At the heart of Temu's business model is direct collaboration with an extensive network of manufacturers, without any middlemen. Production mainly takes place in China. Since July 2024, Temu has also been opening up to European manufacturers in order to reduce delivery times and offer European customers a better shopping experience (Schwarz, 2024). As soon as a product is ordered, Temu immediately forwards it to the manufacturer, who can then optimally track demand for their individual items. Through this direct cooperation, Temu bypasses the margin of middlemen, so that only the costs for the much cheaper Chinese products are incurred. This significantly reduces product prices and enables Temu to offer products at prices well below the European market level. These price advantages are passed on directly to customers, which makes Temu particularly attractive and constitutes its main competitive advantage.

Another key component of the business model is logistics. Temu operates a centralised fulfilment system that ensures consistent delivery times of no more than 14 days worldwide. This means that, unlike Amazon or AliExpress, Temu handles shipping exclusively itself and does not allow direct shipping by manufacturers. 

The expansion in Europe is now also being driven forward with the so-called ‘local-to-local model’. This involves greater involvement of local retailers, resulting in even shorter delivery times as local warehouses can be accessed (DHL, 2025). In future, up to 80% of sales in Europe are to be generated in this way (Günter, 2025). In April 2025, Temu and DHL will deepen their cooperation to further promote efficiency (Retail News, 2025). Temu now also plans to involve local retailers in Switzerland, but they would have to organise their own logistics and are bound by Temu's price guidelines. This is causing concerns for the Swiss Retail Federation with regard to price and data protection (Janssen, 2025). Now the trade association is also issuing warnings. The risks are said to outweigh the benefits. In particular, reputational risks and difficult conditions on the part of Temu should not be underestimated. For example, prices must be 15% below those of Amazon (Watson, 2025).

In addition to local warehouses, Temu is currently testing another source of income, namely retail media. Retailers are offered advertising space so that they can place their products more prominently. With these approaches, Temu is thus also launching the next stage of expansion in Europe (Günter, 2025).

With the help of gamification elements, Temu succeeds in generating additional purchases. The platform integrates various elements that make shopping almost playful. This includes features such as social referrals and gambling-like mechanisms that encourage users to make additional purchases or reach certain shopping cart values. These gamification elements promote customer loyalty and increase the likelihood that users will shop on the platform repeatedly. However, this was banned in Switzerland in April 2025.

From the customer's point of view, Temu differs from Amazon in that it offers lower prices. By focusing on direct cooperation with significantly cheaper Chinese manufacturers, Temu manages to offer consistent quality and acceptable delivery times. Unlike Amazon, Temu does not operate its own retail business but acts solely as a marketplace. However, Amazon has now launched its new Amazon Haul store in the US, which is very similar to Temu in many respects (Palmer, 2025). Due to the increase in customs duties in the US, Amazon Haul is now adapting its business model so that it is not solely dependent on cheap Chinese goods (Sato, 2025). At the beginning of May, Amazon Haul will launch its beta version in the United Kingdom, marking its first foray into Europe (Redaktion LZ, 2025).

Unlike Temu, AliExpress allows its customers to contact manufacturers directly, which can lead to price negotiations and thus even better final prices for consumers. However, AliExpress's delivery times are significantly longer than Temu's: standard shipping takes 15-35 working days. Premium shipping is only available at an additional cost, which reduces the delivery time to Temu's standard delivery time (Alibaba.com, 2024). 

Temu follows the approach of a global discounter. Its cost leadership is guaranteed by Chinese low-price producers, a highly efficient supply chain and very active price management, which clearly sets the marketplace apart from established market leaders such as Amazon and AliExpress in terms of price attractiveness.

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It is often claimed that, due to low prices and supposedly lower quality, Temu mainly attracts young people with small budgets and a high affinity for online shopping. However, our study, which we conducted in September 2024 as part of a long-term investigation into internet usage in Switzerland, paints a different picture. In a representative survey of over 1,300 participants from Switzerland, it was found that more than a third of respondents in every age group had already shopped at Temu. Figure 1 also shows that Temu is the only Chinese provider that is equally popular among all age groups. For this reason, it is a false assumption that only young people with low incomes order from Temu.

