How to Beat Temu in YOUR Own Game

When an online marketplace sets its policies, it's like walking a tightrope.

On one side, customers want better products, cheaper prices, and faster delivery. On the other side, sellers like you are focused on making more sales and increasing profits.

Finding a balance between these two is tricky.

The truth is, no policy will make both sides perfectly happy—there's always a bit of give and take.

But this compromise doesn’t just affect buyers and sellers; the platform also has to make its own sacrifices to keep things running smoothly.

Ideally, everyone—buyers, sellers, and the platform—would give up a little to create a system that works for everyone.

But with Temu, it’s a whole different story.

Their business model is so off-balance that sellers end up making most of the sacrifices, while buyers hardly give up anything. It’s like Amazon’s "buyer first" strategy, but taken to the extreme.

You’re probably thinking Temu’s low prices come from pushing sellers to cut theirs, right? But that’s not entirely true.

The real reason? It’s actually pretty simple. Temu skips the middleman by going directly to manufacturers in China, cutting out retail markups and saving a ton of money.

They also use their huge buying power to score unbeatable bulk deals, and most of their products are generic and unbranded, which keeps prices down even more.

Plus, Temu takes full advantage of the De Minimis Rule, allowing them to ship items under $800 into the U.S. without paying taxes or duties, as long as they're for personal use.

But if you’ve been selling online for a while, you know it takes more than that to achieve rock-bottom prices. Temu doesn’t openly admit it, but they use a loss leader strategy—selling products below cost to attract buyers. That’s how they manage such low prices.

Basically, Temu is covering a lot of the shipping and operational costs, often throwing in massive discounts and promotions to keep prices low.

To put it in perspective, Temu is losing an average of $30 per order in the US. According to China Merchant Securities, this adds up to losses of $588 million to $954 million per year.

But Temu’s aggressive pricing comes with a price of its own. Customers often complain about poor product quality, inaccurate listings, and slow shipping times because sellers have to cut corners, including opting for the cheapest shipping options.

As a result, Temu's reputation has taken a hit on review sites like Trustpilot and Sitejabber.

In response, Temu has introduced steep fines for these issues—up to five times the price of the product—and has even frozen payments to multiple sellers. Essentially, it has passed on the burden to sellers.

This has led to protests from suppliers, who argue that the fines are unfair and that Temu is withholding payments for goods already sold. Many sellers stay quiet about these issues, fearing retaliation, but the problems are real.

Do I think Temu will keep using the loss leader strategy forever? I doubt it. Like any business, they can only operate at a loss for so long. Eventually, once they’ve reached enough customers and can compete with other big platforms, they’ll need to raise prices.

However, there’s talk that Temu is determined to keep their prices dirt-cheap, which clearly isn’t sustainable. It’s safe to say their business model won’t work for sellers in the long run, and if they don’t change their approach, it’s likely to collapse.

Temu could learn a thing or two from Etsy. Etsy only saw significant growth when it shifted focus from sellers to buyers. Although Etsy’s change was the opposite of what Temu needs, it still worked for them.

But since Temu isn’t making those kinds of adjustments and keeps squeezing sellers, it seems headed for failure.

Still, Temu isn’t going anywhere anytime soon. Despite all the indications of being unsustainable, it continues to thrive, thanks to the consumers’ declining buying power.

With high credit card debt and a shaky economy, many Americans are choosing the cheapest products available, and Temu delivers.

For US online sellers, Temu’s rise can feel like a major headache—unless you take action.

So, here’s the big question: HOW DO YOU FIGHT BACK?

Before I answer that, let’s be clear: you can’t beat Chinese sellers at their own game. It’s just not possible.

Trying to out-price them is like bringing a toothpick to a sword fight. With their low manufacturing costs, huge production runs, and super cheap shipping, Chinese sellers can offer prices that US sellers can’t match.

US sellers have higher wages, shipping costs, and overhead, making it impossible to compete on price alone.

So, what’s the smart move? Don’t focus on price—lean into your strengths. Here are four ways you can thrive even with Temu in the mix:

1. Flex What Makes Your Product Special

Chinese sellers excel at pumping out generic products quickly and cheaply, but they can’t do everything. To stand out, you need to identify what makes your product special—this is your unique selling point (USP).

Ask yourself questions like “Are you the first to offer this product?” “Is it the best in your niche?” or “Does it solve a problem others can’t?”

Take Allbirds for example. They didn’t compete on price—they focused on their USP: eco-friendly, super-comfy shoes made from natural materials. People loved the uniqueness and paid more for it.

Or think of Hydro Flask. Plenty of water bottles exist, but they focused on quality, trendy design, and long-lasting temperature control. Consumers paid extra for that combination.

The key? Find what makes your product stand out, whether it's quality, customization, or eco-friendly materials. Niche down and be the best at what you do. Once you do, customers will gladly pay for that uniqueness instead of just looking for the cheapest option.

2. Offer Customized, Hard-to-Replicate Products

While Temu focuses on mass-produced, generic items, customization is where you can stand out. Offering personalized or handmade products lets you shine in ways Temu can't.

Think about custom jewelry, made-to-order furniture, or unique art pieces. These items showcase your craftsmanship and attention to detail—things mass production can't match. Plus, customers are willing to pay more for something unique and personal.

For example, Etsy sellers are thriving by offering one-of-a-kind items, even with competition from big platforms like Temu. Custom wedding invitations are a great example: while someone could buy cheap invites from Temu, many prefer something special and personalized for their big day.

When you offer custom products, you're not just selling an item—you're giving customers an experience that makes them feel valued, which Temu can't offer.

3. Target the “I Deserve This” Buyers

While Temu grabs the bargain hunters, there’s a big group of shoppers willing to pay more for quality and experience. Not everyone wants the cheapest option, especially if it means giving up on durability or style.

Think of Apple—people pay more because of the brand’s reputation, sleek design, and great service. They’re not after the lowest price; they want value. The same goes for sellers offering high-end goods.

Customers want something special, like a handcrafted leather bag or an eco-friendly beauty product that makes them feel good. Temu may sell tons of cheap items, but when someone’s looking for quality, one-of-a-kind products, they’ll come to you.

Focus on what sets you apart—great customer service, quality materials, and the unique story behind your product. In the end, you’re offering an experience that’s worth the extra cost.

4. Create Hype with Top-Notch Content

Creating hype with great content is like giving your brand a megaphone—it grabs attention. Sharing your story makes customers connect with you because people buy into brands, not just products.

Take Dollar Shave Club: they sold razors, but their fun, viral video made their brand stand out. You don’t need a huge budget, just an authentic message.

While Temu may offer lower prices, it’s faceless. You can be personal and engaging by writing blog posts that solve customer problems, making videos that show off your product, or building a community on social media.

Look at Glossier—they’ve built trust by interacting with their followers. Great content helps you stand out and keep customers coming back, even with Temu around.

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In the end, Temu may be a tough competitor, but by leaning into your unique advantages and playing to your strengths, you can continue to thrive as a US-based online seller.

The race isn’t won by those who play by someone else’s rules—it’s won by those who make their own game.

Till next time.