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Special author: Wang Hanyang

Join the Game

Wang Hua spent ten years starting from a small garage in Chicago and gradually built a network of warehouses in the United States. But not long ago, he was faced with the dilemma of having no goods to ship out of his 30,000 square meter multi-storey warehouse.

Ten years ago, a high school classmate of Wang Hua asked if he could use his garage to store phone cases and help with shipping. At that time, Amazon could not accept all products into the warehouse, and many sellers had to ship them themselves. Wang Hua could earn more than $100 by helping unpack and ship for two hours every day. That was probably the golden age of China's cross-border e-commerce, with a large number of cheap products rapidly flooding into the US market.

Just two months later, the garage could no longer hold the phone cases waiting to be shipped. He and his friend had to look for another place. Finally, considering that the U.S. Postal Service needed to pick up parcels from the storefront facing the street, they rented a suitable warehouse for $1,500 a month. At this time, Wang Hua made a profit of tens of thousands of dollars a month. Because almost any small commodity from China is cheap in the United States. As long as these cost-effective products can be brought to the United States, anyone can participate in the cross-border e-commerce game.

More merchants in or from China discovered Amazon's fertile e-commerce land and began to flock in. However, a large number of merchants who came here with high hopes had to return home disappointed because they lacked understanding of the US market. In addition, after the epidemic, the price of Amazon's own traffic has gradually increased. In order to cope with the cost of traffic, Amazon chose to increase storage prices. At this time, it is no longer the same as before. Merchants need to send goods to Amazon's designated warehouses in advance before they can be put on the shelves. In this way, a large number of goods cannot withstand Amazon's storage costs and become backlogs.

Amazon is no longer a place where you can rely on cheap prices alone, not to mention that being too cheap will result in losses. For most small commodities, if they cannot be sold, you have to pay Amazon, and if you take them back and have Amazon ship them back to China, it will also cost money. So Wang Hua's warehouse became the destination for these leftover goods, and he gained another business.

Wang Hua originally thought that TikTok would be the next fertile ground, so he prepared a new warehouse in advance last year. However, things did not go as he wished, and TikTok did not rise quickly in the United States. In the end, he only used about 10% of his warehouse.

However, there is an advantage to running a warehouse business: if a customer's goods are increasing rapidly, you will know it first. He asked a customer who suddenly started to increase his sales what platform he used, and the answer was: Temu. Wang Hua also wanted to try it. Temu also needs merchants like Wang Hua who have overseas warehouses, so its agents are active on various platforms with overseas Chinese. Wang Hua easily found an agent on Xiaohongshu to connect with Temu. He also paid a deposit of 10,000 yuan to open a store on Temu.

The reason why Temu is eagerly looking for people like Wang Hua is that it has changed from a "full-hosting" model to a hybrid of "full-hosting + semi-hosting".

Under the "full trusteeship" model, merchants only need to send their products to Temu's warehouse in China, which is equivalent to becoming Temu's supplier, and they don't have to worry about the rest. Temu will be responsible for traffic, logistics, customs clearance, warehousing and other issues that cross-border merchants originally need to solve themselves. This has given many merchants who originally did not have much cross-border experience an opportunity.

However, as a latecomer, Temu does not have a complete warehousing and logistics system in the United States like Amazon. Therefore, in the early days, it relied more on sending small and light items directly to the United States by air, and then handing them over to warehousing and logistics companies. This made Temu take several times longer to deliver than Amazon, and 75% of American consumers were willing to pay extra to get the goods faster.

A street grocery store may have lower prices than Walmart, but it will never surpass Walmart because the products are not good enough and the selection is not rich enough. Temu's low price advantage also greatly limits the number of its products - after all, large items still have to be shipped by sea. Therefore, Temu also needs merchants with local warehouses to improve logistics speed and increase product selection. Amazon has a total of 850 million SKUs worldwide, and AliExpress has over 100 million worldwide, but Temu only has tens of millions, and the variety alone is not as good as some convenience stores.

In order to solve the logistics problem, Amazon has built 110 distribution centers across the U.S. over a period of more than ten years. Some large distribution centers are larger than the Forbidden City and have 1,500 full-time employees.

