A New Era in Cross-Border E-commerce: Who’s Gaining Ground as Chinese Giants Retreat?
In recent years, TEMU and SHEIN have taken the U.S. by storm with their ultra-low pricing, fast fashion models, and supply chain rooted deeply in China. But as global trade tensions intensify and U.S. consumer preferences evolve, these two eCommerce giants are facing a critical juncture.
From Meteoric Growth to Market Headwinds
Several recent developments signal a potential slowdown for both platforms in the U.S.:
- According to The Financial Times, TEMU’s U.S. monthly active users dropped by 51% between March and June 2025 — down to 40.2 million.
- Advertising spend has been slashed: TEMU by 87%, SHEIN by 69%, compared to the same period last year. Once top-ten digital advertisers in the U.S., both are now outside the top 60.
- Consumer Edge reports a 10–20% drop in consumer spending on both platforms in May, with no clear rebound in the following weeks.
The rising U.S.–China trade tensions are a key factor. New tariffs announced in April 2025, along with changes to the de minimis import rule, have disrupted the business model TEMU and SHEIN once relied on — low-cost direct shipping from China in small parcels that avoided import duties.
The Rise of Competitors: Amazon, TikTok Shop, and More
While TEMU and SHEIN slow down, other players are capitalizing on the opportunity:
- Amazon is gaining fast in the fashion segment. In the past six months:
- Women's apparel sales grew 26%
- 3 of the top 5 brands are Chinese third-party sellers using Amazon’s FBA
- 92% of sales in this category now come from third-party sellers
- Platforms like TikTok Shop and DHgate have seen temporary traffic surges
- Retailers such as Zara, Asos, Ollie’s, Foot Locker, and Columbia are capturing fast fashion spenders seeking alternatives
Strategic Shift: How TEMU and SHEIN Are Responding
Facing headwinds in the U.S., both companies are pivoting their strategies:
1. Localized Fulfillment in the U.S.
TEMU has already announced plans to localize parts of its supply chain — a notable departure from its previous dependency on direct-from-China shipping. This shift reflects a broader trend: eCommerce players rethinking fulfillment in response to tariff risks and last-mile delivery expectations.
2. Geographic Diversification into Europe
With increasing uncertainty in the U.S., both companies are expanding aggressively into the EU:
- TEMU:
- EU sales up 60%+ in May 2025
- France saw 100%+ MoM growth, driven by increased advertising
- SHEIN:
- EU sales up nearly 20% in May
- UK market grew 50% year-over-year
These expansions suggest a strategy to balance risk, build new revenue pipelines, and hedge against tightening U.S. trade policies. However, Europe also comes with its own regulatory hurdles — especially in areas like data privacy, sustainability, and labor practices.
The Future of Cross-Border E-Commerce
The evolving strategies of TEMU and SHEIN hint at a broader industry transformation. The old model — China-based production + global direct shipping — is giving way to a hybrid future:Global Manufacturing + Local Fulfillment
This model enables compliance, speed, and flexibility. For emerging and established brands alike, success in cross-border commerce may increasingly depend on the ability to build regional supply chains, invest in localized logistics, and respond quickly to shifting policy environments.
Final Thoughts
TEMU and SHEIN’s current trajectory underscores a new phase in global eCommerce. While their U.S. slowdown poses significant challenges, their moves into localized fulfillment and European expansion demonstrate agility and foresight.
Whether these efforts will restore growth — or merely stabilize performance — remains to be seen. What’s clear is that the cross-border eCommerce landscape is entering a period of structural transformation, and businesses across the value chain must adapt accordingly.
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