Temu is the upstart that became a global e-commerce giant

I wrote an article about Temu early in their journey on e-handelstips. With this piece, I want to follow up on Temu as they continue their explosive advance in the e-commerce market.

In less than three years, the platform has grown from an unknown challenger to a global phenomenon with hundreds of millions of users. In 2024 alone, Temu is estimated to have sold goods worth nearly USD 71 billion (about SEK 770 billion), a huge increase from around USD 18 billion the year before, according to third-party statistics. This fourfold growth in a single year is unprecedented in the industry.

The app now has over 416 million monthly active users worldwide

The app now has over 416 million monthly active users worldwide, and surpassed a total of 1 billion downloads already by mid-2025. In Europe, roughly 142 million people use Temu every month, and in the U.S. about 134 million, which corresponds to almost 39% of the entire U.S. population. Temu is the world’s fastest-growing e-commerce, and rightly so, few, if any, have ever gained over 200 million new users in a single year internationally, only TikTok had managed that before. But TikTok wasn’t anywhere near Temu’s turnover.

Temu’s sales (GMV) rose from about USD 18 billion in 2023 to around USD 70.8 billion in 2024, explosive growth. The company handled over 400 million customer orders in 2023 and continues to grow rapidly. Since PDD Holdings does not report Temu’s revenue separately in its financial statements, the figures may be higher or lower. In 2025, the growth rate appears to have slowed somewhat, and revenue will likely end up in the USD 85–100 billion range for the year according to industry estimates, driven in part by a globally weakening economy, which favors players like Temu with a low-price profile.

70.8 USD billion in 2024

A business model of minimal fees and maximum volume

Temu’s rocket-like success rests on an unconventional business model. Unlike established marketplaces such as Amazon or AliExpress, which often charge 15–30% in commissions and various fees from sellers, Temu takes only about 2–5% per sale. There are no listing fees or memberships, making it a low-cost growth channel for sellers. For sellers, this means they keep almost all of the revenue, compared to potentially losing a third to platform costs with competing players.

Keep in mind that roughly 30% of Temu’s assortment, broadly speaking, overlaps with products you can find on other e-commerce platforms, or even in brick-and-mortar stores in the Nordics and Sweden. In other words, the exact same product might be sold on Temu as in a Swedish online shop or store. Every year, goods worth around SEK 100 billion are imported from China, and many of these suppliers choose to sell their products on various digital platforms directly to end customers all over the world. Why risk competing with their resellers, you might wonder?

The reason is that many manufacturers lack exclusivity and have thousands of resellers globally. By selling directly on platforms like Temu, producers and merchants can reach new markets and audiences and, ironically, make more money even without increasing prices. That’s because they can multiply volumes while lowering the end price for consumers by removing the reseller’s margin between the customer and the manufacturer. In textbooks, this is often called forward integration in the value chain.

The next question worth understanding is how Temu can charge so little. The answer lies in economies of scale and a model that fosters a more streamlined and responsive supply chain. Temu essentially removes unnecessary costs that associate with layers of intermediaries. Originally, all sellers (most based in China) were required to ship their goods in bulk to Temu’s warehouses, where the platform took over, listing, marketing, order handling, shipping, and customer service. By having suppliers list at low prices, Temu has been able to offer consumers shockingly low prices, often 30–50% cheaper than the equivalent on Amazon, while attracting sellers with almost non-existent fees.

Today, many sellers on Temu operate with their own inventory on the platform, and distribution runs through a complex logistics network. From there, Temu uses its own distribution or contracts various partners to ship goods. Thanks to extreme volumes, Temu enjoys major scale advantages, filling up cargo space within existing passenger planes or ships themselves and can keep freight prices to customers low while pushing down distribution costs. This also means there’s sometimes a misconception around the environmental aspect of logistics. Because shipments often go fully loaded, the outcome can sometimes be more environmentally efficient, to use the full bus analogy: A full bus emits only marginally more than a nearly empty one, but carries far more people. The counterpoint is that cheap prices can fuel overconsumption; some consumers buy more than they need, think of the “Gekås Ullared effect” in Sweden. And even if the “bus” is full for different reasons, a single contract and platform can concentrate volume enough to unlock much bigger volume discounts.

