Previous research has shown that Temu, through its low price strategy, provides consumers with significant price discounts compared to Amazon, saving an average of $13.87 per item, with a price advantage of up to 40%. However, the recent cancellation of the "$800 package tax exemption policy" by the United States has brought new variables to cross-border e-commerce. The change in this policy has sparked widespread attention and discussion, including concerns that Temu may raise prices and lose its price advantage as a result. But Omnisend's research results provide a relatively optimistic answer. Although the 10% tariff has indeed had a certain impact on Temu's price advantage, reducing it from the original 40% to 34%, Temu still maintains extremely high competitiveness in terms of price.

Policy wise

The United States had previously cancelled the $800 tariff exemption policy for Chinese goods and suspended the cancellation order on February 7th. During the period of exemption policy cancellation, direct mail products face additional tariffs. But Temu platform has multiple ways to respond:

Overseas warehouse layout: Temu will launch an overseas warehouse plan in mid-2023, building one in each of the eastern and western parts of the United States. In 2024, a semi custodial model will be launched to pre stock goods and reduce the impact of tariffs on commodity prices.

Introducing local merchants: Temu fully opened up to American sellers at the end of last year, attracting local American brands and reducing tariff policy risks.

In terms of operational mode

Centralized supply chain through full custody mode: Temu's full custody mode can concentrate the power of the supply chain. In the past, with the help of small parcel tariff exemption policies, logistics costs were effectively controlled, and goods were sent to overseas markets at low prices.

Transfer cost pressure of semi custodial mode: Under the adjustment of tariff policies, Temu is fully promoting semi custodial business, allowing merchants to bear part of the customs clearance, tax reporting, delivery and other costs on their own. The platform can transfer part of the cost pressure to merchants to maintain price advantages.

In terms of supply chain

Source control cost: Temu sells a large number of non branded products to reduce brand premiums from the source. And try to minimize intermediate circulation links and suppress the rise of commodity prices.

Direct delivery mode reduces costs: Temu adopts a direct delivery mode from China to consumers, reducing inventory management costs and further lowering product prices.

However, despite Temu's price advantage, there is still a gap compared to Amazon in terms of consumer trust, product quality assurance, and logistics delivery speed.