Amazon Headquarters

Temu can't wait that long, it has to race against time. Since it doesn't have the ability to build this system, it will find someone who can. So it looks for merchants in the United States who have their own warehouses. "Temu is no longer responsible for the four links of domestic warehousing, international logistics, overseas warehousing, and returns and exchanges. Large sellers will directly prepare the goods in advance and ship them to overseas cooperative warehouses. The fees saved by the platform will be added to the selling price of semi-managed goods by merchants."

Wang Hua's leftover goods have a place to go, because these goods in the United States can be shipped the fastest, and Temu is willing to tilt traffic to this kind of local inventory - the premise is that Wang Hua can guarantee to put 20 new SKUs on the shelves every day. He said: "As long as it is on the shelves, there will be traffic, and orders will be placed, without spending a penny. Amazon cannot do without thousands of reviews. This model is very suitable for clearing inventory." However, the task of 20 SKUs per day is not easy, and the supply of leftover goods is unstable. So he searched everywhere in the United States. But basically, as long as it is put on the shelves, it will be sold out in a few days. So some merchants with their own leftover goods took the initiative to ask him for help.

But he never expected at the beginning that Temu would grow so fast and soon his new warehouse would no longer be idle.

Wang Hua is just one of many beneficiaries of the Temu wave. And Temu is indeed working hard to attract these people. Temu has done everything it can to ensure that its products are cheaper than others. Now it wants to keep it cheaper, and faster.

Chinese players in American games

Temu’s accelerating rise highlights a problem facing industry leader Amazon: it can’t get cheaper.

Amazon has developed into an oversaturated platform with merchants today. It has very strong bargaining power. So Amazon raised the price allocated to merchant traffic. This is particularly evident in Amazon's first quarter 2024 financial report: although GMV increased by 12.5%, advertising revenue increased by 24.3%, far exceeding the growth rate of GMV. This means that sellers spent more money on advertising, but sales did not increase by a corresponding amount. The more money sellers spend on advertising, the more it means that the money will eventually be reflected in the selling price. There are already enough Chinese players in the e-commerce game in the United States, but Temu gives these players a currently better choice besides Amazon.

A cross-border e-commerce practitioner gave an example: suppose there are 50 folding chairs that cost $6 and are sold for $19.99. Amazon charges an additional $10 for delivery. The merchant also has to pay for the delivery from the warehouse to the Amazon warehouse. On average, the profit for each chair is about $3.

If you put it on Temu, the platform will lower the price to $16. The shipping cost of each chair is about $7. The merchant entrusts the overseas warehouse to store these 50 chairs for $15 per month, which is not high. The profit of such a chair is still about $3.

Temu can be cheaper than Amazon and still make the same profit for merchants.

This calculation method is still an ideal situation for Amazon. In reality, merchants still need to buy traffic or even spend money to post reviews. According to the current traffic of Temu, merchants are confident that they can sell out all in the short term without investing in traffic. Not only is it difficult to sell out on Amazon, but they also charge a return fee for returns. Some merchants also said that although Temu’s return rate is simple, it is only 2% at present, but Amazon is 5%-8%.

This has motivated a large number of sellers who were originally from Amazon to move to Temu. Temu also understands Chinese sellers better than Amazon. Amazon is not very friendly to these Chinese sellers. It is difficult to obtain traffic, it is difficult for sellers to find the relevant person in charge when encountering problems, and most things have to be figured out by themselves. Some sellers reported that the loss rate of items sent to Amazon warehouses has increased from 1% to 5%. This means that the 5% is gone before the goods are put into storage and sold. In the past, someone would definitely respond to such matters on Amazon, but now no one cares.

Temu is completely the opposite. Sellers who join the semi-hosting service find that anyone who sends a message will get a reply in seconds, and there are dedicated staff to teach them how to launch new products and how to maintain links. Temu's buyers will also notify these sellers in advance and tell them what the platform will promote next. Some merchants said that Temu's operation and he guaranteed that as long as a certain number of SKUs can be launched every day, they will continue to give traffic to the homepage. Some merchants also said that Temu's operation will guide merchants on how to list products that Amazon does not accept, and it is much more flexible than Amazon overall. The most important thing is that Temu will help merchants buy and attract traffic; Amazon will only buy traffic for itself, and merchants on the platform basically cannot get the traffic brought by Amazon's spending money on advertising.

