Temu, a Chinese e-commerce platform that sells items at rock-bottom prices, launched in Australia last year and now has millions of customers from the country shopping on the platform.

The Chinese group, owned by A$270.56 billion e-commerce giant PDD Holdings, rivals the likes of Shein and Amazon.

While it has seen immense success in most major markets where it has launched, it’s now facing a backlash from some of its suppliers too.

In recent weeks Temu has sought to recruit Amazon merchants who have goods in warehouses in the US and EU, according to the Financial Times.

That move is believed to be in response to Temu pre-empting possible requirements by the tax systems in those countries which Temu could work around if it decides to store goods closer to shoppers.

Such a shift in its business model would also allow it to sell big-box and higher-margin products such as furniture and home appliances.

Typically Temu ships directly from China. Along with Shein, as ChannelNews recently reported, the volumes which it ships out of China are driving up airfreight rates and choking capacity on some routes.

The shift to hiring suppliers with overseas warehouses means Temu is moving from a “fully managed” to “semi-managed” model.

Merchants in its marketplace will take on shipping, warehousing and last-mile delivery costs, all of which were previously handled by the online platform.

That pivot in its strategy has left some suppliers in China with mixed feelings. Also, another point that suppliers have taken issue with is the tactics that Temu uses to force merchants to sell at low prices.

Temu positions itself as a platform where you can find ultra-cheap items. It would typically offer suppliers the opportunity to move unsold inventories to its China-based warehouses. That strategy may now be revisited with the new changes being brought about in its business model.

Some suppliers are also resentful of Temu’s claimed approach to deciding which products are featured on its platform, and wildly fluctuating demand for products.

Some suppliers have also reportedly stopped working with Temu because it began issuing more fines over issues that range from faulty packaging to customer complaints over mismatches between the product and online description.

Some of these suppliers have gone to the company’s offices in Guangzhou to protest against the practice of handing out fines.

One supplier even showed the Chinese press evidence of 279 fines issued by the platform, to a total of Rmb114 million (A$24.46 million). A Temu spokesperson said the protesters “were unhappy with how Temu handled aftersales issues related to quality and compliance issues with their products”, adding that the company was “actively working with the merchants to find a solution”.

Analysts forecast that Temu will generate around A$82.57 billion in gross merchandise revenue — the total value of goods sold on its platform — this year, up from an estimated $A25.99 billion in 2023.

That staggering growth in its sales could cause some suppliers to make their peace with Temu’s decisions and adapt rather than being left behind in any new strategy that the company adopts over the coming months.