The mysterious forces from the East are fighting among themselves before conquering overseas. The two fastest-growing shopping platforms in the U.S. are SHEIN and Temu, the former an ultra-fast fashion company that beat fast-fashion ancestor Zara, and the latter a cross-border e-commerce company owned by Temu. These two domestic “light of affordability” are like a “dimensional blow”, allowing Americans to refresh their consumerism several times over.
However, staring at the same piece of cake, they can’t help but show their chips and weapons, circling their own turf and encroaching on each other’s territory. They don’t want to make each other feel better, let alone Amazon, the North American e-commerce hegemon. The two newcomers fought and blood was spilled on the industry leader. In a real business battle, the tactics have never been elegant, and Shein and Temu chose to meet directly in court.
On July 14, in federal court in Boston, Temu filed charges against SHEIN for violating U.S. antitrust laws. Temu was upset that SHEIN was forcing more than 8,000 apparel manufacturers to “choose one or the other. These manufacturers faced fines and other penalties if they cooperated with Temu. SHEIN, which is an overseas e-commerce company but has a large part of its supply chain in China, has responded by claiming that there is no legal basis for the lawsuit and that it will vigorously defend itself.
The case is actually a “courtesy call”.
Last December, SHEIN first sued Temu in Illinois federal court for, among other things, bribing web celebrities to disparage SHEIN and posing as a SHEIN social media account to direct people to download Temu. The TikTok video that pissed off SHEIN blatantly stomped on the issue: “I switched from SHEIN to Temu, I’m getting more of the same for less money.
In March, SHEIN sued Temu for trademark infringement and copyrighted images. Unsurprisingly, Temu also “strongly and categorically rejected all allegations. While Temu and SHEIN have taken turns as plaintiff and defendant, other lawsuits have not ceased. At the end of May this year, netizens posted SHEIN’s Nike shoe knockoffs on TikTok, and then SHEIN removed the items, explaining that the problem was with a third-party seller.
Amazon actually has a lot of counterfeits, which is an inevitable problem as the platform scales up. But even without third-party sellers, SHEIN’s own apparel has been repeatedly accused of infringement. Meanwhile, Temu is involved in a legal battle with Amazon sellers. Wired magazine reported that dozens of Amazon merchants found that Temu merchants were copying their merchandise, even copying product photos, descriptions, and keywords directly, and then eroding their sales with lower prices. A piece of fitness equipment that sells for $25.99 on Amazon is copied for less than $5 at Temu. In May, the Amazon merchant sued Temu in U.S. District Court, and whether it was a knockoff or not, Temu’s extremely low prices were a threat to Amazon. In June, Amazon excluded Temu from its price search algorithm.
Amazon has used this algorithm for two decades to ensure that the prices of its own goods are not much higher than other platforms. If a merchant overprices their products, they can have their products removed or even have their store shut down. Amazon, which has always been tough, avoided Temu on the grounds that the products were “of dubious origin and could be counterfeit. Avoiding the issue is probably the best thing to do, because if you compare prices with Temu, you’ll either be penalized by the platform, or you’ll be left with no profit at all.
It’s human nature to be greedy, and both Temu and SHEIN have been the most popular shopping apps in the U.S. In May 2021, SHEIN overtook Amazon as the most downloaded shopping app in the U.S., and in November last year Temu won the U.S. crown for free iPhone apps in all categories. Of course, in terms of user data, taking Amazon off the throne is still a long way off, with Sensor Tower reporting that in November 2022, Amazon and SHEIN had 71 million and 24 million monthly users in the U.S., respectively. In February, Temu had 13.4 million monthly U.S. users. Despite the negative press, Temu and SHEIN have won the hearts and minds of many overseas users.
So many items are cheaper than Amazon, that’s what one overseas user thought when she first saw Temu, and then she bought 34 items for $223 on Christmas Day. The order was promised to be delivered within 7 to 15 business days, not as fast as Amazon, but she was willing to wait. A.T. Kearney once said of SHEIN that it could be a real competitor to Amazon if it can get a foothold in the youth demographic and stay in touch with them.
