PDD Holdings is rebuilding Temu’s fulfillment in the EU to blunt the bloc’s new duty on cheap parcels, reusing the approach it took in the US after duty-free entry ended there, co-CEO Lei Chen said on an Aug. 24 earnings call. The EU started charging €3 on every item worth €150 or less on July 1, and Chen said orders into affected markets will move less efficiently and cost more, a considerable impact on parts of the business. PDD is onboarding local merchants to put supply closer to shoppers and speeding up local warehousing. Merchants in some markets still ship item by item rather than consolidating, which raises costs and leaves demand unmet, co-CEO Jiazhen Zhao said. Temu still buys mostly from merchants outside the US and EU, most of them Chinese, so it can’t dodge the duty.
