Temu is not killing dropshipping because of its limitations in quality control, branding, customer service, and privacy issues. Temu’s low product quality drives customers to return to dropshipping businesses for reliable products. According to a survey by Appino and Spryker, only 6.4% trust Temu over Amazon. Temu's vague privacy policy also led to confusion among users on how their data is used and protected. A class-action lawsuit claims Temu "wiretapped" website visitors and failed to disclose a data breach. These privacy concerns make online shoppers gravitate toward dropshipping stores as a safer alternative.
Forceget’s Burak Yolga states that Temu faces several challenges that limit its potential to disrupt traditional dropshipping. One major issue is the longer shipping times, as Temu’s products take 10 to 12 days to reach customers. Burak also notes concern about the low product quality that results in customer dissatisfaction. The lack of authentic and organic customer reviews also undermines consumer trust. Temu targets a niche market, so it may not impact dropshipping businesses that serve a broader or different audience.
However, Temu makes it harder for new dropshippers to be profitable in the market. They have to compete against products sold at significantly lower prices. Reddit dropshippers report sales declines due to Temu’s aggressive pricing. According to ZipRecruiter, dropshippers typically earn around $36,000 a year. But, with competition from Temu, their income could drop by 20% to 30%, bringing it down to $25,200 to $28,800 annually.
I built several ecommerce businesses in the past, when it was easier to turn a profit. Today, it's so much more difficult due to increased competition, rising advertising costs, and more sophisticated consumer expectations.
This article covers the 4 factors of Temu that are killing dropshipping. We will also address the platform's major issues and their impact on the dropshipping business model. Finally, we introduce a stable and profitable business model that is better than dropshipping.
4 Unique Factors of Temu That Can Kill Dropshipping
1. Temu Offers Direct-to-Consumer Low Prices
Temu eliminates intermediaries by sourcing their products directly from manufacturers. This direct access allows them to offer wholesale rates than other platforms. Most of Temu’s products come from China, where it’s cheaper to produce than in Western countries. Ecomclips says TEMU products are 60% to 80% cheaper than similar items on Amazon. The platform advertises extremely low prices, such as $4.79 to $6.49 smartwatches for men.
Temu is influencing the pricing strategies of dropshipping businesses by forcing dropshippers to lower their prices to compete with Temu's rock-bottom pricing. New dropshippers must prioritize brand differentiation, quality, and service for sustainability.
A Reddit user shared that they’ve bought a range of items from Temu at very low prices. They estimate spending about $200 on items that would cost around $1000 elsewhere. They’re very enthusiastic about Temu, calling it the best shopping app worldwide and highlighting the affordable prices on Chinese-made products.
Another user shared their positive experience on Temu and praised their unbeatable prices. Temu's coupon codes gave them access to 30% extra discounts and even a $100 coupon bundle. The user also noted the impressive variety of products available on Temu.
2. Temu Executes Aggressive Marketing and Promotions
Temu aggressively invests in marketing to be Americans’ top choice for cheap online goods. In Q4 2023, Temu was the fifth highest spender among digital advertisers. According to Digital Marketing Institute, Temu invested in four 30-second Super Bowl ads in 2024 and saw a 20% increase in daily active users post-Super Bowl ads.
Temu also attract new customers by partnering with influencers on TikTok and Instagram. Temu focuses on micro-influencers rather than big names to build trust and engagement. They promote their products with haul videos, and hashtags like #temuhaul that has 180,000 TikTok posts.
A Reddit user noted that Temu uses bold, misleading ads disguised as user-generated content. These ads use claims like "Temu is being sued for bad labor practices!" and promise rewards like "$100 on their site." They observed that despite Temu's issues, these ads attract significant interest.
3. Temu Provides Efficient Supply Chain and Fulfillment
Temu leverages China’s manufacturing capabilities by working with local suppliers. According to TechBuzz China, Temu uses 90,000 suppliers to provide over 1 million SKUs. Temu also uses techniques like data analysis and demand prediction to improve its supply chain. Its efficient logistics helped it accurately predict what people need.
Temu’s shipping is faster than traditional dropshipping due to its express shipping options. The estimated delivery time for its express shipping is between 4 and 9 days. According to NextSmartShip, express shipping costs $12.90 for orders under $129 and is free for orders over $129. This option is highly competitive compared to traditional dropshipping services.
4. Temu Offers Tons of Flash Sales and Deals
Temu's flash sales cover a diverse range of categories, ensuring there's something for everyone. This keeps shoppers engaged and encourages them to check back regularly. The Temu App says it offers discounts of up to 90% on some items. Items like a Nintendo Switch have been listed for as low as $7 during their flash sales.
A Temu shopper on Reddit was able to buy a Nintendo Switch for $7, commenting that the platform's flash sales are legit.
