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Temu’s rising popularity from its mind-blowing prices

Temu’s rising popularity from its mind-blowing pricesPhoto from Unsplash

Originally Posted On: https://omaha.com/brandavestudios/temu-s-rising-popularity-from-its-mind-blowing-prices/article_d62ff032-2377-5b46-8907-518c5aa1c003.html

 

Mass manufacturing has become increasingly precise and personalized due to advancements in digital technology. This has led to a new wave of e-commerce companies, such as Temu, that are changing the way people shop online. These companies empower consumers by allowing them to directly communicate their needs and preferences, which in turn influences what gets produced. As a result, consumers have more control over the products they purchase, ensuring they receive items tailored to their specific desires. Less waste, lower prices.

That in a nutshell is how Temu can offer prices that are significantly lower than competitors in e-commerce and traditional retail through its Next-Gen Manufacturing model. Rather than racing to the bottom in terms of using lower-quality materials and cheap labor, Temu has chosen another route by targeting inefficiencies and “hidden” costs in the supply chain from product design right up to last-mile delivery. By making the supply chain more responsive, targeted and less wasteful, consumers can enjoy lower prices and better quality at the same time.

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So how is Temu so affordable? Temu achieves affordability primarily through its Next-Gen Manufacturing approach, which revolutionizes the supply chain and significantly reduces costs. By leveraging digital technology and focusing on precision and personalization, Temu can eliminate inefficiencies and “hidden” costs in the supply chain, from product design to last-mile delivery. This innovative method allows an estimated 50% cost savings, resulting in lower prices for consumers while maintaining high-quality products. Next-Gen Manufacturing empowers consumers to communicate their needs and preferences directly, leading to a more targeted, responsive and less wasteful production process.

Let’s dig deeper into the process.

What is Temu?

But first, what is Temu? And how is a company that started operations in September 2022 able to make such an impact on the e-commerce industry?

Temu, an online platform, connects consumers to independent third-party sellers worldwide. Temu has a vast network of merchants and manufacturers to provide a wide selection of merchandise at competitive prices.

What does Temu mean?

Temu means “Team Up, Price Down.” Temu aims to deliver cost savings to consumers through economies of scale, enabling access to high-quality products at affordable prices.

Temu also emphasizes integrity and social responsibility, partnering exclusively with brands, manufacturers and sellers who share these values.

As a part of the emerging e-commerce platforms disrupting traditional retail, Temu goes beyond streamlining supply chains. It enhances demand forecasting and accelerates product development by utilizing consumer preferences. Through a distinctive approach to sourcing and manufacturing, Temu has rapidly expanded its user base and garnered a devoted following.

Why is Temu different from other e-commerce platforms?

Temu differentiates itself from other e-commerce platforms by adopting the Next-Gen Manufacturing model. This innovative approach allows Temu to present markedly lower prices while maintaining an optimal product fit and preserving quality.

A key disparity between Temu and its competition is its unwavering prohibition of dropshipping. This practice, often associated with inadequate customer service, high prices, long shipping times, and difficult after-sales return and refund policies, is strictly forbidden on the Temu platform. By excluding dropshipping, Temu ensures a heightened customer experience for its users.

Does Temu sell counterfeit products?

No, Temu does not sell counterfeit products or knockoffs. The company maintains a strict vetting process for all third-party sellers, ensuring that they adhere to quality standards. Sellers who violate Temu’s policies, which include selling counterfeit items, can be permanently banned from the platform. Temu is dedicated to ethical, humane and lawful business practices and requires merchants to comply with its code of conduct and all applicable laws.

What is Next-Gen Manufacturing?

E-commerce and brick-and-mortar retailers have refined their supply chain processes to decrease costs and provide consumers with competitive prices. Well-known brick-and-mortar retailers have served as pioneers in leveraging technology to optimize the fulfillment process and share data with vendors for inventory replenishment. Leading e-commerce companies, on the other hand, established fulfillment centers and delivery fleets to ensure prompt deliveries.

Despite these advancements, existing systems primarily focus on after products are made, prompting the question of whether further optimization is achievable.

Temu’s Next-Generation Manufacturing enhances the entire process, from product design to customer delivery. Temu shares consumer preferences with manufacturers and merchants to increase production efficiency, minimize waste and the risk of surplus inventory, and lower marketing expenses.

Temu’s Next-Gen Manufacturing is estimated to reduce costs by at least 50%

Temu is able to offer significantly lower prices than its peers by leveraging its Next-Gen Manufacturing program. Unlike traditional retail models that start with product production, Temu starts at the product development stage and extends optimization to last-mile delivery. By doing so, the NGM program reduces costs by up to 50% compared to conventional systems, resulting in cheaper, customized products for consumers. These cost savings are then passed on to the consumer, enabling Temu to offer more affordable prices than its competitors.

By sharing insights into consumer preferences and shopping behaviors, Temu cuts down on guesswork pre-production, reduces waste, eliminates inventory risk and lowers marketing costs. As quantity is better predicted, warehouses can be much smaller, and products can be shipped immediately from factory lines to sorting facilities for timely delivery. This process offers a more direct, predictable and transparent process from design to delivery, making Temu’s prices much lower than its peers. Photo provided by unsplash

Next-Gen Manufacturing restructures the manufacturing process to begin with consumer demand, which informs what manufacturers produce. This reverses the traditional business model of “produce first, sell later.” In the traditional model, manufacturers rely on intermediaries, such as department stores, to sell their goods to consumers.

These same intermediaries stand between producer and buyer, such that buyer feedback is delayed as it makes its way through the intermediary to the brand owner or manufacturer. This gap between what manufacturers understand of the market and what consumers want at that very moment often results in unnecessary guesswork and imprecision in forecasting demand. Very often, this leads to overproduction or undersupply as producers misjudge the level of demand, resulting in either glut or shortages, with a corresponding impact on pricing and inventory.

Next-Gen Manufacturing offers superior consumer insights

Next-Gen Manufacturing by Temu offers continuous, real-time feedback to merchants at no cost, providing insights that surpass traditional consumer surveys and market research. As more consumers choose Temu for their shopping needs, upstream manufacturers gain a better understanding of their preferences, allowing them to tailor products to specific groups at competitive prices.

NGM grants merchants greater visibility into buyer behavior, enabling them to predict demand for specific products with higher accuracy. Consequently, manufacturers can plan production with increased certainty, resulting in reduced waste of raw materials and shorter turnaround times.

Improved demand prediction also minimizes inventory risk. Manufacturers can worry less about being left with unsellable merchandise, as they can more accurately forecast demand. This reduces risks associated with overproduction, unnecessary warehousing and inventory costs, ultimately freeing up capital.

Additionally, less spending is required for marketing products that consumers already desire. Customers purchase what they need, and products are made specifically for their target audience.

Next-Gen Manufacturing benefits consumers by offering more personalized products, quicker delivery and potentially lower costs. By producing items more closely aligned with consumer needs, manufacturers can decrease costs related to waste and unsold goods, ultimately resulting in lower prices for consumers.

Temu strikes a balance between quality and affordability

With its innovative approach, Temu strikes a balance between quality and affordability by enhancing demand forecasting and enabling manufacturers to create products that cater to consumer preferences.

Leveraging digital technology and e-commerce platforms, Temu facilitates direct communication between manufacturers and consumers, resulting in more efficient production, diminished waste and increased sustainability. As the retail landscape continues to evolve, Next-Gen Manufacturing is poised to play a pivotal role in the sector’s future, laying the foundation for a more diverse, sustainable and customer-oriented retail environment.

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