The rapid global expansion of Temu, now the world's second-largest e-commerce platform, has raised questions about its operational strategies. Beyond its aggressive marketing campaigns, the company's unique business models have been crucial to its success. This article examines Temu's three primary models: Full Hosting, Semi-Hosting, and Y2, helping sellers determine which approach best suits their needs.
Temu's Strategic Shift: Beyond North America
In 2025, Temu has quietly redirected its strategic focus. Influenced by multiple factors, the platform is now targeting emerging markets in Europe and Latin America, accelerating its localization efforts through several key initiatives:
- Local warehouse expansion: Establishing new warehouses in Europe and Latin America to enable VAT-free customs clearance and reduce delivery times to approximately three days.
- Full Hosting logistics subsidies: Introducing subsidies for initial shipping costs and incentives for overseas warehouse storage, while handling EU VAT payments on behalf of sellers. This particularly benefits shipments valued below €150, which qualify for tax exemptions.
- Semi-Hosting traffic prioritization: Providing enhanced visibility through improved search rankings, priority placement in promotional activities, and access to self-managed advertising tools. Notably, sellers can seamlessly transition products from Full Hosting to Semi-Hosting while retaining existing sales data and customer reviews.
Model 1: Full Hosting – The Hands-Off Approach
The Full Hosting model serves as Temu's entry-level option, offering comprehensive support for sellers. After delivering products to Temu's domestic warehouses, sellers relinquish control over pricing, marketing, international logistics, final delivery, and customer service to the platform.
Ideal for:
- Manufacturers lacking e-commerce experience or dedicated teams
- Businesses seeking to liquidate excess inventory through Temu's competitive pricing and subsidies
Advantages: Low operational costs and simplified processes eliminate the complexities of cross-border commerce.
Disadvantages: Limited profit margins (typically 5%-10%) due to platform-controlled pricing and intense competition among homogeneous products.
Model 2: Semi-Hosting – Greater Flexibility, Higher Margins
The Semi-Hosting model grants sellers increased autonomy in product selection and pricing while leveraging Temu's traffic support and market development subsidies.
Ideal for:
- Integrated manufacturing and trading companies seeking pricing control and higher profits
- Specialized sellers with deep market knowledge in specific product categories
Advantages:
- Flexible pricing based on market conditions and cost structures
- Enhanced product visibility through platform support
- Potential for premium pricing on non-standardized products
- Seamless migration from Full Hosting with preserved sales history
Disadvantages: Strict fulfillment timelines impose penalties for delayed shipments, requiring robust supply chain management capabilities.
Model 3: Y2 – Semi-Hosting Enhanced for International Sellers
Exclusive to the U.S. market, the Y2 model represents an advanced version of Semi-Hosting that addresses overseas inventory challenges. It enables direct shipping from China to U.S. customers without maintaining American stock.
Operational details: Sellers have nine business days to process orders, followed by five business days for delivery. Temu's designated logistics partners handle final distribution after customs clearance.
Ideal for: All international sellers, particularly those facing capital constraints or unfamiliar with foreign warehouse management.
Advantages: Eliminates overseas storage costs and inventory risks while providing greater operational control to protect profit margins.
Selecting the Optimal Model
The choice among Temu's three models depends on individual circumstances and objectives. Manufacturers and inventory liquidators will find Full Hosting most convenient, while experienced sellers pursuing higher profits may prefer Semi-Hosting. The Y2 model offers particular advantages for international sellers seeking to minimize overseas storage requirements.
Each approach presents distinct trade-offs between control and convenience. Successful sellers carefully evaluate their capabilities and goals when selecting their operational framework on Temu's platform.