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In our study on internet usage in Switzerland, we surveyed over 1,300 Swiss people about their reasons for shopping with Chinese providers. These included Temu. The following chart in Figure 2 shows the advantage enjoyed by Chinese providers. Their competitive edge lies primarily in their prices.

The Temu app works like a casino, constantly enticing customers with offers and discounts. In addition, Temu's algorithm is extremely precise in tailoring itself to each customer's individual preferences, resulting in a personalised and inspiring shopping experience. The Temu app features a wheel of fortune that can be spun to win discounts. These can be increased with additional mini-games. Furthermore, a stopwatch runs, in which a customer must spend a certain amount within the specified time to receive these prizes. After a purchase, the customer continues to collect points, which lead to more discounts, and often the purchase is used as free credit for the next purchase if it happens in the next few days.

According to the responses from over 1,300 consumers surveyed, they purchase the following product categories from Temu:

Swiss retailers are also feeling the impact of these figures and the associated purchasing behaviour of the population. Bernhard Egger, managing director of the trade association, recently commented on this. According to him, Chinese suppliers such as Temu are expected to cause losses of around one to three billion Swiss francs per year in Swiss retail. However, he explains that those who sell cheap clothing are particularly affected, while companies in the higher-priced segment with better quality face less competition (awp Finanznachrichten, 2024).

Online shopping grew by 18% in 2024 compared to the previous year. At CHF 2.6 billion, this is a new record result. The main drivers are small parcels from Asia, which also include Temu (Handelsverband.swiss, 2025). Although these are mostly small amounts, the total is more than 10 million parcels (Bachmann, 2025).

Even major discount campaigns in Switzerland, such as Black Friday, are losing their appeal, as providers such as Temu make the discount prices of Swiss retailers seem high in comparison. More than 40% are no longer interested in Black Friday, as Temu attracts customers with better offers all year round (Spiegel Wirtschaft, 2024). In addition, Temu engages in so-called ‘keyword bidding’ on other brands. This involves bidding money on certain search terms and keywords in search engines to increase their presence in online advertising. Temu also bids on third-party brand keywords such as ‘Zara Jeans’, ‘Mango Dresses’ or ‘Walmart Black Friday Deals’. They choose this strategy because search engines are central to bargain hunting. As a result, the cost per click has increased 16-fold in the last two years (Grunow, 2024).

Not only Swiss companies, but also online giants such as Amazon have to respond to Temu. On 13 November, Amazon unveiled its new shop, Amazon Haul, in the United States. There, goods are sold for less than USD 20 and delivered within two weeks. The app is similar in design to Temu, and the whole concept is strongly reminiscent of the Chinese company. However, Amazon wants to check the safety of the retailers' products (Weidemann, 2024). This concept is now set to come to Europe in the course of the year (Palmer, 2025). Initial tests are already being carried out in the United Kingdom (Redaktion LZ, 2025).

Amazon is also asking retailers who sell on Temu and Amazon not to offer their goods at lower prices on Temu. Retailers who disregard this new rule will be excluded from the Featured Offer programme. This programme makes shopping easier for customers. Amazon wants to ensure that customers always get the best price (Von Thun, 2025). 

The German company Kaufland also wants to become a European alternative to Temu. It plans to expand its online marketplace to Italy and France in order to compete with Temu. The advantage here is that, unlike its competitors, customer and retailer data is stored exclusively in Europe (Kolf, 2025).

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Temu bypasses traditional supply chains (from producer to wholesaler to retailer and then to customer). The company connects suppliers, so-called sellers, directly with end consumers. Without intermediaries, the supply chain can be made leaner and more efficient. This leads to lower prices and faster delivery times compared to platforms such as AliExpress or traditional European retailers, but also to Amazon. Until the beginning of 2024, Temu operated exclusively on a consignment model. This means that the supplier remains the owner of the goods until they are sold or consumed by the customer. In the US, Temu launched a marketplace model in March 2024 in addition to the consignment model, which enables even faster delivery times and, in the long term, also offers local retailers the opportunity to sell goods via the Temu platform. This model is now also in use in Germany, France, Italy and Spain. According to the PR department, Temu plans to expand into many other countries. In Croatia, Temu has even been cooperating with the local postal service since March 2025 to enable faster deliveries (Retail News, 2025a). In Spain, Temu is also entering into a new partnership with the logistics company Correos (Retail News, 2025b).