Flash sales on Temu are often scheduled during peak shopping hours between 12 PM and 2 PM, or 7 PM and 9 PM. This timing is intended to capture users’ attention when they are most likely online and ready to shop.
Is Temu Killing Dropshipping Per Reddit?
Reddit users do not believe that Temu is not killing dropshipping. But, some of them shared that their sales dropped due to Temu's impact. Another user noted that dropshipping can survive with the right products and audience. However, Temu's growing popularity might draw consumers away. Dropshippers need to differentiate by offering a clean website, a smooth shopping experience, and great deals.
A successful dropshipper reported an 80% sales drop due to Temu's growing popularity. They couldn't compete with Temu's low prices, suspecting their wholesaler was also selling on the platform. The wholesaler couldn't assist in recovery due to the Chinese economy's downturn and the need to protect their own profit margins.
Another Redditor suggests that Temu impacts dropshipping businesses who promote the same products. Non-cheap products may face higher advertising costs to compete. Businesses will also need to increase prices to remain profitable.
They suggest focusing on niche authority to help customers easily learn or buy your products. They also recommend offering a broader selection within your niche than Temu.
Is Temu Killing Dropshipping on YouTube?
YouTube experts do not believe that Temu is killing dropshipping. However, they highlight the huge impact of the e-commerce marketplace on small sellers. Dropshippers must focus on building their brand to attract traffic that converts. One YouTuber warns entrepreneurs that using Temu for dropshipping comes with risks.
YouTuber Niall Enrique does not believe that Temu will kill dropshipping. He knows Temu’s low prices and direct competition can be challenging for dropshippers. But, he is confident that dropshipping businesses can survive. Business owners do this through effective branding, marketing, and by creating perceived value. Niall also suggests that Temu may help with product research.
YouTuber and entrepreneur Ali Shakarchy recognizes Temu as a platform with potential and significant risks. Ali warns business owners that using it for dropshipping can cause serious problems. These include store shutdowns and damage to its brand due to its branded packaging and lack of support for dropshipping. Ali recommends using Temu for bulk purchases of validated products. He also recommends to ensure customer satisfaction by repacking and shipping items domestically.
YouTuber Travis Marziani states that Amazon dropshippers are losing customers due to Temu’s lower prices on similar products. Temu’s customer influx disrupts Amazon dropshipping of low-cost private label items. This shift makes it more challenging to maintain sales and profitability on Amazon. Travis suggests that dropshippers must focus on premium and branded products to differentiate themselves in the competitive space.
YouTuber Steve Chou explains that Temu’s aggressive pricing strategy leaves small and unbranded businesses vulnerable. They lack the brand strength and customer loyalty to withstand Temu’s dominance. Sales for generic item sellers, like t-shirts, have dropped by up to 50% as consumers turn to Temu for cheaper alternatives. Steve also points out that Temu has unfair advantages. It avoids US taxes and tariffs through a loophole. It also benefits from extremely low labor costs, linked to forced labor in China.
4 Hurdles of Temu That Can't Kill Dropshipping
1. Temu Has Quality Control Issues
Some Temu products disappoint customers because of low-quality materials. This results in frequent returns and complaints from shoppers. The platform also faces criticism for inconsistent product quality and misleading product images. From October 2022 to January 2024, Temu faced 3,323 FTC complaints about online shopping issues. Dropshippers who ensure the quality of their products lead to repeat customers and a thriving online business.
Reviews from Temu shoppers state that they find the products to be cheap and poorly made. Some felt misled by the heavy marketing and artificial discounts, leaving them feeling "suckered." They decided not to buy from Temu again after this poor experience.
2. Temu Limits Branding and Customization
Temu ships products with orange packaging and the company logo. This means that sellers can’t add their own logos or branded inserts to the packaging. The lack of these options can lead to customer churn, as customers may choose to order directly from Temu in the future.
On the other hand, dropshipping stores have full control to customize packaging and add their logo. This helps dropshippers position themselves as providers of premium or unique products. According to Ipsos, 72% consumers say that packaging design influences their purchasing decisions.
3. Temu Receives Customer Service Complaints
Customer service is another area where Temu has received considerable criticism. According to the Better Business Bureau, Temu already has 2,771 complaints and a rating of 2.44 stars. Complainants cite slow responses, bad complaint handling, and trouble getting refunds or exchanges for faulty products.
Dropshippers can bridge this gap with personalized service and expectation management. The personalized service sets dropshipping apart and allows it to thrive, even with Temu in the market.
Online shopper Jeffrey Roberts had satisfactory service with Temu on several medium-sized orders. However, a larger order disappeared after payment with no confirmation or acknowledgment. Jeffrey's experience made him decide not to shop at Temu again. And he expects the company to take appropriate steps to resolve the issue.
