Customers are going crazy over the low-priced e-commerce platforms Temu and Shein, but CEOs of small companies are concerned. There are claims that the competition in the fast-fashion e-commerce scene smothered local businesses.
Unable to compete with the prices, paired with the complex global economic challenges, companies are closing down. CEOs are also complaining that it has a ripple effect on advertising costs.
Shein and Temu target the same market: young people, also known as Gen Z. Shein, a Chinese-founded company, entered the US market six years ago. But it has since pushed other fashion players off the catwalk. Zara, H&M, and Forever 21 are only a few battling to compete with Shein’s low prices.
Temu entered the e-commerce market and excelled at a record pace. The founder of PDD Holdings, Colin Huang, is the 30th wealthiest person in the world and third in China.
Temu and Shein wrestle in court
Last year, Shein and Temu’s battle for territory turned to the courts. Shein first challenged Temu, accusing it of working with influencers to “belittle Shein on social media.”
Although Temu was still new in the industry, it stood its ground and pushed back. It filed papers in July 2023, accusing Shein of “intimidating fashion manufacturers not to work with them.”
In October, both parties withdrew their charges.
ALSO READ: Low-cost e-commerce companies Shein and Temu drop court cases
Difficulty competing
Modern Retail reports how Jane.com, Etsy, and Gap have attributed recent business turbulence to Temu and Shein’s dominance. They all complain about how challenging it is to compete with these giants’ ultra-low prices and rapid product turnover.
Four months ago, Gap’s executive vice president mentioned that Shein was “competing” with their customers. She acknowledges that “we have a lot to do” to keep the customers and give value to buyers.
Jane.com announced the marketplace would be shutting down, but has now left e-commerce sellers in deep trouble. Sellers were preparing for Black Friday sales when the website suddenly shut down before the event. Small business owners claim they are owed thousands of dollars and cannot recover it.
Strategies to success
Experts warn that prices alone cannot give your business that competitive advantage. At the same time, costs play a significant role.
There are other ways to keep customers, like:
- Enhance customer experience: Focus on understanding your customers and their preferences. Prioritize feedback and communication and build a trusting relationship to ensure they want to return for that extra care.
- Focus on quality: With mass production like Temu and Shein, quality is not top of mind. Competing with ultra-low-cost prices, giving quality items to customers will result in repeat purchases. When returning an item, focus on making this process seamless and efficient.
- Sustainability and ethical practices: Many customers refuse to support ultra-low-cost businesses using cheap labor and unfair labor practices. Customers often align themselves with a brand that they can identify with, having the same ethical and sustainability goals.
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About the author
Mia is a multi-award-winning journalist. She has more than 14 years of experience in mainstream media. She's covered many historic moments that happened in Africa and internationally. She has a strong focus on human interest stories, to bring her readers and viewers closer to the topics at hand.