That’s a good way to describe Temu, too. Browsing their websites, you’ll notice a subtle similarity. When you open the SHEIN homepage, you’re greeted by European and American style images, tens of thousands of items in different categories, advice on what to wear and keyword recommendations to save you from selection problems, and discounts in all caps to make the prices even more discounted. Necklaces are $2.30, sweatpants are $4, and shorts are $9. …… tempts hot-headed visitors to click in and get the same model.
At the top of Temu’s homepage is a countdown of deals, with eye-catching products in the limited-time specials section – $10.79 for a smartwatch, $0.97 for a bobby pin, $3.63 for a nose-hair trimmer …… Sales range from a few thousand to tens of thousands. Continuing down the page are back-to-school features, sale sections, outfit suggestions, and a dizzying and seemingly endless stream of merchandise. These colorful items are about to be packaged together and appear in the vertical screens of social media.
The rise of Temu and SHEIN in the U.S. has a lot to do with Gen Z, a generation that follows trends on a budget. Under the hashtags #Temuhaul or #SHEINhaul on TikTok, young people show off the results of their shopping sprees with captions such as “$50 Temu blind box,” sharing their algorithmic shopping addiction on and off screen. In fact, SHEIN has always been a brand with a strong sense of “net”. Social media has always been the core of SHEIN’s business model, and it has also allowed it to capture the earliest traffic dividends.
SHEIN has been working with fashion bloggers since 2012, sending them a few pieces of clothing in exchange for heartfelt fittings and merchandising, bearing in mind that Instagram was born in 2010, and the netroots economy was still a novelty at the time. That tradition continues to this day, with SHEIN collaborating with small-time celebrities, big-name celebrities, and vertical bloggers – even Hailey Bieber is wearing a $6 orange tank top and $5 snakeskin-print bottoms. At the same time, SHEIN also loves to run results ads, linking directly to products or coupons in a simple, brutal call to action that calls for you to buy something right away, rather than sitting down and packaging itself as a certain lifestyle. A recent report released by UBS Investment Bank shows that SHEIN has more followers on TikTok than any other apparel brand, and the third highest number of Instagram followers.
Temu is also a ‘marketing genius’, after all, social fracturing and gamified shopping are the traditional arts of Poundland.Temu landed in the US in September 2022, and went live in 25 markets in less than a year. Temu’s short period of time is due to the backing of Temu’s supply chain and Temu’s money-making ability. The new rebate, net red placement, smashing ads, in short, is a very large-scale purchase of traffic. From Facebook, to email, to paying for app store search terms, Temu reaches out to its seed users through almost every marketing channel, and on February 12, Temu launched its first advertisement at the Super Bowl, a 30-second ad that ran twice and cost about $14 million.
The Super Bowl is a national sporting event in the U.S. with hundreds of millions of viewers, and Temu became an instant hit, with downloads of Temu jumping 45% the day of the Super Bowl compared to the day before. The tagline of the ad reveals Temu’s positioning: Shop like a Billionaire. In other words, Temu’s endless selection and low prices give us the illusion of being rich.
The Poundland ‘slash and burn’ that makes friends comes in an improved version. One Canadian user complained that to get a free gift, you have to invite seven new users and complete your order within 24 hours, and if you exceed the time limit, you have to start all over again. Perhaps in an effort to avoid a similar experience with TikTok, Temu and SHEIN, which have been killing it, have coincidentally kept a low profile on their origins.
In 2021, SHEIN moved its headquarters to Singapore and was initially headquartered in Nanjing. Temu was founded in Boston in 2022 by the parent company of Temu, and in April this year it deleted its association with Temu in the “About Us” interface on its official website. The frenzied marketing landing is a finely tuned business. In order to achieve the ultimate efficiency and price, Temu and SHEIN are both “control freaks”, but there are some differences in their specific methods.