Due to new customs laws in the United States, Temu wants to adapt its supply chain model. The so-called ‘half-custody’ model is to be promoted in the United States, whereby suppliers and manufacturers now send their goods to American warehouses themselves and Temu no longer handles all aspects for them. Ultimately, the model is to be made mandatory throughout the United States and no longer voluntary. This change could lead to higher prices and fewer small Chinese retailers on the platform, as they now face higher costs due to Trump's new laws (The Standard, 2025).

By using optimised logistics – particularly air freight and modern digital technologies for real-time optimisation – Temu accelerates transport processes. According to Temu, more than 50% of all goods are shipped to Europe via air freight (Temu PR Department, August 2024). From the customer’s perspective, shipping with Temu can be tracked with precision. Just minutes after placing an order, the customer receives a notification that the goods have begun their journey. Every subsequent step is communicated in detail. Air freight enables short delivery times of less than a week to Switzerland. However, this speed comes at the cost of higher CO₂ emissions, as air freight leaves a significantly larger environmental footprint compared to other transport methods (DHL, 2023).

Direct collaboration with producers, the avoidance of proprietary warehouses, and the use of economies of scale result in significant cost reductions. Temu achieves further savings through centralised logistics handling. Goods ordered by customers are collected in China and packaged together in a single parcel, saving cargo space and shipping costs.

According to Temu’s press department, delivery times to Europe are expected to improve further with the establishment of European warehouses for selected products.

Even Switzerland is being flooded with parcels from China. It is estimated that every second parcel ordered last year came from Temu, and approximately 100,000 Chinese parcels arrive at Zurich Airport daily. This influx is causing general delays, which have even led to late deliveries of essential medicines (Gnehm, 2025).

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DHL (2023, July 26). Nachhaltige Transportlogistik – Frachtarten im Vergleich.
https://dhl-freight-connections.com/de/nachhaltigkeit/nachhaltige-transportlogistik-frachtarten-im-vergleich/

1. Insufficient measures against fraudulent sellers: Temu is accused of failing to take adequate action against fraudulent sellers who continue to distribute products and content that violate EU regulations.
   
2. Health risks due to addictive potential: The gamification approach of the website and app, which uses mechanisms similar to those found in casinos, allegedly entices users to make purchases and increases the amount of time they spend on the platform.
3. Lack of transparency in product recommendations: The platform provides no information on the criteria used to generate product recommendations. This lack of disclosure violates the requirements of the Digital Services Act (DSA) and raises concerns about fairness.
4. Restricted access to data: Temu reportedly denies access to certain data that, under the DSA, must be made publicly available. These data are essential for ensuring the traceability of products and sellers.

These repeated accusations raise fundamental concerns about the platform’s transparency and legal compliance. As a result, potential EU sanctions for Temu’s breaches of the DSA could jeopardise its presence in the European market (FAZ, 2024).

What follows is a broader overview of additional accusations, ranging from misleading consumer information and copyright violations to product counterfeiting, missing safety labels, unethical labour practices, and environmental harm.
These repeated accusations raise fundamental concerns about the platform’s transparency and legal compliance. As a result, potential EU sanctions for Temu’s breaches of the DSA could jeopardise its presence in the European market (FAZ, 2024).

