Temu, the fast-growing e-commerce platform known for its ultra-low prices, has announced a shift to the U.S.-based fulfillment model in an effort to sidestep sweeping new tariffs on Chinese imports. The move comes after the U.S. government eliminated the de minimis exemption for shipments from China and Hong Kong. While Temu initially warned of price increases, it has now reversed course, opting instead to localize its operations by recruiting American sellers.
Temu Banks on Local Fulfillment
Temu’s supply chain model, built on high-volume, low-value shipments direct from Chinese factories, has come under immediate strain. The U.S. government’s termination of the de minimis exemption for parcels from China and Hong Kong eliminates a key cost buffer for e-commerce platforms reliant on cross-border dropshipping. Simultaneously, the proposed 145% tariff on Chinese imports compounds the cost burden and operational risk.
To cushion the blow, Temu is transitioning to a localized fulfillment model, stating that all U.S. orders will now be serviced by domestic sellers. Previously, both Temu and rival Shein had benefited from low-friction customs clearance on individual low-value parcels—critical to their high-volume, low-cost business approach.
While Shein has signaled it will increase prices, Temu’s decision to instead localize fulfillment reflects an urgent need to protect market share without compromising its low-price promise. But such a rapid transition raises operational challenges—from onboarding U.S. sellers to managing fragmented inventory and distribution networks within North America.
In a statement to Fashion Dive, Temu said the fulfillment pivot is meant to empower U.S.-based sellers and improve service levels. The company has reportedly accelerated recruitment of domestic merchants, a move that puts it on a collision course with giants like Amazon and Walmart in the hyper-competitive marketplace fulfillment space.
Margin Pressure Meets Marketplace Competition
The shift to local fulfillment may help Temu navigate regulatory headwinds in the near term, but operational questions remain. With excess Chinese inventory redirected elsewhere and local sellers onboarding rapidly, Temu is entering a more fragmented and less optimized fulfillment environment. This increases pressure on last-mile performance, inventory visibility, and quality control—areas where platform-native firms often lag established retailers.
“This transition is not without pain,” said Martin Balaam, CEO of AI firm Pimberly in an official statement. “Temu will likely face margin pressure as suppliers offload inventory elsewhere, and standing up a U.S. fulfillment ecosystem will take time and resources.” He also noted that Temu’s sprawling product categories and weaker product data systems may have made compliance under tightened customs scrutiny harder than for rivals like Shein. Shein, for its part, announced plans to raise prices in response to tariff changes, but has not mirrored Temu’s operational overhaul.
Fulfillment Flexibility Is Becoming a Core Competency
Temu’s decision to pivot toward U.S.-based fulfillment is a clear response to tightening trade conditions, but it also reflects a deeper operational truth that global supply chains that rely heavily on preferential customs treatment are increasingly exposed to policy volatility. While the shift may offer short-term continuity in pricing, it introduces new logistical challenges that will test the company’s ability to scale domestically without compromising service levels.
For business leaders, the case reinforces the value of supply chain optionality—not just in sourcing, but in fulfillment strategy. As global trade becomes more fragmented and regulatory environments more complex, adaptability in how and where goods are moved will define long-term resilience.