Although it is in the United States, no one can leave Chinese sellers in this game of cheapness.

According to Marketplace Pulse, Chinese sellers account for almost 50% of the top sellers on Amazon in the United States, and may contribute nearly 50% of third-party GMV; another research institution, ecocrew, believes that Chinese sellers account for 63% of all sellers. Some American sellers lamented: "Don't compete with Chinese sellers on Amazon. If they enter your category, just give up. They know the Amazon system far better than 99.99% of non-Chinese sellers." Amazon used the word "significant" to describe these Chinese sellers in its annual financial report (10-K).

On one hand, there is the enthusiastic Temu customer service, where everything can be discussed clearly via WeChat; on the other hand, there is Amazon, where everything is troublesome. Chinese sellers naturally prefer Temu.

This is why Temu only allowed sellers from mainland China and Hong Kong to open stores for quite a long time, because this was enough. Temu used Chinese factories, Amazon's unwanted inventory, and Chinese sellers who were originally their suppliers to tear a crack from Bezos' country at extremely low prices.

The most difficult level

The e-commerce game has complex aspects: suppliers, supply chain, operational efficiency, products... Only when they are all done well can you be allowed to participate in the game. But the winners of each version have found their greatest advantages in different aspects. In China, in the latest version of the game, Pinduoduo achieved extremely low prices by relying on more sophisticated supplier and supply chain management than other players. Relying on low prices, it has restarted the game that was originally thought to be over, allowing everyone to join the game again.

Low prices are always the highest goal of e-commerce competition, and this is also true in the United States. Although the goals are the same, the level of the game in the United States is different from that in China. In the United States, there are many choices for semi-managed service providers, so Temu cannot control them like it controls domestic suppliers; more importantly, the problem in the United States cannot be won by volume.

Long before Wang Hua rented his first warehouse, the United States had already completed deindustrialization from the secondary industry to the tertiary industry. The United States does not produce most of the goods purchased by Americans, so American e-commerce is inherently cross-border e-commerce. In the American e-commerce game, if you want to participate, you must solve the problem of logistics. But the logistics problem that the United States needs to solve is completely different from that of China.

The postage from Yiwu to most parts of China can be as low as 0.5 yuan, so Pinduoduo offers free shipping on the entire platform. Consumers basically do not have to consider shipping costs when shopping. For Chinese buyers, it is obvious that shipping costs are more expensive when buying things from abroad. This does not need to be explained. The distance is longer and it is cross-border, so isn’t it more reasonable to be more expensive? But in the United States, the situation is the opposite: the logistics cost from China to the United States is even lower than the logistics cost within the United States.

As early as 2015, Amazon stated at the hearing: "A 100-gram package from North Carolina to Virginia costs at least $1.94, a distance of 547 miles; but a package of the same weight from Shanghai only costs $1.12, a distance of more than 11,000 kilometers. Similarly, sending a one-pound package from South Carolina to New York City costs almost six dollars, but from Beijing it only costs $3.66."

Amazon may not have thought that Temu would be able to come up with a new trick many years later. Because the U.S. Postal Service's subsidy for light and small items gives Chinese cross-border e-commerce represented by Temu an advantage in cost, small commodities can be directly mailed to the United States in the form of small items shipped by Chinese airlines. Amazon has warehouses across the United States, which requires merchants to send goods to different warehouses in advance. But under Temu's full-hosting model, after being ordered by consumers, the goods are sent directly from China to the nearest international airport for delivery.

The east coast of the United States has a larger population, but the west coast is closer to the production base in Asia. Domestic land logistics costs across the east and west coasts are high, and sea freight to the east coast is expensive. Flying directly from the place of origin is the cheapest. Using the negotiated prices with express delivery companies such as SF Express, plus subsidies for small packages, Temu's logistics costs are lower than Amazon's in most cases before the goods arrive at the warehouse in the United States. Even Amazon itself is aware of the problem, and it is reported that it is about to propose a special price zone for direct shipments from China. This is undoubtedly an imitation of Temu.

Temu and Amazon are doing exactly the same thing in the game: purchasing products made outside the United States at the lowest possible price and then moving them to consumers at the lowest possible cost. Many of Temu’s and Amazon’s sellers are actually the same people. The reason why leftovers are leftovers is definitely because of problems with the products themselves (not necessarily quality issues). Temu cannot rely on the same suppliers as Amazon and clearing out leftover inventory in the United States to beat Amazon.

