Online fast-fashion retailers Shein and Temu, both hailing from China, are making significant strides in the US fashion industry, outpacing traditional brands and gaining market share. These e-commerce platforms have become thriving hubs for buyers and sellers, fostering international trade for Chinese businesses. With their affordable prices, attractive discounts, and convenient policies, Shein and Temu have garnered attention from US consumers.
One of the key factors contributing to their success is affordability. Shein and Temu offer products at lower prices compared to major fashion brands like H&M, Zara, and Uniqlo. For instance, similar-looking products on Shein are often priced between $20 and $30 each. Additionally, users of the Shein app receive daily discount coupons, ensuring even better prices.
The convenience factor also plays a crucial role in attracting US consumers. Shein, for instance, provides free shipping, as well as flexible return and refund policies. These features have contributed to the platform’s popularity, with the Shein app surpassing Amazon as the most downloaded app in both the Apple and Google stores, reaching 200 million downloads last year. Shein’s annual revenue stands at an impressive $30 billion, with 13.7 million annual users.
The rising prices of apparel in the US have further fueled the success of these Chinese fast-fashion retailers. According to the US Bureau of Labor Statistics’ Consumer Price Index, apparel prices saw a 3.1% increase over the past year. This surge in clothing and footwear costs has put a strain on the budgets of many US consumers, prompting them to seek out more affordable alternatives.
Strategically entering the US market during a period of relatively high inflation, Shein and Temu have managed to attract customers looking for cheaper options. Last year, apparel inflation stood at 5.03%, dropping to 3.17% this year. By offering affordable prices and diverse product ranges, these Chinese retailers have successfully enticed customers seeking budget-friendly alternatives.
In addition to affordability, the styles and trends offered by Shein and Temu have captured the attention of millions of customers. Outpacing traditional US brands, these retailers have gained an edge with their fast rollout speed. Data from Rest of World reveals that between July and December 2021, they added between 2,000 and 10,000 stock-keeping units (SKUs) to their apps daily.
Particularly, Temu has rapidly gained traction with US customers through its user experience approach, reminiscent of its parent company Pinduoduo, a top retailer in China. Unlike Shein, which primarily focuses on branded apparel, Temu operates more like a marketplace, offering a wide array of products, including home appliances, furniture, and accessories. Bloomberg Second Measure indicates that spending on Temu in the US exceeded that on the more established fast-fashion retailer Shein by 20% in May.
Nonetheless, these Chinese fast-fashion retailers have not been immune to controversy. Shein and Temu have faced legal issues, raising concerns regarding their business practices and intellectual property rights.
Looking ahead, Chinese online fast-fashion retailers like Shein and Temu continue to gain substantial market share in the US fashion industry. Their affordability, convenience, and extensive product offerings have attracted millions of US consumers. However, these retailers face challenges arising from legal issues and concerns surrounding their business practices. The evolving landscape of the fashion industry ensures an interesting future for these retailers as they strive to succeed and compete effectively.
