The Temu growth is incredible. Over 230 million users in more than 70 countries. We often debate how much longer parent Pinduoduo can fund the growth but just take a look at the chart below.

As Temu continues to explode, it seems the China based suppliers and factories are feeling the burden of “returnless eCommerce.” When a customer isn’t required to return an item, the retailer funds sales at no profit AND the parent company is splurging on advertising, the economics aren’t pretty.

“Earlier this year, suppliers such as Xiang said they started to notice frequent penalties amounting to as much as five times the shipment price of their products. The penalty notices usually cited subpar quality or sizes or colors failing to meet shoppers’ expectations, but Temu didn’t provide documentation or offer a way for sellers to appeal, according to suppliers.

“We have no visibility into return information and no contact with shoppers,” said Ke Ling, a Temu supplier based in Dongguan near Guangzhou. “I will willingly accept fines if you show me evidence. How can you not provide any documentation at all?””

Additionally Temu continues to push the marketplace for sellers based in China with US domestic warehousing. Many of these sellers currently sell on Amazon using the Fulfillment by Amazon program.

Without the incentives or overtaxing of current suppliers, can Temu ever dial down the spending and incentives yet keep the customers addicted to the platform?