In Shanghai on February 6 (Reuters) - The decision by the Trump administration to subject low-cost imports entering the U.S. to tariffs is expected to have a more significant impact on fast fashion retailer Shein compared to online dollar-store Temu. This is primarily due to Temu's broader product range and strategic adjustments to its shipping practices.
Both platforms have experienced considerable growth in the U.S. in recent years, benefiting from a rule that exempted shipments valued below $800 from import duties. A report from June 2023 indicated that Chinese retailers were responsible for over 30% of daily packages shipped to the U.S. under this rule.
As the Biden administration began scrutinizing this rule, both companies started preparing to reduce their reliance on it. However, Temu acted quicker to modify its approach, transitioning to a model similar to Amazon's, where goods are bulk-shipped to overseas warehouses instead of directly to customers.
Tech analyst Rui Ma noted that Temu swiftly implemented changes, with a significant portion of its U.S. sales being fulfilled by local sellers based in U.S. warehouses by the end of last year. Additionally, Temu has shifted towards sea freight for bulkier items, a strategy that reduced imports falling under the de minimis threshold.
On the other hand, Shein continues to heavily rely on air freight to swiftly deliver its vast array of fast fashion items. While it has established centers in several U.S. states and a supply chain hub in Seattle, its business model remains highly responsive to trends, necessitating speed in product delivery.
Although the majority of Shein's products are still manufactured in China, the company has started diversifying its supply chain by including suppliers from countries such as Brazil and Turkey, a trend likely to accelerate in response to new tariffs and regulations.
Nomura analysts predict a sharp decline in de minimis shipments to the U.S., affecting consumer purchasing from Shein, Temu, and Amazon Haul. Approximately 1.36 billion shipments utilized the de minimis provision to enter the U.S. in 2024, representing a 36% increase from 2023 according to CBP data.
Amid the uncertainty caused by Trump's recent executive order impacting express shipping, there remains optimism about the adaptability of Chinese e-commerce firms like Shein and Temu. Rui Ma emphasized the robustness of China's e-commerce operators and supply chains, expressing confidence in their ability to navigate challenges swiftly and effectively.