4. Temu Has Privacy Risks
Allegations suggest that the Temu app collects excessive user data. According to Fox Business, 21 Republican attorneys general demanded information from Temu about its data collection practices. Arkansas Attorney General Tim Griffin said Temu is “functionally malware and spyware.” It accesses users’ phone operating systems without restriction. Cybersecurity experts even warn that the app harvests users’ personal photos and videos.
Allegations about Temu’s invasive practices make ethical dropshippers stand out. Sellers who focus on privacy and data security position themselves as a more trustworthy alternative to Temu. Dropshippers must adopt best practices for data protection to reassure customers and maintain trust.
The YouTube video 'Temu - USERS BEWARE - YouTube’s Largest Advertiser' by Upper Echelon highlights some serious privacy concerns with Temu. The app is accused of having aggressive, malware-like features. To top it off, Chinese law requires companies like PDD Holdings to share data with the government. This raises real concerns about the safety of shoppers' personal information when using Temu.
A Reddit user shares that they noticed that after installing the app, items they searched for on Google began appearing as Temu ads. They found this experience unsettling and asked Bing Copilot about the issue. It suggested Temu's business model focuses on obtaining phone permissions and selling data.
A customer reported that money was taken from their account without any Temu order on record. After an investigation, they were told it wasn’t fraudulent. And, they were advised to contact their bank for a refund. The customer described the situation as "absolutely shoddy treatment."
Is Dropshipping Being Affected by Temu?
Yes, dropshipping is being affected by Temu. Temu's rock-bottom prices make it difficult for dropshippers to compete on price alone. Sensor Tower reports Temu's downloads increased by 57% and reached 33 million since its U.S. launch. Temu's growing popularity may lead consumers to associate low-cost products with the platform. This may dilute the perceived value of products sold through traditional dropshipping channels. Dropshippers must cater to customers willing to pay a premium for products that go beyond the basic offerings of platforms like Temu.
Temu is a great problem if dropshippers' only strategy revolves around pricing. The user comments that cheap prices attract potential buyers who are cheapskates and targeting these consumers is like playing with fire.
The challenges Temu poses for dropshipping businesses are:
YouTuber Paul J Lipsky highlights several challenges with drop shipping from Temu. According to Paul, Temu’s unclear stance on drop shipping and reports of canceled orders raise doubts about its suitability for this model. He notes concerns about customer service and long shipping times, similar to issues with AliExpress. The tracking process is unreliable, with updates often delayed. This leaves customers in the dark about their orders. Paul also says that packaging is basic and there are orders with missing invoices, which confuse buyers.
Is Temu a Good Dropshipping Supplier?
Temu is a good dropshipping supplier because it offers competitive prices and a wide variety of products. This is possible because Temu uses a direct-to-consumer model. The absence of a middleman allows them to operate on low margins and high-volume sales.
A Reddit user states that TEMU does not permit dropshipping based on their terms of service. They warn that attempting to use TEMU for dropshipping will lead to being caught. Your account will eventually be banned.
Is Dropshipping Dead in 2024?
Dropshipping is dead in 2024 for most sellers because of high competition and unsustainable levels of profit margins. A report from Meteor Space states that the global dropshipping market has seen a 23.5% increase from 2023. Low-cost retailers like Temu and SHEIN push small dropshippers out with aggressive pricing. High advertising costs also reduce their profit margins.
Dropshipping notes that dropshippers spend $10 to $20 per product for ads. Strict policies on platforms like Amazon and eBay make dropshipping even more complicated. Finally, the low entry barriers to dropshipping also lead to widespread market saturation. This makes it even harder for new sellers to compete in the saturated space of dropshipping.
A Reddit user claims that dropshipping has been dead for awhile. They share that Chinese manufacturers will takeover dropshipping businesses once they see traction. They suggest that entrepreneurs should use their skills to launch their own brand or products.
Another user comments that dropshipping fulfillment model is fading, but there are individuals who are thriving by focusing on low competition niches. They recommend discovering new opportunities and trends that other sellers might overlook.
Conclusion: Why Local Lead Gen is More Alive Than Temu and Dropshipping?
Local lead generation business is more alive than Temu and dropshipping because it offers a more sustainable and predictable model. Local lead generation focuses on providing consistent, high-quality leads to local businesses. Once a lead generation system is set up, it continuously attracts leads without additional operational expenses. Local lead generation also serves multiple clients across various niches. This ensures a steady stream of income and a more resilient business model.
On the other hand, dropshipping and selling on Temu relies on physical product sales. You face challenges like inventory, shipping, and customer service. These factors limit the scalability of your online business. More sales volume often requires more investment in these areas. Dropshipping profit margins are typically lower, averaging around 10-30%. This contrasts with the higher margins found in local lead generation. Local lead gen also offers a passive income of $500 to $2,000 per month for each website you develop.
Local lead generation is a superior choice for building a sustainable, profitable online business. By funneling relevant leads directly to your clients, you provide a high-value service. This allows you to command higher fees, which result in higher profit margins.
