Headline: Temu Outpaces Shein in Pivot Amidst Import Tariff Changes
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The U.S. government's move to impose tariffs on low-cost imports is expected to disproportionately impact fast fashion retailer Shein compared to online discount store Temu. This is primarily attributed to Temu's more diverse product range and proactive adjustments to its shipping strategy.
Both companies have experienced significant growth in the U.S. under the de minimis rule, which exempted shipments valued under $800 from import duties. However, Temu has swiftly shifted its operations to reduce reliance on this provision.
Temu, owned by PDD Holdings, has expanded its "semi-managed model," resembling Amazon's strategy of storing inventory in overseas warehouses rather than shipping directly to customers. By March 2023, approximately 20% of Temu's U.S. sales originated from local sellers, according to Marketplace Pulse. By year-end, half of the products sold to the U.S. were first routed through domestic warehouses.
Additionally, Temu has increased its reliance on ocean freight for bulk shipments, including larger items like furniture, which helps avoid import duties under the de minimis threshold.
In contrast, Shein remains heavily reliant on air freight for direct shipping of its vast array of fast fashion products. Although it has established distribution centers in the U.S., the company's emphasis on speed and responsiveness to fashion trends limits its ability to diversify its supply chain as quickly as Temu.
Despite the anticipated impact of the new tariffs, analysts believe that Shein and Temu will adapt swiftly due to the agility of Chinese e-commerce firms and their supply chains.