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Reporter | Ren Siyuan, Deng Yiyun, Cui Shuo

Editor | Wang Shanshan

At around 10 o'clock in the morning on July 29, Zhang Han once again came to the downstairs of Aoyuan International Center in Panyu District, Guangzhou - the headquarters of TEMU, a cross-border e-commerce platform under Pinduoduo.

Zhang Han is a seller of TEMU. He and a group of rights protection sellers agreed to carry out a "big action": since they were not invited visitors, they had to first climb up the fire escape stairs to the 30th floor of the office building, gather there for a short rest, and then rush to the TEMU office area on the 25th floor to file a face-to-face rights protection complaint.

The rights protection demands of these sellers are all centered around the hefty fines they have received from the TEMU platform this year. This rights protection campaign began in May this year, and by early July only a dozen sellers were directly involved in the communication with TEMU, and they went to the TEMU Guangzhou headquarters and the local petition department about 10 times to seek negotiations. It was not until a concentrated rights protection action a week ago (July 22) that the number of sellers holding banners and demonstrating downstairs of the TEMU headquarters exceeded 100 for the first time.

At 12 noon on July 29, before the fire escape was blocked, a total of 70 to 80 people gathered on the 30th floor. About half of them then entered the TEMU office area on the 25th floor to find the relevant person in charge to negotiate their rights protection demands. This was also the first time that the rights protection sellers successfully rushed into the core office area of ​​TEMU after months of rights protection.

The TEMU employees who were sitting at their respective workstations in the office area were soon notified to leave work. They turned off their computers and left the office one after another.

At around 1 p.m. on July 29, TEMU employees were notified to leave work temporarily, and the entire office area was empty.

The person who stayed behind to receive the rights-defending sellers was no longer the director of public affairs who had represented TEMU several times before, but his assistant. In a round of communication at the end of June, the director said that a portion of the after-sales reserve funds would be gradually released for a small group of rights-defending sellers. Zhang Han had a total of 2.8 million yuan of after-sales reserve funds frozen. After this negotiation, he did receive a refund of 100,000 yuan, but then TEMU's merchant system showed that he was fined more than 60,000 yuan in after-sales reserve funds.

Later, even the only TEMU public affairs employee who was sent out to communicate disappeared from the office area. Throughout the afternoon, more sellers who were also dissatisfied with the platform policy rushed to Aoyuan International Center to show their support after receiving the news. Most of them were blocked outside the office building and were not allowed to enter. According to Zhang Han's visual estimation, the momentum has increased several times compared to last Monday. He thinks there should be 400 to 500 people. Some interviewed sellers also said that the number of people who participated in the rights protection this time reached 800.

Around 5 p.m., dozens of sellers sitting in the corridor on the 25th floor office area were persuaded to leave by the police for occupying other people's office space. At that time, there were still 100 to 200 rights defenders on the first floor. In the end, everyone did not receive any new response from TEMU and had to leave.

On the evening of July 29, YiMagazine interviewed several sellers on the TEMU platform. They had all received fines from TEMU for various reasons, and some of them had participated in the rights protection activities since May. It is hard to say that it is a coincidence. These sellers have many commonalities in their statements: most of them are first-generation sellers who actively joined TEMU very early; they are currently still using TEMU's "full trusteeship" (editor's note: sellers are only responsible for submitting product information to the platform and shipping to TEMU's warehouse in China, and the platform is responsible for updating the store's front-end product page, online customer service, and cross-border logistics) model to operate the platform's business; they all suddenly felt that TEMU's fines were becoming more and more "out of control" since this year, but they could not get a full explanation from the platform and the necessary appeal channels, and then they realized that they had been trapped in some unfair terms.

A seller provided a screenshot of the details of compensation deductions when interviewed on July 29, and received as many as 9 payments within half a day.

Almost every seller interviewed said that "there was no fine last year", and the intensive fines began this year during the Spring Festival. Sellers also found that "notifications to modify the agreement will often pop up" during the login steps of the seller system since 2024. If you do not click to agree, you will not be able to enter your store backend to view the data, and of course you will not have the opportunity to withdraw sales proceeds.

In the second half of last year, TEMU revised the "After-Sales Service Rules", an important part of the merchant cooperation agreement, and proposed that for products determined by the platform to have quality issues, the platform has the right to require sellers to pay after-sales compensation at 5 times the total price (product declared price when the order is generated X number of products).