Everyone uses the same factories to produce goods, the same sellers to sell goods, and the same logistics to ship goods to the United States. The most costly hurdle here is also similar: the last mile. Because Americans can move everything overseas to reduce costs, only the last mile is a real American problem that needs to be handled within the United States.

Forklifts and pallets crowded in the US warehouse

This step is also the most expensive step in the entire logistics process: Capgemini's report pointed out that the last mile delivery accounts for 53% of the total transportation cost and 41% of the overall supply chain cost. A seller used his own home as an example: "Once a courier drove to my house and delivered a package and left. It took an hour. He earned $25 per hour, so the cost of this order was that high." Although this situation is a bit extreme, it illustrates one thing: no matter how to reduce costs on the production side, the reduced part may be swallowed up by the last mile logistics.

Although most are not so extreme, the overall cost of each small order is about three dollars. Different suppliers in the United States have different prices. A supplier in the central United States calculated that it could do $3.9 per order, while a supplier on the West Coast believed that if the volume was large, it could do up to $2.5 per order. Amazon's costs are not transparent, but it charges members who do not meet the minimum purchase amount $2.99 ​​for postage.

According to YipitData's analysis, Temu's average order value in the United States is between $30 and $40. This means that up to 10% of the cost of each order may be consumed in the last mile. Temu believes that this is too expensive, and the reasonable cost should be one dollar, and one dollar can be subsidized in the early stage, for a total of two dollars.

Most local service providers gave up, but Temu's volume of orders must be met with courage. A Chinese-founded last-mile contractor named UniUni came up with an idea: half of the cost of the last mile comes from labor costs, so they chose not to recruit full-time couriers. The solution is to cooperate with part-time drivers and let them deliver goods while picking up passengers. UniUni did not deal directly with drivers at the beginning, but placed orders with drivers through a program called Beans Route.

But this is not feasible. Drivers simply cannot deliver goods while picking up passengers. They can only deliver seven to eight packages an hour. A driver showed his friend that he needed to deliver 59 packages on one day, and Beans Route planned a route for him. But in fact, if he followed this route, he could not take care of both passengers and goods. So later UniUni had to find another way.

Finally, Temu had to raise the price to $2.5 per order. For a while, Temu and the semi-managed overseas warehouse almost handed over the whole matter to the US Postal Service. The larger the volume, the cheaper it would be. But it is impossible to be lower than Amazon. An overseas warehouse owner calculated that even though Temu has a lower cost in cross-border delivery, it is still about the same as Amazon after taking into account the last mile.

This may just be a halftime break in the cost game, because Amazon has proved the importance of building a logistics system in the United States. The first is the pursuit of timeliness by American consumers. According to Emarketer statistics in 2022, 53% of online purchases by American consumers will arrive within 2-3 days; only 10% of the delivery time exceeds five days. But more than one-third (38%) of consumers prefer to receive the goods within one day. Temu's goods from China, even if they are semi-managed local warehouses, are only 7 days in time, and fully managed goods take longer.

The e-commerce game is all about cheapness. After stripping away all costs, the last mile still stands at the cost center. Temu cannot turn all links into its domestic suppliers and let them control them as they do. Anyone who wants to play this game better must face this problem. It's all in the game.

Difficult Pass

The issue of logistics costs has always been a challenge for the United States. As early as when West Coast cities such as San Francisco emerged, there was no railway crossing the East and West Coasts. In the mid-19th century, it took twice as long to travel from New York to San Francisco as it did from Hong Kong to San Francisco. Hong Kong also seized the opportunity to become the main supplier of goods to California. This is simply an early version of Temu. Nearly two hundred years have passed, and the specific problems have changed, but logistics as a major problem still plagues American companies.

The specific problem now is the last mile. Whether it is Temu, Amazon, Shein, or independent websites, all American e-commerce companies have to face this cost behemoth that can never be reduced. Perhaps the entire logistics cost in the United States can be roughly simplified into one problem: how to reduce the labor cost of the last mile.

