Is Temu Dropshipping? Their Business Model Explained (2025)

You've probably noticed how popular Temu has become lately.

Everyone seems to be talking about it, and maybe you're wondering how it exactly works.

In this article, we'll explain Temu's business model in simple terms and answer your biggest question:

Quick Answer: Is Temu dropshipping?

Temu is not a traditional dropshipping company. Temu operates as a hybrid marketplace using consignment inventory, where suppliers own products until sold.

Temu handles marketing, storage, shipping, and customer service, blending elements of dropshipping, consignment, and marketplace models to offer low-cost products.

By the end, you'll understand Temu, how it compares to regular dropshipping websites, and whether it's a good choice as a place to shop or as your business partner.

Let's start!

Is Temu dropshipping?

Before we answer that question, let's quickly review what dropshipping means to make sure we're on the same page.

Dropshipping is when a seller doesn't keep any products in stock. Instead, they list items for sale on their website, and when a customer buys something, the seller orders it from a supplier who ships it directly to the buyer:

In other words, the seller never handles the product personally.

So, does Temu work this way?

Well, the answer isn't as straightforward as you might think.

Temu doesn't exactly follow the traditional dropshipping model. Instead, Temu is closer to an online marketplace, somewhat like Amazon or AliExpress.

They partner directly with manufacturers and suppliers, many in China, and sell products at very low prices directly to consumers.

However, there are still similarities between Temu and dropshipping websites.

For example, Temu doesn't produce or own the products itself, which makes it feel similar to dropshipping.

But overall, Temu is not a dropshipping site.

To summarize clearly:

• Temu IS similar to dropshipping because:
  • They rely on third-party suppliers for products.
  • They mostly don't buy product inventory themselves.
• Temu is NOT typical dropshipping because:
  • They manage product quality and branding closely.
  • They ship out the products themselves, in branded packaging.

This might still leave you with questions, so let's examine Temu’s actual business model in the next section.

So, what does Temu's actual business model look like?

Now that we've clarified that Temu isn't a typical dropshipping store, you're probably interested in their actual business model.

In reality, Temu uses an innovative model that's slightly different from traditional online marketplaces or dropshipping stores.

Here's how Temu actually works:

1. Temu's weekly supplier auction system

Temu doesn't just directly pick and buy products.

Instead, they use an auction-like system to get the lowest possible prices from suppliers.

Here's how this works:

1. Temu identifies products they want to sell.
2. Temu holds weekly auctions and invites suppliers to offer their best price quotes.
3. Suppliers then compete against each other, offering their lowest prices to win the right to sell through Temu.

In this process, Temu doesn't just look at the prices, but they also carefully select which products can go on the platform, often by checking the quality and customer feedback.

2. Products get sent to Temu's warehouses

Once Temu accepts a supplier's quote, the supplier ships their products directly to Temu's warehouses.

Here's the interesting part, though: even when products are stored at Temu's warehouses, they still belong to the supplier — not Temu.

This method is known as "consignment inventory," meaning the supplier keeps ownership of products until they actually sell to customers:

Temu simply handles the logistics (storage, packaging, shipping) and marketing side of things.

3. Aggressive marketing and low prices

Temu is famous for its low prices and frequent discounts.

They heavily promote products through online advertisements and social media. The goal is to attract customers by offering unbeatable prices, allowing them to "shop like a billionaire":

4. Orders are fulfilled

When a customer places an order through Temu's website or app, Temu's warehouse team picks, packs, and ships the product directly to the customer:

Temu manages customer support, handles returns, and oversees the entire customer experience.

5. Unsold products are returned to the supplier

If certain products don’t sell within a specific period, Temu returns these unsold items to the original supplier.

The supplier is responsible for covering the shipping costs for these returns. This lowers Temu's risk because they're not stuck holding unwanted inventory.

6. Temu makes money

Temu primarily earns revenue by taking a commission (percentage fee) on each product sold through the platform.

Because they negotiate low prices with suppliers via their auction, Temu can be very cheap while still earning profits from each sale.

Here is Temu's business model again in a visual overview:

And to make it even clearer, here's a table overview of every step that's happening:

Step	Who is involved?
1. The products get manufactured	The local supplier
2. The products are sent to Temu's warehouse	Paid by the local supplier
3. The products are listed on Temu	Temu
4. An order is placed on Temu	The customer
5. The product is shipped to the customer	Temu ships out the product
6. The manufacturer of the product gets paid	By Temu (often 3+ months later)
7. Unsold products get sent back	Paid by the local supplier

As you can see, Temu's model mixes elements of marketplaces, dropshipping, and consignment, making it quite unique!

What's the difference between an online marketplace and a dropshipping website?

Now that you know more about Temu, let's clearly understand the difference between an online marketplace and a dropshipping website.

This will help you understand how Temu fits into the bigger picture.

What is an online marketplace?

An online marketplace is a website or app where multiple sellers offer their products to customers. Examples you might already know include Amazon, eBay, and AliExpress.

In these marketplaces:

• Many different sellers list and sell products through a single website.
• The marketplace platform handles payments, offers customer service, and sometimes manages shipping.
• Sellers are responsible for the products, including setting prices and managing their own stock.

