Temu Faces Merchant Backlash Over Fines and Penalties

Temu, an e-commerce platform owned by PDD Holdings, has faced significant backlash from independent Chinese merchants. Hundreds of vendors selling on Temu staged a demonstration in Guangzhou to protest against what they perceive as "unjust" fines and withheld payments. The protesters, who were primarily merchants selling clothing, contended that penalties introduced by Temu in April were overwhelmingly high, sometimes equating to five times the value of a sale, exacerbating financial strain. This is prepared by SSP.

Merchant Grievances

Videos from the protest, reviewed by multiple sources, showed demonstrators chanting slogans and staging a peaceful but loud sit-in at a Temu-affiliated office. The fines in question could be levied for late deliveries, incorrect product descriptions, or sending wrong items. Some merchants, like one who withheld nearly ¥2 million ($276,000) in sales, believed the penalties made it almost impossible to turn a profit. They expressed frustration at the lack of transparency and communication from Temu regarding these fines, leading to mounting discontent.

Stated Reasons by Temu

Temu has disputed the scale of the protest, estimating only "a dozen sellers" initiated the demonstration. The company claims these vendors refused to resolve disputes through normal arbitration and legal routes stipulated in their seller agreements. Despite acknowledging penalties are necessary for maintaining high-quality standards, Temu asserted its commitment to fair enforcement and dispute resolution. The platform highlighted that most merchants reportedly experience success, citing increased sales and positive feedback from customers.

Impact of Penalty Policies

Multiple sellers have shared that these stringent fines have pushed many small vendors toward bankruptcy. A garment merchant shared her situation, stating she was initially estimated to pay ¥110,000 in fines but ended up facing a bill of ¥290,000. Many sellers felt trapped in the system, as exemplified by a clothing vendor named Penny, who couldn't quit the platform due to financial obligations and inventory worth millions of yuan.

Temu's Expansion and Competition

Launched in September 2022 with a marketing slogan "shop like a billionaire," Temu rapidly rose to popularity with competitively priced products. According to Sensor Tower, the Temu app garnered over 600 million downloads, making it one of the top-downloaded apps globally. The platform's aggressive expansion into markets including the U.S., Latin America, and Southeast Asia amplified its competition with established e-commerce giants like Amazon and Shein.

Concluding Remarks

While Temu's robust marketing investments and expansion strategies have driven significant growth, the recent protests underscore an internal discord between the platform's objectives and its merchants' needs. As Temu continues to negotiate these issues, the effectiveness of its dispute resolution processes remains in the spotlight.