‘I’m really desperate now’: Temu sellers revolt against fines and withheld pay

Juliana Liu and CNN staff

Hong Kong (CNN) — Online shopping tract Temu has faced reliable questions earlier astir its business practices. Now it has a caller problem: a backlash from independent merchants based successful China who waste their products connected nan wildly celebrated rival to Amazon.

Hundreds of them staged a objection this week astatine an agency affiliated pinch Temu successful nan confederate Chinese metropolis of Guangzhou. They were protesting what they called “unjust” fines levied by nan institution aliases withheld costs connected equipment already sold, among different complaints.

The protest, which peaked connected Monday and had mostly dispersed by mid-week, highlights nan myriad challenges faced by Temu, owned by Chinese e-commerce elephantine PDD (PDD), arsenic it continues an eager and costly world description . The level entered its latest market, Thailand, past month.

Temu operates arsenic an online store, carrying cut-price merchandise from self-employed sellers. More than 100,000 of them are based successful China, according to Marketplace Pulse, a investigation firm.

According to videos taken by a protester connected Monday and seen by CNN, nan demonstrators gathered to chant slogans demanding their money. Dozens of them managed to get into nan agency and staged a sit-in. The atmosphere, while large and tense, was peaceful.

Two suppliers, who declined to beryllium named for fearfulness of retribution, separately told CNN that they were location to kick astir what they called “disproportionately high” fines charged by Temu for mediocre customer service. This could see precocious deliveries, inaccurate merchandise descriptions aliases sending nan incorrect products. Four sellers interviewed by CNN said nan fines ranged from 1 to 5 times nan wholesale value of nan product.

One of them, who sells family goods, additionally claimed that nan level had besides allegedly stiff astir 2 cardinal yuan ($276,000) successful completed income that she wanted to retreat to salary salaries and different costs of moving her business. The merchant said Temu had informed her that her products had “violated nan rules” but that she didn’t understand what had gone wrong.

“I’m really hopeless now. I deliberation I’m astir to suffer my family and business. I really regret (joining nan platform),” she said successful an interview.

CNN has seen screenshots of nan seller’s Temu relationship showing a full of conscionable nether 2 cardinal yuan was ineligible for withdrawal.

A spokesperson for Temu disagreed pinch nan standard of nan protest, saying “a twelve sellers,” mostly clothing sellers who besides run connected rival Shein, gathered successful Guangzhou.

“They were unhappy pinch really Temu handled after-sales issues related to nan value and compliance of their products, disputing an magnitude worthy respective cardinal yuan,” nan spokesperson said, adding nan sellers had declined to resoluteness nan disputes done nan normal arbitration and ineligible channels stated successful seller agreements.

“The business is stable, and nan institution is actively moving pinch nan merchants to find a solution,” nan personification said.

‘Impossible’ to make money?

With nan tagline “shop for illustration a billionaire,” Temu launched successful nan United States to small fanfare successful September 2022. But it quickly built up a pursuing pinch products for illustration $6.50 swimsuits and 90 cent eyebrow trimmers. A fewer months later, it made headlines erstwhile it took retired an advertisement astatine nan Super Bowl.

Since its launch, nan Temu app has been downloaded much than 600 cardinal times, according to Sensor Tower, a marketplace intelligence firm. It was nan eighth most-downloaded app globally past twelvemonth and remains number 1 successful nan US. Over nan past year, it has expanded aggressively successful Latin America, nan Middle East and Southeast Asia.

Abe Yousef, elder insights expert astatine Sensor Tower, told CNN that successful nan short run, Temu is apt to beryllium much concerned astir trading itself to consumers than nan margins it makes, a strategy that has worked good for Amazon (AMZN) and Wayfair (W).

To entice shoppers, it offers free shipping, free returns wrong 90 days and value adjustments wrong 30 days. Shein offers comparable terms.

Goldman Sachs said successful June that it expects Temu to make $45 cardinal successful gross merchandise value, nan full worth of equipment sold connected its platform, successful 2024, up from $18 cardinal past twelvemonth and astir $300 cardinal successful 2022.

Ivy Yang, a China tech expert and laminitis of consulting patient Wavelet Strategy, said Temu’s robust description has created an “imbalance” of incentives. Consumers want better, cheaper equipment faster, she said, while sellers want to waste much astatine higher margins and Temu wants to spot recurring gross to warrant its monolithic trading investment.

“Discontent has been brewing for a while now and has yet reached a tipping point. The sellers person had it,” she said. “They are angered by nan deficiency of transparency and connection regarding hefty fines … and nan crushing reality that it’s almost intolerable to make a profit trading connected Temu.”

A seller surnamed Peng, who sells women’s clothing connected nan platform, and different surnamed Mi, who sold items for illustration sportfishing ligament and basal oils for a two-week stint earlier efficaciously closing her online shop, told CNN that nan fines made it reliable to move a profit. CNN is not giving their afloat names because of concerns astir retribution by section authorities.

The institution disputed this characterization, saying astir merchants connected nan level acquisition occurrence and use from accrued income and affirmative customer feedback.

“While penalties are basal to support a high-quality marketplace, we are committed to adjacent enforcement and conflict resolution” according to a Temu spokesperson.