This strategy has also been financed by Temu’s deep pockets. In the U.S., Temu made a splashy entry with a 2023 Super Bowl ad urging people to “shop like a billionaire.” That kind of aggressive marketing, combined with viral campaigns (e.g., “invite a friend for free stuff” or “spin the wheel and win SEK 1,000”), has paid off: app users spend over 20 minutes a day on Temu on average which is twice as long as on Amazon or eBay.

In short, Temu has changed the game by combining rock-bottom prices for consumers with an extremely favorable deal for merchants, made possible by the scale of its operations. A key advantage of having an app is pushing notifications and communicating directly with users. High app engagement lowers Temu’s customer acquisition costs, since they don’t need to buy traffic to the same extent. That’s a classic marketplace advantage and a dream for many small merchants: frequent app visits even with a relatively small catalog. This is of course easier to do with a long tail assortment.

Temu also makes money on volume and “on the money.” Think payment processors where they hold huge sums that can be put to work, or at least earn interest. Their tech costs have been relatively low as well because they could essentially “white-label” the sister company’s platform (Pinduoduo), tweak functionality, and add new features. Today it’s far cheaper to build new features than before, and you can build a lot with generative AI. I’m convinced Temu is doing this (though I don’t have a verified source), especially since Nvidia, and even Shopify says they’re building everything or as much as possible with AI and not hiring new developers unless there’s a strong business case for why it can’t be solved with existing staff and GenAI. With their massive volumes, Temu can also share revenue with partners, kickbacks on payments, logistics, support services, and more. Many small streams make a big river.

Another part that sets their model apart from Amazon is traffic. On Amazon, Etsy, and similar platforms, you pay extra to drive traffic to your marketplace listings. That isn’t how Temu works. You can land at the top of search results in two ways: either you have the lowest price in your niche or category, or you have high quality, determined today by lots of strong product reviews. That means sellers’ marketing costs are lower on Temu and don’t need to be baked into the margin, so, yes, you guessed it, prices can drop even further. Manufacturers also benefit from production scale. Instead of small batches and frequent changeovers, smaller producers can run larger volumes and achieve better profitability. It’s a win-win for the seller and Temu.

Temu has opened its platform to local businesses in Sweden, Denmark and across Europe, and has enabled local fulfillment. Its Local Seller program is live in more than 30 markets globally.

Temu offers a low-cost, alternative channel for sellers in Europe to reach new customers and grow their businesses. We expect that as much as 80% of our sales in Europe will come from local fulfillment and local sellers.

Air freight capacity is arranged through Temu’s logistics partners based on demand, rather than fixed dedicated routes. Many of the products purchased on Temu are shipped as cargo within existing passenger flights, leveraging available space without introducing additional air freight routes. This approach helps maximize efficiency and reduce unnecessary carbon emissions.

Users can turn off notifications anytime in their settings. Besides, many customers find our updates helpful, especially when it comes to tracking their orders or spotting new deals. That said, marketing messages are only sent to users who’ve opted in.

Smart logistics from China to local fulfillment in days

A key to Temu’s rise is smart logistics. Initially, virtually all goods were shipped from China directly to global customers. Thanks to PDD Holdings’ vast network of manufacturers and shipping partners, Temu offered free international shipping and free returns, quite unique in the industry. Orders were often split into multiple parcels to deliver parts of the order as quickly as possible, a creative way to improve the experience despite long transport distances. Temu managed to deliver most items within 5–8 business days, even from the other side of the world, impressive in itself.

With Temu’s explosive volumes, further optimization was needed. The company’s logistics partners have invested in modern warehouse tech and automation to handle millions of orders. Reports indicate Temu uses robots for sorting and packing in some facilities, resulting in an error-picking rate of only ~0.4% (99.6% accuracy). Automated sorting systems can process over 3,000 orders per hour in certain warehouses, and autonomous AGV robots handle internal transport of larger items. By integrating global tracking systems (e.g., 17TRACK), Temu can track deliveries in real time across 2,000+ carriers and proactively manage delays. This tech-driven logistics machine gives Temu an operational efficiency that’s hard for competitors to match.

