562: US Sellers Rejoice! The Govt Just Destroyed Temu And Shein

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You’re listening to the My Wife, Quit or Job podcast, the show where I cover all the latest strategies and current events related to e-commerce and online business. And today I’m doing a solo episode to talk about Tmoo and how recent legislation from the Biden administration is going to greatly hurt Chinese companies like Tmoo and Shien. But before I begin, I want to let you know that tickets are now on sale for Seller Summit 2025 over at sellersummit.com. The Seller Summit is the conference that I hold every year that specifically targets e-commerce entrepreneurs selling physical products online.

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And unlike other events that focus on inspirational stories and high-level BS, is a curriculum-based event where you will leave with practical and actionable strategies specifically for an e-commerce business. Every speaker I invite is deep in the trenches of their business, entrepreneurs who are importing large quantities of physical goods, and not some high-level guys who are overseeing their companies at 50,000 feet. Now, I personally hate large events, so the Seller Summit is always small and intimate. Every year, we cut off ticket sales at around 200 people, so tickets sell out fast,

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and we’ve sold out every single year for the past eight years. Now, if you’re an e-commerce entrepreneur making over 250K or $1 million per year, we also offer an exclusive mastermind experience with other top sellers. The Seller Summit is going to be held in Fort Lauderdale, Florida from May 6th to May 8th, and right now, this is the cheapest the tickets will ever be. And finally, if you haven’t picked up my Wall Street Journal bestselling book, The Family First Entrepreneur yet, it’s actually available on Amazon at 38 % off right now. My book will teach you how to achieve financial freedom

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by starting a business that doesn’t require you to work yourself to death. Plus you can still grab my free bonus workshop on how to sell print on demand and how to make passive income with blogging, YouTube and podcasting when you grab the book over at mywifequitterjob.com slash book. So go over to mywifequitterjob.com slash book, fill out the form and I’ll send you the bonuses right away. Now onto the show.

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Welcome to the My Web Cooder Job podcast. In this episode, we’re going to talk about Tmoo. So picture this, you’re scrolling through Tmoo, shopping like a billionaire, eyeing that imitation smartwatch or knockoff designer handbag when you notice that the prices are much higher than you remember. Well, it turns out that the Tmoo party is just about over. The US government just dropped a bombshell that will obliterate Tmoo’s dirt cheap prices overnight. So in this episode, I’m going to reveal how a tiny tweak to the import rules

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is sending shockwaves throughout the e-commerce world. And remember that $800 de minimis threshold that let packages slip into the country duty-free? Well, it’s not just about that price tag anymore. The feds are cracking down on splitting shipments, demanding more data, and basically telling Tmoo that it is game over. And here’s the kicker. This isn’t just about Tmoo. This is actually a huge shift that’s going to reshape how people shop online, affecting everything from AliExpress to Shien to Amazon.

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So in this episode, I’m going to cover the new rules that level the playing field with Tmoo and why your favorite bargain fines might disappear and the surprising winners in this e-commerce shakeup. But before we get into the nitty gritty about the new rule changes, let’s review how Tmoo has been able to dominate e-commerce in the United States so far. Tmoo has three main advantages that have allowed them to crush it. So first off, they have the backing of a multi-billion dollar company in PDD holdings, which sounds eerily like

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Anyway, PDD, also known as Pinduoduo, is a Chinese e-commerce platform specializing in group buying and social e-commerce. And as of September of 2024, PDD Holdings has a market capitalization of approximately $179 billion, making it one of the largest companies globally in the e-commerce and technology sector. And for the past two years, they’ve been throwing money at Tmoo for the primary purpose of gaining market share. And last year,

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Wired magazine reported that Tima was losing an average of $30 per order in the United States. Meanwhile, China merchant securities calculated that Tima was losing between $588 million and $954 million every single year. And that’s a ton of money. Second, they’ve got cheap labor and tons of Chinese sellers desperate to sell on their platform. China’s domestic e-commerce market is highly competitive with dominant platforms like Alibaba, JD.com, and Pinduoduo.

