Many people have the impression that Temu, which ranks second in the world, used to be a profitable place for cross-border sellers: in 2024, small and medium-sized merchants can easily prepare and distribute goods, with monthly sales of hundreds of thousands, and orders are flowing in.
But in 2026, the market has completely reversed. A large number of merchants have experienced a sharp decline in orders. The prices of goods within the platform are completely chaotic. Products of the same category are either passively priced at high prices and unsaleable, or they are sold at low prices at a loss. A large number of sellers have cleared their inventories and closed their stores. The low-price myth that once grew wildly is quickly being shattered.
According to IPC International Post 2025 –
According to the 2026 global cross-border consumption survey data, Temu relied on its low-price strategy across all categories to surpass AliExpress and secure the second place in the global cross-border platform. Its monthly active users exceeded 246 million, second only to Amazon. At its peak, there were more than 800,000 domestic sellers. Yiwu small commodities, 3C accessories, and home furnishing department stores gathered together to make a lot of money relying on platform subsidies and dividends.
But starting from the first quarter of 2026, the market direction suddenly changed, and the first thing that showed up was the cliff-like shrinkage of orders.
Lao Chen, a seller of small kitchen appliances in Dongguan, relies on Temu’s fully managed model throughout 2024, with an average monthly shipment of US$180,000. The factory has reserved two production lines exclusively for platform stocking.
After entering April 2026, store orders were directly cut to 30% of the original level. In May, they fell another 42% month-on-month, and warehouses accumulated nearly 600,000 yuan worth of finished products with nowhere to go out.
Lao Chen said frankly that among the dozens of peers in the same park around him, 70% chose to stop replenishing goods, and the remaining 30% cleared their stocks at low prices to withdraw funds.
Not only small household appliances, but also the three major categories of accessories, daily storage, and small pet items, the overall order volume of the platform has generally declined by 35% – 55% year-on-year. A large number of small and medium-sized sellers have gone from stable profits to struggling to maintain capital, and even more and more losses as they ship more goods.
The most direct trigger of the plummeting orders is the price adjustment reform launched by the platform in March 2026. It is also the most complained about front-end selling price chaos in the industry.
Temu adopts a fully managed operation model, and the supply price is determined by the merchants and the platform, but the terminal selling price is completely controlled by the platform.
This year, in order to reduce subsidy losses and improve financial reports, the platform increased the retail prices of goods in European and American sites in batches without notifying suppliers in advance. The prices of many daily products doubled, and the prices of some small items increased by more than 200%.
The same silicone ice tray was sold for US$2.1 by merchants. It was previously priced at US$3.99 on the platform. After the price adjustment, it was directly sold to US$9.99. The price was far higher than the offline retail price of local Wal-Mart. A large number of consumers were lost, and product exposure and order volume plummeted.
On the one hand, the platform passively raises prices, resulting in high prices and unsaleable prices. On the other hand, the platform’s new price comparison regulations have led to low-price involution, and the entire category price system has been completely torn apart.
According to the latest price comparison rules, the system captures the selling price of the same model across the entire network in real time. If a store’s declared supply price is 5% higher than the lowest in the industry, it will be restricted from new products and frozen for 30 days. Many well-funded manufacturers maliciously lowered the supply price to seize traffic. A storage box that costs US$1.8 directly quoted US$0.3 for supply, forcing peers to follow up. Small and medium-sized factories cannot bear the cost of production and either take orders at a loss or are forced to withdraw from the platform.
Extreme polarization has emerged: high-priced goods cannot be sold, ultra-low-priced goods have no profit, mid-priced compliant merchants are under pressure from both sides, and the price of the entire platform has completely lost its reasonable range.
In addition to pricing conflicts, the implementation of three major external macro policies has further accelerated the survival difficulties of platform merchants, which is also a brand new industry change in 2026 that is different from previous years.
First, the tax-free policies in Europe and the United States have been completely cancelled, and low-cost small package bonuses have completely disappeared.
The United States will officially abolish the tax-free policy for packages under $800 in 2025, and the European Union has finalized the cancellation of the tariff-free rule for small packages of 150 euros on July 1, 2026. In the past, sellers have been blocked in relying on direct mailing of small packages to avoid tariffs and reduce costs. Comprehensive taxes and fees for small products plus customs clearance fees, the cost of a single unit has increased by 18% – 30%. Costs have increased, but the selling price is controlled by the platform, and profit margins have been squeezed in both directions.
For many small commodities that rely on low prices and high volume, their gross profit margins directly fall below 3% after excluding tariffs and logistics, and they have no value in continuing operations.
Second, international geopolitical conflicts push up full-link logistics costs.
The situation in the Middle East routes is unstable. International sea and air freight rates have continued to rise since February 2026. The unit price of air freight from China to Europe and the United States has increased by 22% month-on-month. The increase in first-leg freight rates has directly eaten up the original meager profits of the product.
Under the fully managed model, most of the first-haul and overseas warehousing costs are shared by suppliers. The platform will not bear the additional cost of price increases, and all the burden of rising costs is passed on to domestic merchants.
Third, the EU’s compliance supervision has tightened, and high fines have forced the platform to upgrade its risk control.
At the end of May 2026, the European Union issued a sky-high fine of 200 million euros to Temu, which strictly reviewed product safety and data compliance issues. Products without CE and ROHS certification were removed from the shelves in batches, and a large number of unqualified white-brand goods were unable to be put on the shelves. Merchants who had previously relied on low-priced and uncertified brands directly lost their shipping channels, further reducing the overall order volume of the platform.
Many sellers mistakenly believe that the decline in the platform’s order volume is just a short-term fluctuation and will recover after a few months. In fact, the underlying profit logic of the platform has undergone fundamental changes.
In the past few years, Temu relied on large subsidies to lower prices to seize users. The platform absorbed the losses and merchants were able to earn the difference. In 2026, the group reduced its global subsidy budget and no longer paid for low prices. It not only had to raise terminal prices to reduce losses, but also lowered supplier quotes through price comparison control. Under the squeeze from both sides, merchants were naturally in a dilemma.
Platform data shows that the growth rate of new merchants in 2026 will decline by 61% year-on-year, and the number of merchants exiting the platform continues to increase month-on-month, especially mom-and-pop shops and small industrial and trade factories.
Of course, objectively speaking, the platform’s failure does not mean that there is no way out. A few brand merchants who are deeply involved in high-quality products and have their own supply chains have bucked the trend and grown.
This type of merchant does not participate in low-price intrusion, their products have complete compliance certification, and they rely on differentiated styles to avoid price comparisons. Platform traffic gradually tilts towards branded models, and single store profits are actually higher than in previous years.
This also proves that the cross-border industry has bid farewell to the era of mindless distribution of goods to make quick money, and it is the general trend that the extensive low-price model will be eliminated.
From crazy subsidies, everyone’s entry into the market and massive orders, to orders cut in half, prices collapsing, and small and medium-sized sellers exiting the market in batches, the world’s second cross-border platform’s market reversal in just two years is essentially the inevitable result of cross-border e-commerce burning capital to attract customers and returning to the nature of business.
In the past, the window period for making money by relying on policy bonuses, platform subsidies, and poor information has been completely closed. The combination of rising costs, strict compliance, and rational consumption has forced the entire industry to eliminate low-end production capacity.
For ordinary sellers, it is no longer feasible to just follow the trend and sell goods at low prices. They must either focus on product quality to create differentiation and reduce unnecessary costs to adapt to the new regulations;
Cross-border outlets are always iterating, and practitioners who only follow low-price involution are destined to fail to keep up with the pace of industry changes.