Labor costs are hourly wages, hours and benefits. It is difficult to cut hourly wages and benefits. It seems that the only thing that can be done is to improve logistics efficiency and deliver more goods per unit time.

Take Amazon, which is the best at last-mile delivery, for example. A courier is usually responsible for 5-6 zip codes. A zip code can be as few as a few blocks or as many as several towns combined. Before delivering goods every day, the courier will see today's stops - that is, how many destinations the algorithm thinks they need to stop at.

If the daily task is within 150 stops, it will be a relatively easy day. But in most cases, a courier's daily workload is between 150-200 stops. But this does not represent the actual number of deliveries, because the system will merge nearby places into one stop. The actual number of places that need to be delivered may be more than 200 or even 300.

Amazon electric delivery vehicles commonly seen in the United States

There is a real physical distance between these stops. There may be a 40-minute drive, a crowded street, or a mail room with no one to open the door. A courier is responsible for delivering to large houses in wealthy areas, and the driveways in front of these houses are as long as a mile. Most of the driveways do not allow other vehicles to enter, and he even needs to be good at running to get there with the package.

It's not just the distance, there are a bunch of messy difficulties that you can't realize unless you're in it. Almost all couriers hate delivering at night because it's hard to read the addresses on mailboxes and houses, especially for single-family houses. There's also the worry that there won't be unleashed dogs in these houses that suddenly come out and scare people - FedEx can refuse to deliver because of this, but Amazon can't. According to Earnest statistics, Temu is growing fastest among high-income people. So Temu's last-mile delivery can't avoid the problems that Amazon will encounter.

The challenge of labor costs is the efficiency of delivery, but efficiency cannot be improved infinitely. Ultimately, the essence of the challenge is American urban planning. Rationalist planners in the last century believed that cities should be simplified and reduced in density, with highways running through them, and even that residents should leave the city and move to the suburbs. Therefore, the middle class and wealthy class in the United States are spread out in the suburbs around the city like sausages on a pizza.

These suburban residential areas, plus the vast rural areas that people pass by on the highway and never get off to look at, make up the last mile in the United States. Temu cannot rely on volume to solve this problem like Pinduoduo does in China, because the last mile is not a business problem, but a social problem. Social problems are like the weather, and you have to face it.

However, just like Pinduoduo's control over suppliers in China, Temu also adopted its familiar method overseas: let more players join, and then increase the price. Now in addition to UniUni, there are also last-mile carriers such as SpeedX and RoRo joining the competition. According to an insider, Temu currently charges Chinese-dominated carriers $1.8 per piece, Mexican-dominated carriers $1.6, and Angolan-dominated carriers $2.

The way to lower the price is that one driver only delivers to one zip code, which makes it easier for him to get familiar with the route and increase the number of deliveries within an hour; second, many illegal immigrants join in as relatively cheap laborers, who can work with work cards issued by the US government while waiting for their status. Some drivers said they can earn about $20-30 an hour.

However, this method is only applicable to large cities with high density and cannot cover the vast suburbs and rural areas in the United States where the absolute distances are far apart.

A game that can't be won by rolling

This is not to say that a city planning that facilitates delivery is good. Obviously, the reality is not so either-or. But in the United States, the middle class inherited the life imagination of the old aristocracy. Since there is plenty of land, they just keep building. In the end, the city is like the castles of the rich, scaled down and lined up together.

This is obviously not feasible. The "big house in the suburbs" lifestyle eventually divided the United States into two geographical spaces decades later: one half is the middle class and the rich, and the other half is the lower middle class and the poor. The continuous accumulation of decades of urban planning errors has also fed its bitter fruit to all service providers who need delivery, including Temu.

The living scenes of American residents can be divided into four categories: Downtown, Suburb, Rural, and Hood. Hood is often translated as slums, but this is not accurate. According to the standards of most countries, residents in the Hood are not considered poor, as they can afford food and have a place to live. But the Hood is indeed a space where the middle and lower class residents of the United States live.

One person described his life in the Hood this way: "You were afraid to go outside. You were afraid of slow-moving cars for fear of a drive-by shooting. You wouldn't go out for a walk or walk your dog for fear of being robbed. There were always people hanging around at all times who didn't look like they had a job. You didn't dare call the police for fear of retaliation. If a crime happened, you didn't see anything. Neighbors asked you to take down your security cameras. Someone stole your bike or pet and came back and offered to give it back to you for $20. You didn't go to the park."