SHEIN’s “small order, quick return” model: SHEIN produces ultra-small batches of 100 to 200 pieces of each new style and measures the market response. If it’s well received, it produces more, otherwise it stops in time, responding flexibly to rapidly changing consumer preferences. The company’s speed of new production outperforms fast-fashion brands, relying on big-data-based market research and style design, as well as the Pearl River Delta’s mature textile industry and strong supply chain management system. 2022, Shein’s sales grew by 46% to break $29 billion, surpassing Zara’s single-brand sales for the first time in a year, and beating the fast-fashion originator in the name of ultra-fast fashion.
Although both are “cheap and big”, SHEIN and Temu are genetically different: SHEIN is ultra-fast fashion, which designs and sells its own branded clothing, outsourcing production to the Pearl River Delta textile industry, and is strong in the supply chain management mentioned above, with fast turnover of inventory and a wide range of new styles; Temu, on the other hand, is the sister version of JD.com, which is like a large-scale online supermarket, where the platform is not in charge of design and production, but rather recruits third parties to provide products. Temu is the sister version of Jinduoduo, like a large online supermarket, the platform is not responsible for design and production, but to recruit third-party sellers to provide products, low prices, a full range of goods to sell to the world, Temu does not learn from the shape of SHEIN, but has the God of SHEIN, it is also a firm grip on the supply chain, which is mainly reflected in the management of the third-party sellers – price, quality control, logistics, warehousing and other aspects, Temu have to intervene. Temu is involved.
LatePost reported that in order to ensure the time, Temu requires merchants to prepare goods in advance, if no goods will be automatically removed from the shelves; in order to keep the price low, Temu has the final pricing rights, one of the rules is not higher than the selling price on Amazon. Even after a merchant joins Temu, there is still the possibility of being eliminated at any time, and if Temu finds a cheaper option in the same category, the current one will be replaced. At the same time, Temu also did some quality control, some categories need merchants to send samples to Temu to review, and then only to prepare goods to the transit warehouse, to avoid the emergence of a concentration of counterfeit and shoddy.
Merchants who have lost the right to speak are equivalent to mere supply channels. A small home furnishings merchant interviewed by Wired magazine said that Temu would often ask for price reductions, and that it would be difficult to make a profit once they were in its supply chain.2022 In November, Temu’s customer unit price was between $20 and $25.2023 Temu has a goal of getting more and more people to buy their products in the U.S. every year. Their goal is for Americans to make 30 purchases from Temu per year with an average order size of $50. While Temu is trying to increase the customer unit price, SHEIN, which has been out of the sea for a long time, has also begun to try a different business model and supply chain system. when Temu was launched in the United States in September last year, it set a small goal: at least one day before September this year, the gross merchandise value (GMV) exceeded SHEIN. this is not a daydream. In May, U.S. users spent 20% more on Temu than on SHEIN.
SHEIN is clearly getting antsy in the face of Temu’s aggressive growth. Since the end of May, like Temu, it has introduced third-party sellers and transformed itself into a platform that goes beyond fashion and sells a wider variety of products: 50-cent pins, $2 hand-held fans, $39.99 mini-fridges. ….. …SHEIN’s focus on Merchants includes Amazon sellers with over $2 million in annual sales. The positioning of the sellers is similar to that of SHEIN, focusing on good quality and low price, but there is no lack of high-end brands such as Paul Smith, which are also included in the U.S. website of SHEIN. In this way, SHEIN’s merchandise category is richer, the source of income is more diversified than the self-owned brands, but also overlap with Temu’s home turf, began to worry about logistics, warehousing and other infrastructure issues. At the time, there were media comments:
SHEIN challenges Amazon in the business of selling everything.SHEIN and Temu, the arch-rivals, are becoming more and more like each other in the midst of a watery grave. In the short term, they are each other’s biggest competitor, and Amazon is the ultimate boss that they are both trying to conquer, but while their business models are different, both SHEIN and Temu are thinly veiled, with sophisticated supply chains designed to keep the price system low and the variety of products flowing. For consumers, the two platforms may not be fundamentally different. As for their future, apart from court battles, it is the silent, price-sensitive overseas buyers who will ultimately make the choice.