Temu merchants seem to think that, when it comes to financial penalties, it’s a fine line between business and bully.
Chinese sellers offering goods at ultra-low prices on Temu are taking a stand against the company’s practices around issuing fines, the South China Morning Post (SCMP) reported.
According to the Bloomberg, hundreds of protestors gathered at Pinduoduo’s headquarters in Guangzhou, China, to protest on Monday afternoon. Videos show the protestors not only stood outside the office, but also entered it, staging a sit-in of sorts in the hallways. Yi Magazine, a Chinese publication, reported that 80 protesters went into the office, leaving when police interjected.
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Bloomberg reported that the reason behind protestors’ actions came from increasingly harsh fines imposed on sellers by Temu. According to Coinlive, sellers have begun to complain that Temu takes a share of their profits over quality issues, inability to meet shipping deadlines and more. But, for many, hefty fines seem to be making their stints on the marketplace less and less valuable.
In a statement, a Temu spokesperson told Sourcing Journal via email that a protest occurred “recently.” The company did not directly clarify whether its statement pertained to the July 29 protest or to others that have gone on over the past month.
“Recently, a group of merchants gathered at the office of a Temu logistics affiliate in Guangzhou. This group included about a dozen sellers, most of whom are clothing sellers who also operate on Shein. They were unhappy with how Temu handled after-sales issues related to the quality and compliance of their products, disputing an amount worth several million yuan,” the spokesperson said. “These merchants have declined to resolve the disputes through the normal arbitration and legal channels stated in the seller agreements. The situation is stable, and the company is actively working with the merchants to find a solution.”
The protests come on the back of plans for major expansion. Earlier this year, Temu inked deals with logistics partners on U.S.-headquartered warehouses, opening a call for U.S. sellers to join the platform. The logistics partners have since grown in number, according to industry experts. But the majority of the goods occupying shelves in partners’ warehouses still belong to Chinese companies, sometimes registered as U.S. entities, sometimes not.
The new business model, at least in the U.S., requires more effort on the part of Chinese merchants. That’s because those who previously relied on Temu to ship goods overseas for them now face a new beast: getting their goods to those warehouses in the U.S. to stay relevant.
The Financial Times reported that a seller said the U.S. fulfillment model carries heavy incentives for those making it work. Benefits purportedly include higher search rankings on its platform and subsidies for clothing sellers.
As the company continues to expand, the Financial Times reported, it has worked to onboard an increasing number of sellers, which current sellers believe has only served to drive down demand for their goods and pit sellers against one another for competitive low prices. That, in turn, means that getting in front of consumers quickly could be boon for sellers trying to turn a consistent profit.
Temu’s expansion may be both a ploy to entice consumers obsessed with both low prices and fast shipping to continue buying. But it may also be an indication that the company, which relies heavily on the U.S.’s de minimis provision—often referred to as a loophole—wants to get ahead of any potential policy changes, particularly in the U.S. market.
Nonetheless, its protest-driven woes just add to the various entities, organizations and people that have expressed concerns over Temu’s business model, ethics and privacy considerations. The company has faced heavy scrutiny by regulators and activist groups in both the U.S. and the EU and has been the subject of a variety of lawsuits, from governments, consumers and competitors alike.
