Temu vs Shein: fast fashion rivalry explained

Temu, the popular ecommerce platform, filed a lawsuit against the ultra-fast fashion company Shein yesterday.

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The battle between two of the world’s largest budget ecommerce and dropshipping companies, Temu and Shein has escalated this week. Temus has filed a fresh lawsuit against Shein for supposed anticompetitive conduct on Wednesday evening.

In a 100-page complaint document, Temu describes a range of unlawful actions undertaken by Shein. The firm alleges that Shein used “Mafia-style” tactics to coerce its merchants, which include Amazon sellers, into severing ties.

The latest complaint comes after Temu filed a separate lawsuit against Shein in July. At the time, both parties voluntarily dismissed the case against one another. Now, Temu claims that Shein’s anti-competitive behaviour has intensified.

Shein and Temu: rivalry explained

Both Shein and Temu are major ecommerce businesses based in China. While Shein has made a name for itself offering cheap, low-quality clothes and dresses for under £10, Temu’s marketplace is more diverse and stocks a wide range of household products.

The two behemoths have been competing to dominate the quickcommerce market since Temu first arrived onto the scene in 2022. Both brands have already cemented themselves in UK shopping carts.

Shein, which first launched back in 2008, still reigns supreme for Brits. Research from GlobalData shows it became one of the top 10 apparel firm’s in the country by market share in 2023, reaching a market share of 2.2%.

But Temu is catching up. In September this year, the firm maintained a five-month streak as the number one mobile shopping app by downloads in the UK, according to data insight platform, data.ai.

Temu tactics and Shein shiftiness

The Temu complaint alleges that Shein stole merchant accounts and passwords in order to jeopardise Temu’s growth in the US. Reuters reported in November that Temu accounted for nearly 17% of market share in the United States within the discount stores categories.

It also claims that Shein “falsely imprisoned” merchants who dealt with Temu, holding sales representatives in Shein’s offices for many hours and threatening them with penalties for doing business with Temu.

Temu has faced its own share of bad press, however. Reuters recently reported that Shein paid social media influencers to badmouth the company and created “imposter” accounts to push their app, tricking consumers into thinking that Shein and Temu are the same brand.

Should you use Temu or Shein for dropshipping?

Shein and Temu are two big names in stiff competition for the global dropshipping market. Their latest dispute raises questions about who will triumph in the PR war, and whether it will dissuade merchants from trading through the respective platforms.

According to the complaint document, “multiple suppliers have ceased doing business with Temu as a result of Shein’s intimidation tactics.”

Certainly, Temu poses a threat to Shein’s position as the jewel in the ecommerce crown. Ultra-low pricing is one of its biggest unique selling propositions. Products are sold at wholesale rates, allowing shoppers to access discounts of up to 90% off retail prices.

In a cost of living crisis, as consumers seek out low-cost items and businesses cheaper supply chain fees, it’s understandable why Shein may be growing wary.

This is part of the reason why the online giant has seen such impressive scale-up in the US, and suggests its UK market share could overtake Shein as soon as next year.

Dropshipping is one of the cheapest side hustles to start in 2024. Read our seven step guide to setting up a dropshipping firm.

Written by:
Helena Young
Helena is Lead Writer at Startups. As resident people and premises expert, she's an authority on topics such as business energy, office and coworking spaces, and project management software. With a background in PR and marketing, Helena also manages the Startups 100 Index and is passionate about giving early-stage startups a platform to boost their brands. From interviewing Wetherspoon's boss Tim Martin to spotting data-led working from home trends, her insight has been featured by major trade publications including the ICAEW, and news outlets like the BBC, ITV News, Daily Express, and HuffPost UK.

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