Online retail giants Temu and Shein have recently faced a significant decline in sales following US President Donald Trump’s decision to eliminate a duty exemption for their small parcels. This move has had a noticeable impact on American consumers who have grown accustomed to the affordable products offered by these platforms.
According to data from Bloomberg Second Measure, Shein experienced a 16% to 41% drop in US sales over a five-day period starting from February 5. Similarly, Temu, under PDD Holdings, saw a decrease of up to 32% during the same timeframe. While these numbers may seem alarming, they are on par with the typical post-holiday slump in spending that these companies usually experience. However, what sets this decline apart is its sustainability and the reversal of the growth trend observed in late January, persisting until the latest available data on February 9.
The decline in sales coincided with President Trump’s announcement that parcels from China valued under $800 would no longer be exempt from customs duties. This change directly impacts Shein and Temu, which heavily rely on this exemption for their deliveries to US consumers. Even though the policy has not yet been enforced, the mere anticipation of additional fees could be deterring shoppers from making purchases.
In addition to the policy change, other factors such as seasonal fluctuations, increased market competition, and broader economic shifts may also be contributing to the sales downturn. These challenges have prompted both Shein and Temu to take proactive measures to mitigate the impact of the new tariffs.
Shein, known for its trendy fashion offerings at unbeatable prices, has reportedly reached out to its top apparel suppliers in China to establish new production facilities in Vietnam. This strategic move aims to diversify the company’s manufacturing base and reduce its reliance on Chinese production. On the other hand, Temu has opted for a “half-custody” framework, relinquishing some control over its Chinese supply chain to adapt to the changing trade landscape.
The evolving situation between the US and China has sent ripples through the global e-commerce market, forcing companies like Shein and Temu to reassess their business strategies. While these challenges are undoubtedly daunting, they also present an opportunity for innovation and adaptation in a rapidly changing economic environment.
As consumers, we may find ourselves navigating the aftermath of these policy shifts as we weigh the trade-offs between affordability and potential additional costs. The impact of these decisions extends beyond the balance sheets of multinational corporations to the daily choices we make as shoppers seeking value and convenience.
In conclusion, the repercussions of President Trump’s decision to eliminate duty exemptions for small parcels from China have reverberated across the e-commerce landscape, affecting companies like Shein and Temu. While the road ahead may be uncertain, one thing is clear – the global marketplace is evolving, and businesses and consumers alike must adapt to thrive in this new era of trade dynamics.