Temu does not guarantee product safety and thereby evades product liability (Valda, 2024a). Spot checks conducted by independent organisations have shown that technical products frequently fail to meet safety standards (da Silva & Büchenbacher, 2023; Hügli & Flohr, 2024). Toxicology tests on various items revealed that in more than half of the tested products, legal limits were exceeded, with carcinogenic substances or plasticisers detected. Temu has announced it will review the cases (Bund, 2024). In some instances, essential product certifications are missing (Pöschl, 2024a), while in others, documents may have been falsified (da Silva & Büchenbacher, 2023). Purchasing dangerous goods—such as defective batteries that could cause house fires—could lead to insurance issues. If consumers pass on such products, they may even be held criminally liable (MDR, 2024; Blick, 2024). Serious accidents involving Temu products occur repeatedly. In January, a young girl suffered severe burns caused by a jumper (Meier, 2025).

Legal Basis:

Temu, like eBay, positions itself as a marketplace rather than a direct seller, thereby avoiding responsibility for product safety (Valda, 2024a; Hügli & Flohr, 2024). Due to Temu’s foreign headquarters, enforcing product safety laws proves difficult (Valda, 2024a), especially as Swiss customs only carry out spot checks, which further hinders the enforcement of safety standards. When consumers pass on unsafe or counterfeit products purchased from Temu, they assume the role of importer and thus bear legal responsibility themselves (MDR, 2024; Blick, 2024).

Temu sells products that resemble well-known brands as well as items of inferior quality, such as squeaky sports shoes, headphones with poor sound quality, and goods that are smaller than depicted in the images (Weder, 2024; da Silva & Büchenbacher, 2023). Accusations of trademark counterfeiting are also frequent (Kaiser, 2024). Retailers report numerous copies of their protected products appearing on Temu. Even when illegal items are reported and removed, they are often simply relisted (Handelsblatt, 2024a).

Temu faces accusations of misleading customers through manipulative advertising tactics. This includes unclear recommended retail prices, unauthorised advertising, and manipulative sales triggers such as continuous discounts, limited stock availability, and gamification elements that pose addictive potential (Valda, 2024a; Pöschl, 2024a; Weder, 2024). Despite a ban on manipulative design, recent studies show that such practices remain problematic (vzbv, 2025).

Swiss retailers accuse Temu of failing to comply with environmental protection laws and of not paying the advance recycling fee (Valda, 2024a; Pöschl, 2024a).

According to the Swiss Retail Federation, Temu benefits from a competitive advantage due to exemption from value-added tax (VAT), which further increases the price gap compared to domestic suppliers. However, this changed at the beginning of 2025, and Temu is now required to pay VAT as well (Kälin, 2025). Nevertheless, the low prices continue to pose a threat to Swiss retailers. 

Temu stands accused of neglecting its due diligence obligations within its supply chains, particularly with regard to the prevention of child and forced labour. US lawmakers have criticised Temu for having introduced a code of conduct without conducting audits, even though products originate from the Xinjiang region, which is known for forced labour (Urech, 2024b; Retail News, 2024c).

Within Switzerland: The State Secretariat for Economic Affairs (SECO) is currently in contact with Temu but is not providing any further public statements at this time (Valda, 2024a). In early 2024, Temu established a Swiss entity, Whaleco Switzerland AG, with a base in Basel (Pöschl, 2024a; Valda, 2024b). This could potentially make the company more accessible for SECO (Pöschl, 2024). It is expected that Temu will be required to display discount prices more transparently in the future (Valda, 2024b). Temu itself claims that the Swiss subsidiary aims to offer better service and ensure greater compliance with local regulations. However, further developments remain unclear (Pöschl, 2024a). Swiss political parties are united in their efforts and have formed an alliance to enforce stricter regulations for foreign online retailers in the future (Zahno, 2024).

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At first glance, the returns process at Temu appears simple and transparent. Returns are generally free of charge. On its website, Temu guides customers through an eight-step return process (see Fig. 5). The similarity to return systems familiar to European consumers reflects Temu’s efforts to provide a seamless shopping experience for this market.

However, a closer look at the return policy reveals some obstacles for customers. For instance, returns are only straightforward if all original barcodes are still present. If not, items without barcodes must be placed in separate, transparent, and marked bags – adding extra effort for the consumer. Furthermore, only one free return label is provided per order. Each additional return from the same order incurs a charge of CHF 6 (Temu, n.d.).

