📦 The Big Shift
Temu is changing how it ships goods to the U.S. The company will no longer manage pricing, shipping, and marketing for merchants. Instead, sellers must send bulk shipments to U.S. warehouses. This "half-custody" model aims to reduce tariff impact but could increase prices. Bloomberg reports that priority will be given to merchants who adopt this system.
📈 Tariffs Are the Trigger
Trump’s latest tariffs forced Temu’s hand. The 10% tariff on all Chinese imports, effective Feb. 4, 2025, disrupted Temu’s business model. The removal of the "de minimis" exemption, which let sub-$800 packages enter duty-free, hit eCommerce hard. Though the White House reversed that decision, Temu is adjusting to avoid future risks.
💰 Higher Prices Incoming?
Merchants now shoulder higher shipping costs, losing Temu’s bulk shipping advantage. The shift could mean higher prices for U.S. consumers. Shein, Temu’s main rival, is also adjusting, reportedly lowering its IPO value due to tariff concerns. Analysts warn that these logistics changes could erode Temu’s ultra-low pricing edge.
📉 Consumer Confidence Dips
New tariffs are already hitting consumer sentiment. The University of Michigan’s consumer index fell 5% in February, the second straight month of decline. Joanne Hsu, its director, says buying conditions for durables dropped 12%, partly due to tariff fears. Inflation worries are rising again, adding more uncertainty to online retail.
Will Temu’s new model keep its prices low?
