs up for Temu or just visits their website for the first time, they likely observe some fantastic deals, like some bargain prices, buy-one-get-one-free deals, free presents just for signing up, and many more.
4. Lower labour costs
One big factor behind Temu’s low prices is the cheaper labour costs tied to making many of its products, which helps keep shopping costs down for customers. Most of the products on the Temu are manufactured in China, where labour costs are considerably lower as compared to the United States or Europe.
5. Money-saving logistics and digitalised processes
Temu saves on overheads like shopfront rent, staff wages, and local storage by running entirely online, without the costs of a bricks-and-mortar store. Its costs are significantly down because of its digital-first platform and cheap shipping methods, particularly through air from China.
6. De minimis customs power
Temu manipulate the ‘de minimis’ rule in the markets of the U.S., which exempts customer duties under a certain value. While not directly related to Australia, this represents the broader logistical benefits.
7. Cheap delivery rates
Temu offers free economy shipping on most orders, frequently with a minimum order threshold that depends on the region, but you may need to pay delivery fees for orders from a local US-based warehouse. It is suggested to check the shipping details on the website of Temu, as free shipping conditions are uncertain.
8. Shopping games and social incentives
Temu drives cost-effective customer conversion by using whimsical qualities like referral bonuses, social sharing, and gamification. Customers gain vouchers and even free items, completely driven by digital activity.
Why are Australians fascinated by Temu?
Australians are fascinated by Temu in today’s financial climate because of the combination of assertive marketing, extremely low prices for customers facing the cost-of-living pressure, and a gamified shopping experience. The platform is the best choice for those who are looking for budget-friendly shopping items substitute for the local store. These are the main elements behind Temu’s popularity in Australia:
- Bargain-basement: Customers experiencing rising costs are particularly inclined toward Temu due to its extremely cheap products.
- Gamified shopping: Temu makes shopping addictive/entertaining by gamifying the shopping experience, including loyalty programs, time-limited sales, and the collaborative shake and win games.
- Aggressive marketing: Temu uses aggressive marketing to reach various audiences with deep and penetrative advertising, including ads on social media platforms.
- Vast product assortment: The platform offers a diverse assortment of products, including fashion, electronics, home goods, and cosmetics.
Apart from these, Temu also offers many other advantages to Australians.
Things to consider before buying anything
While Temu provides value, Australians should wisely buy things. Keep these points in mind before you buy anything:
- Review seller feedback: Must check the review of seller before buying anything.
- Prepare for prolonged delivery time: Most products are sent from overseas, so be prepared for the delayed arrival of your order.
- Check the returns: Keep in mind that Temu’s return rules can be a bit unforeseen compared to what you’d usually expect from local shops.
- Trade off cost and quality: Sometimes, spending an extra few dollars locally guarantees some degree of consistency.
Conclusion
In conclusion, Temu is cheap because it appeals to consumer demands for low-cost goods, based on a mix of direct sourcing from manufacturers, economies of scale, labour costs based on country of origin, and freight rates to Australia. This means that for Australians they have a wider range of selections, usually at much cheaper prices. Shopping on a site where price is the primary driver of purchase is fun for Australians, just understand product quality and expectations around shipping.