Given Temu’s consistently low product prices, consumers are often less inclined to initiate a return. The low value of the goods is disproportionate to the effort required for repacking, visiting the post office, and waiting for a refund. Many customers therefore choose to dispose of the item rather than go through the complete returns process. The requirement to return products in their original packaging and the CHF 6 fee for additional returns reinforces this behaviour.

It also remains unclear what happens to returned items. Are they sent back to China? In most cases, returns first go to a redistribution centre within the country. There is evidence that the items are not necessarily shipped back to China but may instead be resold to third parties or marketed as clearance stock. Other companies using similar business models destroy only a small portion of returned goods that can no longer be resold (Kühne, 2023; Weidemann, 2024).

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Temu operates a demand-driven shipping model that delivers goods directly from manufacturers to consumers. This approach potentially reduces unnecessary warehousing and transportation, thereby lowering CO₂ emissions by minimising supply chain stages. The company highlights a partnership with Trees for the Future, which supports reforestation efforts in Africa to offset the carbon emissions linked to its operations.

However, there is a significant lack of transparency regarding Scope 1, 2, and 3 emissions. Other than the tree-planting initiative, no concrete targets or actions for emission reduction have been disclosed. A considerable portion of Temu’s product range falls under (ultra-)fast fashion, often made from synthetic materials like acrylic and polyester, which significantly contribute to environmental degradation. According to SPER Market Research (2023), the Chinese synthetic fibre market is expected to reach USD 39.8 billion by 2033, with a compound annual growth rate (CAGR) of 6.27%, largely driven by the Asia-Pacific region.

Temu also provides no clear data regarding the energy consumption of its data centres. Waste management practices, including information on the handling of returns, recycling, or damaged goods, remain vague. In contrast, other online platforms such as Amazon often disclose what happens to returned products. According to Amazon (2024), the majority of returned items are re-sold as new after thorough inspection.

Temu promotes values such as empowerment, inclusion, diversity, integrity, and social responsibility on its website. However, no publicly documented programmes or independently verified initiatives are available to substantiate these claims. Meanwhile, the company has faced widespread criticism over working conditions in supplier factories, particularly in China, where labour rights protections are often weak.

In response to a U.S. Senate-led investigation concerning forced labour allegations, Temu refers to its Code of Conduct, which prohibits all forms of forced, child, or prison labour (Rubio, 2024). Nevertheless, reports persist of long working hours and low wages (Stone, 2023). Temu claims to require its suppliers to comply with all local laws concerning wages, working hours, and voluntary employment. Still, greater transparency about labour practices across its workforce and supply chain is needed to enhance credibility. It should be noted that European retailers also struggle to ensure complete supply chain visibility when sourcing products from China.

Temu highlights “integrity” as a core corporate value, defined as being “honest, ethical, and trustworthy” (Temu, 2024). According to the company, a Code of Conduct is in place that mandates compliance with local laws. However, there is no evidence of independent audits or compliance checks, which are critical for verifying adherence to ethical standards and regulatory obligations.

Recently, the company has faced growing scrutiny over allegedly unethical practices, including misleading discount displays, manipulative interface design through so-called dark patterns, the absence of proper contact information on its website, unfair competition, and improper price disclosures (VZBV, 2024; Valda, 2024; Weder, 2024). Following warnings and legal notices from authorities in Germany, Austria, and Switzerland, Temu issued formal undertakings to cease the practices in question.

These responses, alongside communication with the company’s press office, indicate a willingness to adapt its practices. Nevertheless, external audits and greater transparency are essential to ensure compliance with both self-imposed standards and generally accepted ethical business principles.

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Amazon (2024). Was passiert bei Amazon mit deinen Retouren?
https://www.aboutamazon.de/news/nachhaltigkeit/was-passiert-bei-amazon-mit-deinen-retouren

Although Temu continues to expand its logistics network and is increasingly opening distribution centres in Europe, selling on the platform remains a difficult undertaking for European merchants. One of the main barriers lies in Temu’s pricing strategy, which fundamentally differs from the mechanisms of other marketplaces. 

