| Welcome to Bw Reads, our weekend newsletter featuring one great magazine story from Bloomberg Businessweek. Even if you aren't an enthusiastic shopper, you might recognize the name Temu from wacky commercials that aired during past Super Bowls. It's become the world's biggest online dollar store, but that doesn't mean it's immune to President Donald Trump's tariff threats. You can find the whole story online here. And you can hear more on the Big Take Podcast. If you like what you see, tell your friends! Sign up here. Jiaxing is a thriving manufacturing hub located near the mouth of the Yangtze River. Despite having a population twice the size of Chicago's, the city isn't well-known outside China, but people on the mainland recognize it as the town of scissors and blades. There are about 80 factories here specializing in hair clippers, pet-grooming equipment, sheep shears, kid-friendly scissors and the rest of the globe's sharp-edged needs. Inside a yellow-brick factory in the southern part of the city, Ma Da walks the floor, surveying machines as they spit out dozens of steel blades a minute. His company, Haining Yongfa Clipper Blade Co., has been making tools for salons and barbershops for almost 40 years. It had long sold its products to more recognizable razor brands that printed their names on the parts, but that began to change after Covid-19. "We saw this opportunity," Ma says. It was a combination of two things. One was temporary: People were cutting hair at home and adopting new four-legged family members that needed to be groomed, so Ma started a consumer brand for the company's products, KBDS, and added a line of pet clippers. The other big thing that happened was Temu. In just two years, Temu has become the world's biggest online dollar store. Its homepage perfectly captures the vibe. Visitors are bombarded with random items—faux-leather car seat covers, frog costumes for cats, knockoff handbags, supplements, whatever—and a flurry of banners, countdown timers and prize wheels hawking deals, price drops and limited-time offers.  Yongfa workers assemble blades. Photographer: Nico de Rouge for Bloomberg Businessweek Not content with simply making the stuff the rest of the world buys, China found in Temu an effective way to sell that stuff directly to consumers. In frenetic, candy-colored commercials aired during the 2023 and 2024 Super Bowls, Temu invited customers to "shop like a billionaire," describing prices so low that anyone could buy as much as they wanted without thinking about it. And people do. With 50 million US shoppers a month, according to research firm Sensor Tower, it's the biggest e-commerce app after Amazon. EMarketer Inc. estimates Temu will generate $30 billion in US sales this year, a milestone that took Amazon.com Inc. more than a decade to reach. Temu isn't a startup, though. Its parent company, PDD Holdings Inc., has been operating an online marketplace in China since 2015, periodically trading places in recent years with Alibaba Group Holding Ltd. as the country's most valuable e-commerce business. Temu is the result of a careful study of American shopping habits and artificial intelligence systems for hyperpersonal product recommendations. To get the word out, PDD spent like a billionaire on ads and subsidies to bring down prices. One other dynamic helped fuel Temu's meteoric rise in the US: Donald Trump. The tariffs he imposed on China in his first term, most of which were retained by President Joe Biden, raised the cost of all manner of products. But Trump left untouched a near-century-old loophole that exempts international packages worth less than $800 apiece. That ability to ship items directly to the US duty-free is a big part of how Temu can undercut the prices of Amazon and just about everyone else. Instead of opening a bunch of warehouses near customers' homes, Temu boxes up orders in China close to the factories where they're made, loads them all onto cargo planes bound for major cities and gets them delivered right to customers' doorsteps. Biden pledged to eliminate the tax rule that makes this possible but never did. Trump has now taken up the cause. He ordered the loophole to be suspended as part of the tariffs he placed on China on Feb. 1, then backtracked days later when customs officers were unsure of how to handle the mountains of packages piling up at US airports. For now, Temu exists in a nervous limbo similar to the one the Chinese video app TikTok is in. Temu's continued prosperity isn't up to Trump alone. Amazon and TikTok Shop are increasingly vying for the same budget-conscious shoppers, and Temu, while showing encouraging signs of customer retention, is still spending on marketing at a rate that may be difficult to sustain. But at least for now, Temu is winning over more customers and sellers. Back at the blade factory, with the aroma of hot grease in the air, Ma explains that Yongfa started off selling on Amazon. But working with Amazon, he says, can be crushing. After manufacturing and packaging its products, Yongfa needs to box them all up, arrange their transport to the US and pay a tariff to unload at the port. Then it has to pay for the products to be shipped to Amazon warehouses across the country. The fees go on: advertising for visibility on Amazon.com, packaging and local shipping to customers, a penalty if warehouse stock isn't replenished promptly, a penalty if inventory sits for too long, a 15% commission on every transaction. In all, Ma says, Amazon's fees eat up at least half of each sale. Selling on Temu is more straightforward. Yongfa ships its products to a nearby Temu warehouse in China, and that's about it. Temu handles promotion, packs the blades when orders come in and ships them by plane to US airports for the final leg of delivery. Temu pays the seller a flat rate. There are few fees and no storefronts to set up or maintain. "We are not a professional e-commerce company," Ma says. "Temu is an easier model for us." Here's what that means for shoppers: A three-pack of detachable KBDS blades costs $70 on Amazon and $36 on Temu. Amazon's customers will get their order in a day or two, whereas Temu's will take 7 to 10 days. Either way, the factory pockets the same amount of money. Amazon's 90% markup largely reflects the cost of fast delivery, which has long given the company its competitive edge. Temu is proving there's another type of consumer out there. Keep reading: How Temu's Online Dollar Store Became a Trade War Target Previously in this newsletter: Tariffs Won't Put an End to the Temu and Shein Model | 
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