In January this year, TEMU adjusted the above-mentioned 5-fold fine to "fine amount divided according to product quality score". The quality score is divided into four levels: <60 points, 60-70 points, 70-80 points and 90-100 points. For goods returned by consumers, in addition to "not settling the payment for the order", they will be subject to four penalties: 5 times, 2.5 times, 1.5 times or exemption from deduction of compensation. The fine seems to be no longer "one size fits all", but a new problem has arisen - the platform has not made a clear explanation of the scoring standard for "quality score".

From media reports and screenshots of penalty records provided by interviewed sellers, we can see that at least since May, TEMU's after-sales penalties have been updated from "processed every few weeks" to "processed daily." This means that sellers who often go through after-sales procedures may be bombarded with a series of fines every day, and this frequency further stimulates sellers' anxiety and anger.

Considering the "reverse logistics" generated by after-sales returns and exchanges in cross-border e-commerce, which is not only cumbersome and costly, a large number of low-priced products on TEMU can actually enjoy a 90-day after-sales policy of "full refund if not satisfied but no need to return". Consumers may apply for returns because the size of the goods does not match the actual size or there are clear quality problems. TEMU will not provide sellers with evidence such as physical photos of the goods in these specific return orders to fully prove that the goods do have quality problems. This makes it difficult for sellers who cannot get the returned goods back and have to pay several times the compensation to be convinced by the platform's judgment, because the reason for the return may also be that the consumer personally does not like it or it does not meet expectations.

Another conflict between the two parties is centered on a platform-frozen fund called "post-sales reserve." In addition to generating different multiples of compensation, orders that enter the after-sales stage will also generate another frozen amount, which is named "post-sales reserve" by the platform. TEMU did not disclose to sellers the conversion relationship between the actual compensation for each return and the after-sales reserve, nor did it inform them how long after the freeze the money would be returned. Based on the actual frozen amount, sellers estimated that the money was an average of 2 to 3 times the fine. "From the beginning to the end, this has been an opaque and unreasonable deduction." A seller told YiMagazine.

A seller who participated in the rights protection said that during the communication with TEMU, the other party once gave a reply that "the reason why we have so many factories is that the quality of our products is too poor, which is why we are constantly being returned and fined", so they should be responsible for this result. The rights protection seller was also told that Guangzhou Yucan Information Technology Co., Ltd. (legal person is Pinduoduo co-CEO Zhao Jiazhen), which signed the contract with the seller on behalf of the TEMU platform, is not the platform entity of TEMU, so it is difficult for the seller to sue.

In order to prove that their experience was not an isolated case, the first dozen sellers who started the rights protection campaign compiled a list of 279 fines at the rights protection site on July 22, involving reserved amounts and fines totaling 114 million yuan. In this statistical document obtained by YiMagazine, each transaction recorded the corresponding seller's backend ID, company name, legal person name and ID information, and more than 100 sellers involved signed and pressed their fingerprints at the end of the document.

In May this year, dozens of sellers jointly signed a petition and submitted it to the petition agency where TEMU’s headquarters is located.

Zhang Han and more than a dozen sellers first hope that TEMU can state the basis for the penalty, such as pictures of the problematic goods or after-sales receipts submitted by consumers. In addition, they also hope that TEMU can return the fines and after-sales reserve funds for unknown reasons.

While these sellers are defending their rights, they are still receiving various policy revision pop-ups pushed by the platform. For example, a seller received a "new rule pop-up" notification as soon as he logged in, requiring the seller to keep confidential the platform information such as the conversations with buyers. If it is leaked to a third party, a fine of 1 million to 2 million US dollars may be imposed. Unlike in the past, this time the seller carefully read the terms and chose "disagree", and gave up logging into his store backend.

TEMU landed in the North American market in the fall of 2022, relying on heavy marketing to break the ice on C-end traffic. At the same time, it also used the "full trusteeship" model to successfully persuade a large number of domestic clothing companies to become its suppliers, many of which were even factory owners with no direct foreign trade experience. They were initially willing to join TEMU with the purpose of "dumping tail goods". However, this year, TEMU's strategy has undergone a major turning point, and it has made every effort to promote the "semi-trusteeship" model for suppliers, that is, sellers - the goal is to attract big sellers with more cross-border trade experience and overseas logistics service capabilities. These new sellers have brought richer categories, better product quality and more adequate after-sales guarantees to the platform. Correspondingly, the position of a large number of sellers in the first generation of "full trusteeship" models in TEMU is destined to become increasingly embarrassing. At present, these tickets with insufficient evidence but nowhere to appeal are objectively accelerating the persuasion of this group of sellers to voluntarily abandon TEMU.

