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Online retailers Temu and Shein have experienced a significant decline in user growth in the US following the implementation of steep tariffs on Chinese goods by President Donald Trump. Additionally, the closure of a tax loophole that allowed them to offer lower prices than their competitors has also impacted their operations.
According to data from market intelligence company Sensor Tower, Temu’s monthly active users in the US dropped by 51 percent to 40.2 million between March and June. Similarly, Shein saw a 12 percent decrease in monthly active users to 41.4 million during the same period.
Both Temu and Shein revolutionized the ecommerce industry with their innovative business models that disrupted traditional retail practices. By shipping Chinese-made goods directly to consumers as individual packages, they were able to avoid import duties and offer competitive prices, attracting a large customer base in a short period of time.
Despite their initial success, Shein’s plans for a stock market listing in the US and the UK faced regulatory challenges. It was reported that Shein is now considering filing for an IPO in Hong Kong, although the company has not confirmed these plans.
President Trump’s decision to eliminate the low value goods exemption for parcels from China and Hong Kong had a significant impact on Temu and Shein. This policy change led Temu to shift its business model in the US by now shipping orders from local sellers instead of Chinese factories.
The decrease in usage of Temu and Shein’s apps may also be attributed to a decline in their advertising expenditure. Sensor Tower reported an 87 percent decrease in Temu’s US ad spending and a 69 percent decrease in Shein’s ad spending compared to the previous year.
As a result of the challenging environment in the US, Temu and Shein have redirected their focus to Europe. Temu’s app usage surged in countries like France, Spain, and Germany, while Shein saw growth in the UK, Germany, and France.
However, their expansion in Europe could face obstacles as the EU plans to impose a €2 fee on small packages entering the bloc, and the UK government considers ending its import duty exemption scheme.
Although Temu did not comment on specific business metrics, the company emphasized its commitment to collaborating with merchants across various regions to help them expand their businesses.
Overall, the shifting landscape of global trade and regulatory policies has forced online retailers like Temu and Shein to adapt their strategies and seek opportunities in new markets.