Another person offered harsh but true advice in a joking tone: "If you're not sure whether you live in the hood, suburbs, or country, test it by peeing on your front porch. If no one looks at you, you're in the hood. If someone calls the cops, you're in the suburbs. If no one's around to notice, you're in the country."

This is the Hood. It's where things get harder.

Jennie, CEO of HashMatrix, an integrated marketing company in the US market, believes that Temu has made localized adjustments in sales channels and marketing strategies. In the eyes of Americans, Temu is not only cheap, but also positioned as a convenient and reliable online market to meet consumers' needs for convenient life.

In this way, Temu has a rich user circle in the United States. But in general, low-income families in the United States are more likely to shop at Temu. Any platform that competes for market share with lower prices is destined to have such an audience.

According to ChinaTalk: In the first half of 2023, 55% of app users have an annual income of less than $50,000; in the second half, 50% of users have an annual income between $50,000 and $100,000. According to Google Trends, the most popular places to search for Temu in the United States are West Virginia, Arkansas, and Mississippi—all of which are ranked among the poorest states in the United States. In contrast, Temu users generally have lower income levels than Amazon users.

This means Temu’s customers are more likely to be in the hood. When Temu was still packaged in its iconic orange color, a courier complained on video: “It’s Temu, Temu, Temu every day. I’m tired of Temu. It puts all 17 items you buy in one bag, which is big and heavy. Why put all 29 items you buy in that big orange bag? When they get stolen, you come to me and say, courier, where is my Temu package and the 47 items in it? I don’t know! Maybe someone stole it.” But now Temu has been packaged in ordinary packaging, so couriers have lost their direct experience.

Losing a package isn't even a serious issue in the Hood.

Couriers share their experiences delivering in the Hood. But even a newcomer can quickly learn the tricks: almost every order in the Hood will have notes on it. The most common one is never leave it at the front door, ever, because it will be stolen soon. In fact, many owners in the Hood don't use their front door when they go home.

A responsible courier demonstrated that he would put the package between the outer iron gate and the door. He said that he couldn't even put it in the mail room because he couldn't trust anyone. If all else failed, he could hide it in the bushes at the door. While he was delivering the package, a recipient asked him if he wanted drugs. Many roads in the Hood are narrow and difficult to park, and people often yell at couriers.

Even the merchants who send parcels will be affected. A staff member of an overseas warehouse said that their warehouse is no longer in a good area. You have to go through the small door to enter because a colleague was robbed at the main door. As a semi-hosted service provider of Temu, they now also send parcels to the US Postal Service. The US Postal Service will scan the code after taking all the express parcels to the company, and 5% of the parcels will be lost every time. The US Memorial Day in recent years is even more exaggerated. The loss rate on this day is almost 100% every year. He guessed that it was because there were no holidays in the first half of the year, and it was still tax season and everyone was short of money.

The logistics staff said helplessly: "I want to help you but couldn't. It's a culture here."

USPS mailbox

This is the problem that Temu and all e-commerce companies have to face. This is also why it is impossible to rely on robots and driverless cars to completely solve the delivery problem. Facing such a complex situation, it is either stupid or ignorant to still think that machines can replace people. Since the founders who can raise funds are not stupid, it only shows that most technology practitioners who live in good communities have never known the real life of the other part of the country's residents.

Temu is still subsidizing users today, but money can only solve part of the logistical challenges in the United States.

The other side of the game

Although delivery is difficult and packages are often lost, residents in the Hood may need Temu more than others. Because the most notable feature of the Hood is that it has no business. There are check cashing shops, pawn shops and liquor stores illuminated by LED lights in the Hood, but it is seriously lacking in normal business. Many Hoods don’t even have large supermarkets, let alone grocery stores and restaurants.

The COVID-19 pandemic has accelerated the disappearance of the already sluggish businesses in the Hood. Two years ago, Peter Santenello, a famous American anchor, visited several Hoods in Detroit. In the video, he showed a neighborhood ecology that was recovering. Many people also wanted to go and see it, but they would definitely be disappointed: because every store mentioned in the show was closed.