The following are the statements of several interviewed TEMU sellers:

We have a clothing factory with more than 30 employees in Guangdong, and have been engaged in traditional B2B foreign trade for more than 20 years. We settled in TEMU in March 2023, when TEMU had just opened. We valued its relatively simple "full-hosting model" and did not need to operate it ourselves. At the same time, its delivery period and quantity were relatively flexible, which was not stressful for small and medium-sized factories like us.

Our understanding of full trusteeship is that the platform is responsible for operations and ordering, and we are responsible for supply, that is, we only need to produce products that match their requirements. In 2023, I didn't feel the fine too much. At the beginning of 2024, I received the first reminder of the fine, but I didn't pay much attention to it at the time, because it should be the same as other platforms that were fined according to the rules due to after-sales quality issues.

But I became increasingly dissatisfied with the fines that followed, because these fine reminders did not include any evidence of poor quality from the buyers, but only a fine reason from the platform, such as the size was too big or too small, the packaging was too old, etc. If the user wanted a refund, they only needed to select a reason option in the background. The fine information I received only told me which order and which style was returned, and I didn't know which customer it was, whether the fine was 1.5 times or 5 times the purchase price.

After May, I felt that something else was not right - although we produced a lot of goods, the money we raised was sometimes not even enough to pay the workers' salaries.

It was only then that I started to calculate the accounts. If I looked at the sales volume, I found that more than 630,000 yuan was missing. I checked the backend and found that the money was frozen after-sales reserve. Whenever there is a product entering after-sales and a fine is incurred, the platform will deduct such a reserve. This money plus the fine I paid, from the beginning of this year to now, is almost 1.63 million yuan in total. Our store's total revenue this year is 4.4 million yuan.

We later realized that these changes should be due to TEMU updating the relevant terms at the beginning of the year. The updates to these terms often pop up through "pop-ups" before we log in to the platform. If you don't sign and agree, you can't enter the store's management backend. Our profit margin in 2023 is good, and we have gradually cut off many other channels. Cash flow mainly depends on this platform. At the beginning of this year, I definitely still wanted to do business well, so I didn't realize that I should read the terms carefully at the time, and just clicked to agree.

When I checked the records of the withheld reserve funds again, I found that although the agreement was signed in early 2024, the deduction of the reserve funds was first counted and frozen based on the sales situation in August last year. In other words, we signed the agreement this year, but the platform will check last year's transaction history to settle old accounts and deduct money. What makes me most angry is that in theory the platform has a 90-day after-sales period, after which the money should be released to us. But in fact, there is no clear regulation on when the seller can get back how much after-sales reserve funds.

There is another detail, the system page will only show the reserve for a certain month. If the boss is not careful, he will only pay attention to the reserve amount of his last month, but there is actually a total frozen amount, which you need to calculate yourself, and you will probably find that it is a huge expense.

So I started talking to my seller friends and learned that many people have similar situations. In addition, many sellers, especially older factory owners, still don’t know about the existence of reserve funds, but they are all angry because there is no evidence for the fines.

In addition, we all believe that as a fully managed supplier, our mission is completed after we have delivered the goods according to the platform's requirements. We are not responsible for meeting the expectations of customers, which is the responsibility of TEMU. We sent the goods to TEMU for review, but now they want to fine us for not selling the goods to consumers, which is unreasonable.

After the Spring Festival this year, we have been fined by TEMU for after-sales problems, which I feel is wrong, because in 2023 we have not been fined for after-sales problems, whether quality or other issues. When TEMU fines you, it will only tell you that the fine is due to missing parts or packaging problems, but will not provide any evidence, and then tell you how many times the fine will be deducted. You do not have any channel to appeal on the platform, and the money is directly deducted.

Because I feel that the fines from TEMU have become a bit out of control this year, our store was quick to respond and cut many of the fined products, from 1,000 to only a few dozen now. The fines have made me afraid to expand my business, and I feel very insecure when I am fined tens of thousands of yuan.

We used to have thousands of orders a day on TEMU, but now we only have a few hundred. Last year, we made a few hundred thousand yuan a month on average on TEMU. In June this year, the gross profit from the collection was only 30,000 yuan, and after deducting the staff's wages and fines, we are still losing money.