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So many smaller Chinese manufacturers have been hurting big time and selling on Tmoo provided a new revenue stream from international customers. In addition, economic uncertainties in China have led to decreased consumer spending within the country. So with slower demand, sellers were desperate to explore international markets even if it meant cutting prices dramatically. And then finally, they had the de minimis advantage. The de minimis threshold in the US allows goods valued at $800 or less to enter the country

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without incurring import duties. And Tmoo takes advantage of this de minimis rule to significantly reduce costs when selling products from China to U.S. customers. By avoiding paying tariffs and customs duties on most of its products, Tmoo can price items more aggressively, which gives them an edge over U.S.-based competitors, allowing for rock bottom prices very few can match. But things change quickly. Within the last couple of months, all three of these advantages pretty much disappeared. So first off,

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Timu Sugar Daddy, PDD Holdings, grossly missed market estimates for quarterly revenue. And to make matters worse, Chinese executives gave pessimistic remarks about the country’s e-commerce landscape and the company’s global outlook. So as a result, PDD’s future doesn’t seem promising and its shares plunged by over 28%, marking the largest one-day drop in the company’s history and erasing nearly $55 billion in market cap. So it turns out,

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that throwing money away with Tmoo has finally caught up with the company. Now as an online e-commerce influencer, I used to receive tons of requests from Tmoo for sponsored content, but for the last couple of months, the activity has completely dried up. Meanwhile, Tmoo’s sellers are starting to revolt as well. Recently, hundreds of Tmoo suppliers staged a demonstration at an office affiliated with Tmoo in the southern Chinese city of Guangzhou. And it turns out that in order to achieve the low prices that Tmoo demands,

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sellers are getting squeezed. No way, hard to believe, right? Well, during this peaceful sit-in, sellers protested that unjust fines were being levied by the company and that Timmu is unfairly withholding payments on goods that were already sold. One seller who sells household goods claimed that Timmu had frozen about 2 million yuan or $276,000 in completed sales that she needed to withdraw to pay salaries and other costs of running her business. According to Ivy Yang,

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a China tech analyst and founder of consulting firm Wavelet Strategy, discontent has been brewing for a while now and has finally reached a tipping point. The sellers have had it with Tmoo. They are angered by the lack of transparency and communication regarding hefty fines and the crushing reality that it’s almost impossible to make a profit selling on the platform. Now I personally have a couple of friends who sell on Tmoo and the only thing that matters to them is low prices.

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Tmoo will go out of their way to make sure that sellers are selling everything at the lowest prices possible. For example, as a seller, Tmoo will often ask you to lower your prices and if you don’t agree, they will simply remove your product from the marketplace. Meanwhile, if you say yes, they won’t tell you what the lower price is. They’ll just lower it to whatever they want without telling you whether you make a profit or not. And as the saying goes, you can only squeeze so hard until something breaks and now sellers are leaving the marketplace in droves.

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But the final nail in the Tmoo coffin just happened a couple of weeks ago. On September 13th, the Biden administration introduced new changes to the de minimis rules to curb what it described as abuse by Chinese e-commerce platforms like Tmoo and Shien. There are three major changes, which I’ll summarize for you so you don’t actually have to read the official press release. But the first change states that any products that are subject to tariffs under sections 301, 232 or 201 of US trade law,

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will no longer qualify for the de minimis exemption. And previously, Chinese sellers, including those on platforms like Tmoo, could bypass those tariffs by keeping the value of individual shipments under $800. But not only do sellers have to pay customs duties now, but they also have to pay tariffs for every shipment no matter how small. Now, in case you aren’t familiar with the products under tariff, Section 301 tariffs target goods like electronics, textiles, and machinery.

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Section 232 affects imports of steel, aluminum, and other materials, and Section 201 covers products like solar panels and washing machines. And overall, these products cover about 40 % of the total imports from China and roughly 70 % of what’s sold on Timo and Xien. But what about the other 60 %? The second part of the new de minimis changes are even more devastating than the first for companies like Timo and Xien.

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New rules will impose stricter information collection for each low-value shipment that claims the de minimis exemption. Sellers will now need to provide the 10-digit tariff classification number for products which allows U.S. Customs and Border Protection to flag problematic items or items that should be subject to duties. Sellers also have to reveal the buyer who is claiming the de minimis exemption which adds more transparency and makes it tougher for them to avoid taking responsibility for poor quality products coming into the U.S.