Temu entered the United States at this time. With high inflation and accelerated business recession, Temu came here at the perfect time. A housewife living in the Hood said that she certainly knew that Temu's quality might not be as good as Amazon's, but she bought some toys for her children that might lose interest after playing a few times at the cheapest price, which was not bad.

Hood is the United States outside the Fifth Ring Road. Even though Temu has become popular in the United States today, the American Internet is still discussing whether Temu is a scam, and quite a few bloggers are also urging everyone to reject Temu. A large number of content condemning Temu gradually returned to the old question: Americans should not use Chinese applications, nor should they buy low-quality Chinese products. If you simply look at the discussions on the American Internet, you may even think that Americans don't use Temu at all.

Since 20 or 30 years ago, Americans have been discussing and trying to leave Made in China; they have even tried to use policies to leave all other countries and re-produce by themselves. But to this day, a steady stream of goods still flows from Asia to the United States by sea or air. Because decades of "de-industrialization" not only made a group of factories disappear, but also took away the upstream and downstream of the factories, no longer trained skilled workers, and lost the ability to produce on a large scale. And the bitter fruit was swallowed by everyone in this country. Before Temu, most of the goods on Walmart and Amazon came from China.

96% of industrial space in the United States is rented out by warehouses. This is a country of warehouses, with densely packed large warehouses and individual warehouses appearing in rural areas, suburbs, ports, and cities. The United States has the largest number of warehouses in the world, and it is still increasing. From 14,600 warehouses in 2007 to about 22,000 in 2023. Even so, the United States still faces a shortage of warehouses.

Many large warehouses are often equipped with ponds for rainwater management, which is picturesque. Many of the people working there may be new Mexican immigrants who cannot even speak English well. An e-commerce practitioner lamented that in order to recruit people for the new warehouse, he only required basic skills and no drug use. As a result, he received more than 200 resumes in a week, and only four people came for the interview. In the end, only one person was hired, and it is not certain whether he can stay.

Pond and warehouse

These beautiful warehouses are only for temporary storage of goods, which may be from China, Japan, South Korea, etc. The rapid growth of warehouses is accompanied by the continuous decline of industry. And those industries that were supposed to last forever have disappeared from here forever and will never appear again.

The result of losing industry is that a large number of people can no longer find a decent job. The consequences of urban planning at that time are fully revealed here: low-density communities lacking public facilities and sidewalks will slowly collapse once the economy starts to decline. The middle class who used to be able to live a decent life moved away or fell to the bottom, turning one community after another into a ghost town or hood.

With incomes struggling to increase and decent jobs hard to come by, Chinese-made goods have become one of their weapons to fight inflation.

William Julius Wilson, a famous American sociologist, made an observation in the first chapter of his book When Work Disappears: American cities have transformed from institutional clusters to unemployment clusters. For the first time in the 20th century, many urban center residential clusters saw the vast majority of adults doing nothing. In 1959, less than a third of the poor in the United States lived in metropolitan center areas; but in 1991, half of the poor lived in central urban areas - these places are the Hood, where locals or travel guides advise tourists not to go.

Today, many poor young Americans have lost their imagination about work. If they cannot enter a large factory, many people would rather do odd jobs to earn some money than to do a hard job. Because everyone understands: in these ever-changing cost competitions, there are only tasks that can change and disappear at any time and can be taken at will. The meaning of the word "work" has been hollowed out.

The American industry that originally produced everything was first transferred to Europe and Japan; then to South Korea and the four little dragons; and then to China, the world's factory; in the future, some will go to Vietnam, India, Indonesia... and American factories will become warehouses, and middle-class communities will decline into hoods.

The places that receive industry will continue to produce, and the goods will travel across the ocean and return to the starting point of everything to reunite with the former producers. The economy's abandonment of people has become a scab, becoming an awkward cost item in the financial statements of e-commerce companies that needs to be explained.

As a product, Temu is a glimpse of the results of the world over the past few decades. In a large market that is gradually deindustrializing, Temu relies on suppliers to bid unlimitedly and rush into the market with an absolutely low price, but its further growth will be constrained by this environment.

Temu has never been just a game about e-commerce, but also a metaphor about urban planning and national development. Everything that metaphor represents will appear more than once, and not only in the United States. Low prices are just the most visible part of the game.

All pictures taken by the author

Source of title image:The Wire