Temu sets the prices of the goods offered on its platform itself, requiring European retailers to significantly lower their cost structures in order to remain competitive. Even as Temu begins to open its platform to European sellers, only a small number will likely be able to operate profitably under the platform’s pricing model. These prices are heavily influenced by the highly competitive Chinese market, making profitability for European sellers challenging.

In parallel with price pressure, the operational structure adds complexity. While Temu is experimenting with decentralised fulfilment systems in Europe, concerns around product quality remain. A more decentralised model increases the risk of inconsistencies in the fulfilment process. In response to growing criticism in the US concerning its aggressive pricing model, Temu appears to be transitioning to a semi-centralised fulfilment system. This shift involves building partnerships with local producers and fulfilment providers in Europe to shorten delivery times. However, such partners are expected to operate their own distribution infrastructure (eTowerTech, 2024).

Another major challenge is Temu’s multi-step onboarding process for sellers. While platforms like Amazon allow businesses to set up an account using a corporate tax ID relatively easily, registration on Temu takes place via an email-based process followed by a detailed screening procedure. This process is designed to ensure the supplier’s ability to meet delivery standards and maintain consistent product quality. While burdensome, this is part of Temu’s strategy to avoid fulfilment failures.

The more decentralised the delivery system, the greater the risk of quality losses in fulfilment. Nevertheless, following protests in the USA against its aggressive pricing policy, Temu appears to be switching to semi-centralised fulfilment systems in order to accommodate local suppliers. This means that Temu is setting up co-operations with local manufacturers or fullfillers in order to shorten delivery times, for example. These suppliers must then make their own distribution network available (eTowerTech, 2024).

Despite the obstacles, Temu also offers innovative features that European e-commerce businesses can learn from. One such example is the platform’s use of gamification, which has been shown to enhance cross-selling and increase customer loyalty (Rahmadhan et al., 2023). However, retailers should remain cautious to ensure that these mechanisms are not exploitative or misleading, especially regarding potential gambling-like features that may affect consumer welfare.

In summary, selling via Temu is significantly more difficult for European merchants than using platforms such as Amazon or Kaufland. The low price expectations and the complex onboarding process represent major barriers. Nonetheless, Temu offers forward-thinking concepts from which European online retailers can derive valuable insights – particularly in user engagement and fulfilment innovation. 

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Since the end of May 2024, Temu has been obliged by a new EU classification to implement stricter requirements, including measures to protect against counterfeiting and infringements of intellectual property rights. In addition, Temu must submit risk assessment reports by the end of September 2024 that examine potential risks to the health and safety of consumers, especially minors. Non-compliance could result in penalties of up to six per cent of annual global turnover. Repeated violations can lead to a ban in the EU (Tagesschau, 2024). In Switzerland, Temu established an unofficial headquarters in Basel with the company Whaleco Switzerland (Pöschl, 2024; Valda, 2024). This could also make the company more tangible for the State Secretariat for Economic Affairs (SECO) and the Swiss guidelines (Pöschl, 2024). However, this Swiss location was dissolved again. Since March 2025, however, there has no longer been a Swiss Board of Directors, which could again affect tangibility (Jacobi, 2025).

Temu gained enormous popularity through its huge advertising spend of USD 505 million in 2023 (Poinski, 2024). On TikTok alone, there are 500 million mentions of Temu's hashtag every fortnight in Germany (Kolf & Müller, 2023). It is to be expected that this level of awareness will persist for the time being and that the slogan ‘Shop like a billionaire’ will become firmly anchored in the minds of consumers. Our study on internet usage shows that one year after entering the market, Temu is already one of the top 5 most-used online retailers in Switzerland. The high profits of the parent company enable further investments for high market growth.

Despite criticism from consumer centres, consumers are asking themselves why they are paying significantly higher prices on European platforms, especially as some European brand suppliers also order in China and sell via European platforms (Valda, 2024). Manufacturers and local online providers need to consider whether the prices of their products are perceived as fair by consumers. If consumer perception of product quality is similar, it can be assumed that price fairness is low.



The reactions of retailers vary. Let's take a look at two fashion retail platforms and their reactions.