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Now these new rules are somewhat vague, and how bad they will hurt Tmoo and Shiyin will depend on the extent that the US wishes to enforce these rules. But typically, when you import something into the US as a business, you have to provide your employer identification number. The IIN is used for customs documentation, such as the importer security filing and customs entry forms. However, if you’re importing goods for personal use, like a Tmoo customer, and the goods are above a certain value,

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you are required to provide either a social security number or an EIN. And based on these new rules, Tmoo and Shien customers may now have to provide their social security numbers to make a purchase to avoid paying import taxes. Now, how many customers do you think will be willing to provide a Chinese company their social security number? I’m guessing zero. There’s enough paranoia out there already about how Chinese companies are collecting your information. Can you imagine the backlash if they ask for your social security number?

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This rule is basically going to destroy Tmoo and Shien if the US chooses to enforce it. Now the third and final aspects of these new changes ensures that products imported under the de minimis exemption adhere to US safety regulations. All importers of consumer goods will be required to file certificates of compliance electronically at the time of entry, even for de minimis shipments. Now this is significant because it addresses the loophole where foreign sellers, especially on platforms like Tmoo,

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might previously have avoided US safety regulations and certifications by shipping items as low-value packages. For example, Timo is getting away with shipping children’s toys with unsafe levels of lead, phthalates, and other harmful chemicals. They’ve also been selling tons of counterfeit chargers and electronic devices, including phone chargers and power banks, without passing mandatory UL certification, which prevent risks like fires or electric shock. Sheehan has been accused of selling textiles and clothing that contain hazardous chemicals

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such as formaldehydes and azodyes, which can cause skin irritations or allergic reactions. Xi’an has also sold cosmetics from China with harmful chemicals like mercury or hydroquinone, which can cause serious health risks, including skin damage or long-term toxicity. And finally, Tianwu and Xi’an have gotten away with selling children’s apparel and products such as cribs without passing mandatory safety tests for items like choking hazards or flammability risks. Well, with this new rule, the Consumer Product Safety Commission

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will be better able to block unsafe or non-compliant products from entering the US. And as a consumer, if you buy these items, you might have to file a certificate of compliance. And who the hell is going to file a certificate of compliance? No one. So overall, Tmoo’s parent company, PDD, is less likely to throw gobs of money at Tmoo going forward because they are hurting as a company. Most of the influencer money has dried up as well, and we’ll have to see if they decide to buy a commercial for the Super Bowl next February.

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Meanwhile, Tmoo sellers are finally getting fed up with not being able to make a profit on the platform. And Tmoo’s business practices of forcing sellers to lower their prices is taking its toll and sellers are leaving the platform. And then finally, thanks to the Biden administration, the de minimis loophole has finally been closed and Tmoo and Shin will have to pay taxes just like any other US company. But even worse for Tmoo, the government can now force anyone who buys from Tmoo to identify themselves either by their social security number

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or their EIN number. And if someone chooses to buy a product that doesn’t meet U.S. safety standards, they may be forced to show a certificate of compliance. Now, of course, the effectiveness of these rules depends on the level of enforcement from U.S. officials, but I’m willing to bet that the U.S. will be super anal with these rules from the start to set an example. Tmoo and Shin have gotten away with not having to pay taxes for too long, and their primary pricing advantage is about to go away. This is great news for U.S. sellers.

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And if you’ve been having problems with Chinese knockoffs or just competition from China, this will go a long way to leveling the playing field. Hope you enjoyed this episode. Now it’s about time that Chinese marketplaces have to start paying their share of taxes. And the only negative is that enforcing these new rules may take a year or two to be put into motion. more information and resources, go over to mywifequitterjob.com slash episode 562. And once again, tickets to Seller Summit 2025 are now on sale over at sellersummit.com.

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If you want to hang out in person in a small intimate setting, develop real relationships with like-minded entrepreneurs and learn a ton, then come to my event. Go to SellersSummit.com. And if you’re interested in starting your own e-commerce store, head on over to MyWifeQuoterJob.com and sign up for my free six-day mini course. Just type in your email and a sign of the course right away. Thanks for listening.