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GP means that TEMU is just the marketplace. They aren't actually selling you the drill, just facilitating the sale.
If someone says to you "You can buy this widget that costs $10 to make for $5" that doesn't mean they they're selling it for $5. It means there's more going on and that the $5 price take is not the full story.

You may choose to ignore that and believe someone is selling you something for $5 but that doesn't make it true.

In the case of Temu, they're selling it for $5 of your money, and $5 of someone else's money, in order to capture you as a customer in the hope that you continue to buy things when they increase the price to $6, then $8, then $10, $15, $30 and so on in the future.

This is the Uber playbook, and if you have a solid product that people want and you can spend VC money long enough to build a trusted brand (or ideally keep prices artificially low until the competition gives up and you have a monopoly) it's very lucrative. I don't see it working for Temu myself. They sell things people don't need so as soon as the prices go up they'll probably fail. That said, Amazon see them as enough of a threat to launch Haul, so what do I know?

> You may choose to ignore that and believe someone is selling you something for $5 but that doesn't make it true.

Sir, I suggest you use the word "sell" in its usual way, not your own definition of it. If someone takes $5 and gives you in exchange the merchandise and right of ownership on it, then that indeed does mean they "sell it for $5". The fact that something else is going on doesn't make it false.

I suggest that the passage that you read begins with a claim that seems unreasonable ("but I've bought a $2 dress from Temu!"), and then explains its thesis in order to make you view that claim in a different way ("VC capital paid for half of that dress!") I also would like to mention that this is a very common and unremarkable way to begin an argument.
All that aside, I’m happy that VCs are paying for my stuff! I have no idea why they keep doing that. They’ve studied my behaviour so they should already know I’ll delete {app_name} as soon as I get a better deal elsewhere. (Better yet, I’ll keep both and let them fight!)

Maybe they can capture the market for a brief moment, but if they do have a long term strategy, I’m not seeing one.

I'm not? It drowns out any competition and all we are left with is a single company with a monopoly that speed runs enshitification where consumers lose.
This can briefly happen, but until VCs run out of money we’ll get competitors about as soon as the enshittification starts. Well, at least in theory, regulatory caprure is a thing, so it doesn’t always work out.

This also doesn’t work when there’s network effects at play. I believe this is why Grab (Southeast Asian Uber/UberEats) is adding social features like a whole fucking messenger into the app. Didn’t help: Bolt has launched there as well and is often cheaper and faster so I usually check both.

(Now, Grab is publicly traded, and maybe it’s profitable, which would undermine my whole argument. But I’m still getting cheap transportation and discounted food. Maybe they externalize the costs somewhere else which indeed also sucks.)

None of that changes the fact that they are indeed selling it to me for $5 today, so the sentence you quoted is indeed accurate.
The use of 'loss leaders' has a long history, so is your point that Temu's use of loss leaders may be illegal?*

(*I poked around a bit, and this may be possible, especially in California.)

Illegal? Hell no. Spending VC money to capture a market and drive out the inefficient incumbents is a genuinely good plan. Market disruption is a massive net benefit. I just don't think it'll work in the case of Temu, and anyone who looks at the prices and think "Wow, that's cheap!" isn't including where a chunk of the money is coming from.

I guess the same people were surprised when Uber started raising their prices too.