This likely puts pressure on Amazon, which has stated that within 10 years it aims to automate in principal, all manual work in its 700+ warehouses and across logistics. They’ve even launched a self-driving bus in Las Vegas with no driver’s seat, free for passengers, a small taste of logistics’ future. You can bet Temu will pursue similar approaches, which would lower logistics costs even more, though it will lower costs for smaller merchants as well, which offers some hope for broadly cheaper delivery.

Another dimension of Temu’s logistics success is scale and coordination. By consolidating huge numbers of parcels and negotiating directly with postal and courier networks, Temu keeps shipping costs low. Even returns are handled smartly, customers often get free returns up to 90 days. The volume helps postal and courier networks optimize their network load, a win-win for both.

Temu work with trusted third-party logistics providers in each market to ensure reliable and efficient deliveries. They decide the most suitable dispatch routes based on demand and operational needs.

Temu invite local sellers to join the platform, and they expect that as much as 80% of their sales in Europe will come from local fulfillment and local sellers.

By fulfilling orders within the same region, they can offer even faster delivery. This approach also fosters stronger connections between sellers and customers right in their own communities.

Returned items are first sent to third-party returns facilities where they are inspected to process refunds. After inspection, items are grouped together and sent back to the sellers. The seller may choose to resell, dispose of, or handle the product in other ways as they deem fit, as it is their property.

Local expansion and lightning-fast delivery

Through partnerships with national logistics players and local warehouses, Temu is betting on faster delivery and better support for merchants in each region.

In 2024, Temu took a strategic step to get closer to customers, it began establishing local warehouses and onboarding domestic merchants on the platform. In March 2024, Temu invited U.S.-based e-tailers to join for the first time, and soon after opened up for European sellers as well, marking a shift from Temu’s original model of working only with Chinese suppliers. The driver behind this change was largely logistical, by shipping from domestic warehouses within each market, Temu can drastically shorten delivery times. In the U.S., new customs rules also played a role. In 2025 the U.S. tightened its de minimis regime for duty-free imports, making direct shipping from China less sustainable.

The results of this Local Seller Program, or Local-to-Local push came quickly. By late 2024, Temu had enabled local fulfillment via partnerships with local logistics firms and opened its platform to local sellers in several EU countries including Germany, France, Spain, Italy, Austria, and the Netherlands. It opened European offices (e.g., Dublin for the EU market) and signed agreements with major players like DHL and national postal services. Temu says that in 2025 it aims for 80% of all sales in Europe to be fulfilled from local inventory with in-country/regional delivery. A concrete example is France, where Temu struck a strategic partnership with La Poste’s parcel division Colissimo in autumn 2025 to give French merchants seamless domestic logistics and super-fast delivery direct to consumers. Colissimo provides both warehousing and distribution, enabling 1–2-day nationwide delivery and even same-day in Paris.

Similarly, Temu has opened local seller platforms in Japan, Canada, Australia, and other markets, where domestic businesses can sell via Temu with local inventory. For consumers, this localization means Temu can now combine low prices with much faster delivery. Customers also avoid hassles with import fees and lengthy customs processing when goods ship domestically or within the EU, music to UK merchants’ ears. For local sellers, Temu opens the door to an enormous customer base without forcing them to compete with long shipping times, everyone competes on a more level freight playing field.

In fact, Temu has improved its image with this move. The platform has sometimes been criticized for encouraging overconsumption of cheap gadgets and for Chinese sellers being sloppy on customs declarations. By involving serious European and American businesses, quality and compliance issues are being addressed more clearly.