The marketplace usually earns money by taking a commission (a percentage of each sale).

It doesn't always own the products sold on the platform. Instead, the sellers own their products and use the marketplace as a place to sell.

Now, what is a dropshipping website?

Dropshipping websites are usually smaller online stores, often managed by individual entrepreneurs.

Here's how they work:

• The store owner lists products on their own website, but they don't actually keep any inventory (products in stock).
• When a customer buys a product, the store owner orders it directly from a supplier (often from China), who ships it straight to the customer.
• The dropshipping store never sees or touches the product — they act as a "middleman" between supplier and customer.

Where does Temu fit?

Temu sits somewhere between these two models.

It operates similarly to an online marketplace because:

• Multiple suppliers sell through Temu.
• Temu manages storage, marketing, and logistics.
• Unsold products are returned to suppliers, so Temu has a lower risk compared to traditional stores.

However, Temu also has some characteristics similar to dropshipping because they don’t own most of their inventory — it's still owned by suppliers until it sells.

How can you tell if a website is dropshipping?

If you would like to learn exactly how to spot if a website is dropshipping, then pay attention!

There are a few clear signs that can help you recognize dropshipping stores:

1. Long shipping times

Dropshipping websites ship products directly from suppliers.

Although there are many local suppliers now, many dropshipping stores still use suppliers from China (because of their lower prices).

So, if a website says shipping takes 1-4 weeks, there's a good chance it's dropshipping:

2. No original product photos

Dropshipping stores usually use product images taken directly from their suppliers. These images often appear on many other websites, too.

You can test this by searching Google Images for the same product photos. If you find the same pictures on AliExpress or other websites, it’s probably dropshipping:

3. Generic product descriptions

Many dropshipping websites use basic product descriptions copied directly from the supplier’s website.

So, if the product information seems unclear, generic, or incomplete, the website might be dropshipping.

Tip: If you want to learn how to write better product descriptions, check out our article here!

4. No physical store or company address

Most dropshipping websites don't provide a real business address.

They may only list email or basic contact details.

If it's difficult to find clear information about the company behind the store, it might be dropshipping.

Is it possible to dropship products from Temu?

As you know, Temu's products are really cheap, so you may have thought about using Temu as your dropshipping supplier.

The short answer is that you can dropship products from Temu — but it's not easy or officially supported by Temu.

For example, unlike AliExpress or CJdropshipping, Temu doesn't have built-in tools or apps to help dropshippers easily import products or fulfill orders automatically.

The reason behind this is that Temu doesn't officially support dropshipping (source):

Plus, Temu sends orders in bright orange packages labeled with its logo.

This could hurt your brand's reputation because your customers will immediately know that the product came from Temu — and not your own store.

But... some people still manage to dropship with Temu.

Most of them use a dropshipping agent or a fulfillment center.

These companies can order products from Temu, remove the Temu packaging, and ship them in your own branded packaging.

To learn more, check out our in-depth guide on Temu dropshipping here!

Where is Temu shipping from?

Temu mostly ships products from China.

This is because Temu works closely with many manufacturers and suppliers based in China, which helps the platform offer such affordable prices.

However, China isn’t the only place that Temu ships from.

In some countries, Temu has set up local warehouses to offer faster delivery times.

These countries include the United States, Canada, Australia, and the United Kingdom.

Products stored in these warehouses are marked with a “Local” or “Local Warehouse” badge on the website, so you can easily tell which items will arrive faster:

Want to learn more about this? Then take a look at our research on Temu's warehouse locations here!

FAQs about Temu

Still have more questions about Temu? Take a look at the section below, where I've answered some common questions:

Summary

Before we go, we've created a quick summary of this article for you, so you can easily remember it:

• Temu is a popular online shopping platform, but it's not exactly a dropshipping website.
• It operates like a hybrid marketplace using a unique "auction" system, where suppliers compete to offer the lowest price.
• Temu's suppliers send their products to Temu’s warehouses, but the suppliers still own the products until customers buy them (this is called "consignment inventory").
• Temu handles marketing, shipping, and returns, but unsold products are sent back to suppliers at their own cost.
• Overall, Temu’s business model combines elements from dropshipping, marketplace, and consignment inventory to offer low prices with less risk for Temu itself.

Conclusion

So, the final conclusion is that Temu isn't exactly a traditional dropshipping website.

Instead, it uses a unique, hybrid model.

They operate more like a marketplace combined with consignment inventory, meaning suppliers still own products stored in Temu’s warehouses until customers buy them.

Temu then takes care of marketing, packaging, shipping, and returns.

Have you tried shopping on Temu yet?

Let us know your experience in the comments below!

Want to learn more about Temu?

Ready to move your Temu knowledge to the next level? Check out the articles below:

• Temu vs. Shein: Which One for Dropshipping in 2025?
• Temu vs. AliExpress for Dropshipping: Which One Is Better?
• Temu Shipping Time: How Long Does It Take To Get Your Order?

Plus, don’t forget to check out our in-depth guide on how to start dropshipping here!