So we plan to focus all our efforts on other cross-border platforms - our products will be listed on Shein, AliExpress, Amazon and Lazada at the same time, and we will not encounter these penalties on other cross-border e-commerce platforms. On one of our platforms, we received no more than 10 fines in a whole year, and after the buyer provided the product physical picture, the platform would initiate a return ticket and allow the seller to appeal. In the end, I successfully appealed all 9 fines.

What’s even worse is that TEMU has removed a large number of our products from the shelves this year on the grounds that we did not provide a “product quality certification” that meets the standards. Now the warehouse is full of returned products.

We sell toys. TEMU's new requirement is to issue as many quality certificates as the number of products on the shelves. They will formulate their own set of certification standards each time. All our certificates are from formal inspection agencies, and they meet the qualification requirements of other cross-border e-commerce platforms, but they cannot be used on TEMU. They specify a standard every once in a while, and the factory often makes new products according to their last standard, but finds that the standard has changed again, and the product is scrapped again.

This is very unprofessional. No factory can do this, nor will they be willing to do so. Moreover, the cunning part of the platform is that you do not need to provide a certificate when your product is first put on the shelf. You will only be informed that you need to provide a certificate after sales have been generated. Therefore, more and more factories are willing to join, but only after joining will they find out that there are pitfalls.

The TEMU buyers who work with us are on the side of the sellers, but the rules are made and enforced by employees who hold the role of "governance". Buyers and "governance" are on an equal footing, and governance often says that "the rules are not negotiable."

The TEMU platform is still in the traffic dividend period. After all, it was built with money, but it is not worth doing in the long run. Although there are many orders, the money earned in your pocket is not much.

We have been in TEMU since its founding. In the past two years, we have been deducted about 600,000 yuan in "after-sales compensation". This year, we have been fined about 400,000 yuan. Sometimes we are fined a few dozen yuan a day, sometimes we are fined 5,000 or 6,000 yuan a day, and it has nothing to do with sales.

I remember that the initial settlement agreement did not mention fines. Deductions began around April or May last year. The first fine was 5 times the price of the product, which was deducted directly from the payment. Later, the deduction policy was adjusted to deduct different multiples based on the product quality score in the background.

Every product on the shelf has a quality score after it is sold and reviewed. The score changes almost every day, but we don’t know how this score is calculated.

A few days ago, the buyer informed us that the scoring rules would change. The day before yesterday (July 28), I found that the scores of some products suddenly increased, while some decreased. I don’t know why. I asked the buyer, but he couldn’t explain it.

In fact, when the fine was first calculated at 5 times, the probability of being fined was not very high. When the rules were changed to calculate fines based on quality points, there were not many fines at the beginning. But this year during the Spring Festival, there was a sudden peak in deductions, and more than 100,000 yuan was deducted from me in almost one month. Some of the deductions involved orders from a long time ago, and I can't match them to specific orders, but I can find that some of the styles that were fined only had 30 to 50 pieces at the time and had not been restocked for a long time, which means that they were orders sold a long time ago.

After the crazy deductions during the Spring Festival, I found a few popular styles and calculated that the average loss for each piece of clothing was more than 10%. One style had a gross profit of about 13 yuan per piece, with a gross profit margin of nearly 30%. After the deductions, the gross profit per piece was only 3.6 yuan, with a gross profit margin of less than 10%.

The backend can see every deduction and the reason for the consumer's return, but it is difficult to match it with the return order we exported from the backend. These are two different systems with different order numbers. I sell hundreds of clothes a day, and it is impossible to check them one by one, so we cannot file a complaint. I have reason to believe that the platform deliberately makes it impossible for us to check.

If it is a product quality issue, we will certainly accept the penalty. I am not against the fine, but the platform cannot arbitrarily fine me when I don’t know anything. The after-sales rate of women’s clothing is relatively high, 8%-12% for woven clothing and 2%-3% for knitted clothing. It is not reasonable to deduct money for some non-quality issues. I think TEMU is biased towards consumers. The options provided to consumers in the after-sales process are directional. Many options are oriented to product quality issues, and there are even options like "the product packaging is intact, but the product packaging is very old". The reasons for return do not involve consumers' own responsibilities.