Integrating local logistics globally is no small feat. Temu has to balance two models in parallel. The original, fully managed China-to-world model and a new “Amazon-like” marketplace model, just at lower prices, where external sellers handle their own inventory and shipping. Others like Wish and AliExpress have tried this with limited success. But Temu has the momentum and capital to make a serious attempt. By leveraging existing infrastructure (e.g., many Chinese Amazon sellers already have inventory in the U.S./EU that can now be used for Temu), the platform has quickly filled its local assortment. Early reports show strong merchant uptake; in Japan, lots of domestic sellers joined when Temu opened there in 2025, attracted by zero fees and the platform’s reach. In Switzerland, Temu opened to local businesses in autumn 2025, with similar initiatives rolling out elsewhere. Temu itself now claims to be active in over 90 countries. The ambition is clear, to become a truly global marketplace where goods can be sold from and to every corner of the world. Traffic in the Nordics is massive. During Black Friday alone, an estimated 700,000+ parcels were shipped just in Sweden. A friend in Northern Norway tested Temu and, when stepping out to pick up his parcel, saw Temu packages on porches up and down the street, a sign that Temu is not just a shopping site, it’s a new phenomenon

Innovation and outlook

Temu’s story so far is practically a case study in innovation and aggressive roll-out strategy. They’ve challenged e-commerce giants by pushing boundaries across price, shipping, and even how products are developed. The platform keeps rolling out features to retain and engage customers like gamified “Lucky Draws,” daily flash sales, AI-driven purchase recommendations, and social sharing campaigns are now standard in the Temu app. The average user opens the app multiple times per day to check new deals or play mini-games for discounts. Over time, Temu could leverage AI further for personalized recommendations and improved search, areas where competitors like Amazon are already investing heavily. Amazon has tried to respond by launching a low-price seller segment with only a 10% fee, still pricier than Temu, but much cheaper than Amazon’s usual model.

An interesting aspect is the impact on competitors. Amazon has visibly increased its focus on cost efficiency and speed, investing billions in automated warehouses and robotic delivery, partly in response to the low-price threat from Temu and Shein. In China, Pinduoduo is seen as an innovation driver where rivals like Alibaba have launched initiatives to connect Chinese manufacturers more directly with global consumers, and logistics developers are pushing ever more advanced automation. For consumers, Temu has raised expectations with free shipping and returns, constant mega-discounts, and delivery in a few days is a tough combo that pressures the entire industry. As robotized warehouses and electric delivery fleets scale, distribution costs trend toward zero. In Norway, 98% of new car sales are electric, and even public transport boats run on electricity. The next step is autonomy. In Gothenburg, self-driving buses already operates (currently supervised by a driver), with plans to remove the driver entirely by spring 2026. That project “only” costs around SEK 20 million, less than what some Swedish websites have cost to build, and aims to automate an entire job category. Apotea already uses autonomous vehicles at its Swedish warehouse hubs, to name another example.

Challenges remain. Temu has yet to prove that its model is profitable in the long run, it is likely loss-making in many markets today to win customers. Questions around product quality and sustainability persist; the ultra-cheap shopping spree draws criticism for fueling a throwaway culture, though there’s scant debate over the role of personal responsibility or how ultra-low prices opens up possibilities for the lower-income segments of society.

Temu seems aware of this and has announced green initiatives (e.g., climate compensation, electric delivery vehicles in partnerships like the one with La Poste). In the longer run, we can expect Temu to adjust its model and commissions might rise once a sufficiently loyal base of customers and sellers is locked in. Ads or other pay-to-play options might appear.

For now, there’s no doubt that Temu is e-commerce’s new supernova. The combination of smart logistics, massive scale, innovative business design, and aggressive expansion has made Temu a Wall Street-class player to be reckoned with. “Shopping like a billionaire” at tiny prices with cheap shipping and a crazy-wide assortment clearly appeals to the masses. And yes, you can find quality on Temu! If Temu stays the course with local warehouses full of bargains and robots zipping around to pack our orders, the barrier to global e-commerce could be lowered for good. In record time, Temu has shown what’s possible and forced an entire industry to rethink.

The next chapter in this unlikely story will be just as exciting to follow.

A few sources: