Temu is facing a backlash from its suppliers in China over its efforts to restructure its business model.
The online marketplace has been looking to recruit Amazon merchants, who hold goods in warehouses in the US and EU, in recent weeks, The Financial Times reported.
The move is understood to be designed to protect Temu’s business model as the EU plans to impose a customs duty on cheap goods, a loophole that has catapulted the platform’s growth.
The shift in business model would allow the marketplace to sell bulkier and higher-margin products, such as furniture and home appliances, as well as provide shorter delivery times for customers.
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By contracting suppliers with overseas warehouses, Temu will move from a “fully managed” to “semi-managed” model, in which the merchant will take on shipping, warehousing and last-mile delivery costs that were previously handled by the online platform.
However, several Chinese suppliers in the southern manufacturing hub of Guangzhou have doubts on the move that will require them to shoulder more risk to sell on the platform.
One firm in Guangzhou told the publication that it received up to 30,000 to 50,000 orders a day during the early months of Temu’s operation, but that had since fallen to 3,000.
They blamed the decline on the platform’s push to sign up more suppliers in an effort to play them off against each other and drive prices down.
Many suppliers said they no longer work with Temu because it started handing out fines over issues such as faulty packaging and customer complaints over mismatches between the product and online description.
One seller said: “They take a fine from you if there is a customer complaint, even if it’s not your fault. If there is a fault with one item in the batch, then they will fine you for the whole batch.”
A Temu spokesperson told the FT it was “actively working with the merchants to find a solution”.
They added that the supplier feedback was “not representative of the seller experience on Temu”, and said: “The feedback we receive from the vast majority of our merchants reflects a positive experience, with many appreciating the increased exposure and sales opportunities our platform provides.”
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