I’ve been selling on Amazon for a few years, and like a lot of people, I’ve been watching Temu grow and wondering if it’s worth jumping in. Instead of just guessing, I spent some time breaking down the economics of both platforms. Figured I’d share what I found – maybe it helps someone else thinking about the same thing.

The basic analogy

I think of Amazon like a flea market. Hundreds of sellers, each running their own booth. You pay rent (commission), you pay for advertising to get foot traffic, you set your own prices, you manage your own inventory. If you’re good at it, you make money. If you’re not, you eat the losses.

Temu feels more like a supermarket. One store, centrally managed. You don’t run a booth – you just supply the products. Temu sets the price, runs the promotions, handles customer service. You’re not competing against other sellers on the same shelf; you’re just hoping they pick your product to stock.

Where the money goes

I ran numbers on two hypothetical products – a lower‑cost item and a higher‑end one – to see how margins shake out.

On Amazon:

  • Low‑cost product ($9.99) – after Amazon’s 15% commission, FBA fees, and advertising (which eats a huge chunk for most sellers), you’re looking at maybe $3 in profit per unit.

  • Higher‑end product ($99) – better margins. After fees and ad costs, maybe $25 per unit.

The upside is you control your price. The downside is Amazon takes a big cut, and ads are basically mandatory if you want to move volume.

On Temu (semi‑managed, seller handles logistics):

  • Low‑cost product – the platform will price it lower (around $6–7), and after your supply cost and shipping, you might make $0.50–1 per unit. Margins are thinner, but you’re not paying for ads or commissions.

  • Higher‑end product – they’ll price it competitively, maybe $80 instead of $99. Your cut ends up around $10 per unit.

What’s interesting is that on Temu, your margin is basically your net profit. No commission, no ad spend. The flip side is you have zero control over the final price.

How Temu makes it work

What I didn’t realize at first is that Temu uses what they call “smart pricing.” They’ll take lower margins on some products (or even subsidize them) to drive traffic and hook customers. Then they make it up on higher‑margin items.

Basically, the low‑cost stuff builds volume and keeps people coming back. The higher‑end stuff brings in the profit. It’s not that different from how Costco or Trader Joe’s operates – loss leaders and high‑margin products working together.

For customers, the value is obvious. On those two examples:

  • Low‑cost product: saves about $3.90 vs Amazon

  • Higher‑end product: saves about $20

That’s a compelling difference, especially in a tough economy.

Long‑term, what does this mean?

If Temu keeps growing, it’s going to put pressure on suppliers to be more efficient. That’s already happening – factories are selling direct, and middle‑men are getting squeezed.

The biggest question mark has always been logistics. Temu’s early reputation was slow shipping. But they’ve been pushing semi‑managed harder, which means more sellers using US‑based 3PLs or their own warehouses. If they solve the delivery speed problem, Amazon’s advantage shrinks.

Who should actually get into Temu?

From what I’ve seen, Temu works best if you already have:

  • A strong supply chain – you’re either manufacturing or have direct factory access. If you’re just buying from wholesalers, margins get crushed.

  • US/EU warehousing – semi‑managed is where the volume is shifting. If you don’t have a fulfillment setup already, it’s a bigger lift.

  • Products that aren’t in the bottom‑of‑the‑barrel price war – think unique designs, good quality, things people can’t find 20 copies of from other sellers.

One category I’d avoid unless you have serious advantages: clothing. High return rates, sizing issues, and constant style turnover make it tough on a platform where you don’t control the pricing or customer interaction.

My take

I’m not saying everyone should drop Amazon and run to Temu. But if you already have the logistics and supply chain in place, adding Temu as another channel makes sense. The platform is still growing, and early movers usually benefit.

It’s also a decent way to move inventory that’s sitting around – Amazon stock that’s been aging, slow‑movers, etc. Not a long‑term strategy, but it helps clean up the balance sheet.

Curious if anyone here has been selling on Temu for a while – how’s your experience matching up to this? Am I missing anything big?