In the TEMU backend, the reason of "the actual product does not match the product description" accounts for more than 1/4 of our deduction orders. However, it is quite common that the actual effect of the clothes you wear is different from that of the model in the picture. You cannot say that the actual product does not match the product description just because of this. How can I seek justice? We cannot communicate directly with the buyers.

We have also settled in other cross-border e-commerce platforms. SHEIN will require consumers to upload pictures when applying for returns, and then fine the seller after confirmation. I think this is reasonable, and I am willing to be fined. TikTok currently does not have a penalty mechanism. If the proportion of customer complaints reaches a certain limit and it is confirmed that it is a product quality issue, the platform will limit traffic, which is also reasonable.

We have communicated with the TEMU buyer, but it is useless. We are fined every day, and we cannot go to him every day. The buyer may contact hundreds of merchants. He cannot answer your questions, and he may not think that this rule is reasonable, but he has no other choice. The buyer will suggest that we control the quality score, but this cannot help us recover the money that was deducted.

After the Spring Festival, we made adjustments in various ways. Products with high customer complaints and after-sales ratios, or whose profit margins were not enough to support fines, would be removed from the shelves. One of our purposes for doing TEMU is to "support the factory", because its order volume is indeed large and stable, which can be used to revitalize our factory and employees, but that's all. It is impossible to expect to make a fortune in TEMU - currently our cargo volume in TEMU accounts for half of the total, but the profit accounts for less than 10%.

TEMU's practice will affect the entire cross-border e-commerce ecosystem. All sellers will have to infinitely reduce costs and processes in order to make more money. The end result is that everyone will think that Chinese products are rubbish, which is not a good thing for the entire overseas expansion of Chinese products.

I have been doing foreign trade business and joined TEMU in December last year. In April and May this year, I saw other sellers mentioned being fined online, so I checked my accounts. I was shocked to find that I had been fined a long time ago and a lot of money was deducted, mainly after-sales compensation, almost every day.

As long as a product is sold for a period of time, it will be deducted because under normal circumstances, each product will have a certain return rate, and if there is a return, a fine will be imposed. I was deducted the most in May, with a total sales of 24,000 yuan, and deductions of about 5,300 yuan, accounting for more than 20%. The money I was deducted was not much, because the category I was selling covered a relatively small range of consumers, but I had no profit to make - my original profit margin was only about 20%, and (after deducting the fine) I couldn't do it anymore.

If the cost of a product is 8 yuan, I supply it to TEMU at 10 yuan. TEMU will price it at 30 yuan after taking into account logistics and other costs (Editor's note: the compensation is based on the 30 yuan order generation price as the basis for doubling the deduction). Usually, after the product is sold, the buyer will receive the goods for a period of time before the sales amount is settled.This process is equivalent to the seller depositing a lot of money for the goods, and the platform will directly deduct a fine from it, and the remaining amount is your actual repayment.

After I found out that I was being deducted, I gradually reduced the products I sold on TEMU and stopped the loss in time. Now I have reduced it from 80 or 90 products at the beginning to 7 or 8. After selling the remaining inventory, I will not do this platform anymore. However, I saw many sellers say that they can't withdraw even if they want to. TEMU does not have a clear exit like other platforms. I will study it again when the time comes. I also paid a deposit of 1,000 yuan when I joined.

In addition, it will continue to lower the price of goods. If the seller is unwilling to adjust the price, the platform will limit your traffic, forcing the seller to lower the price little by little. I can reduce the quality and make up for the 20% fine, but I don’t want to do that. We produce and sell our own products, and we also have our own foreign trade wholesale customers. Even if we can’t sell them in TEMU, we can sell them through other channels. Our sales in TEMU do not account for much, and at the highest, it is less than 10%.

I have also done business on Amazon before. The seller needs to bear the shipping costs for returns, but the buyer has to return the goods to Amazon's warehouse. I think this is a normal and fair way of trading. The price of goods on Amazon can be set higher, several times that of TEMU, so it is still profitable.

Many products on TEMU are "refund only", and I still can't get the returned products. This situation is very unfair to sellers. The backend shows that many after-sales application reasons are "the actual product does not match the product description", which depends entirely on the buyer's personal feelings. We use real photos, and the style and size are exactly the same as the displayed pictures. I decided to do TEMU last year because I saw that it had a lot of traffic, so I wanted to give it a try. In fact, its traffic is really good, but the effect is limited for the category I do, and I can't make money because of the fines.

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