Temu Picks Up Suppliers Jilted by Rival Shein

The e-commerce upstart has been able to acquire supply chains left behind as Shein polishes its images ahead of a possible IPO.

Photo of Shein boxes
Photo by Dick Thomas Johnson via CC BY 2.0

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Singapore-based fast-fashion giant Shein cut ties with multiple Chinese suppliers last year, and everything-store rival Temu stepped in to pick up the pieces as it reaches for global e-commerce dominance, the Financial Times reported. 

Fa Fa Fa Fa Fashion

Built on incredibly cheap apparel, Shein has quickly become one of the most dominant clothing retailers on Earth — and it’s looking to grow. For months, the company has been preparing for an initial public offering in the US by undergoing something of an extreme makeover. 

To clean up its image — which includes accusations of using forced labor, violating workers rights, and Mafia-style intimidation tactics on manufacturers — Shein stopped working with multiple suppliers in southern China after auditors found they’d been violating the company’s certification standards, like having a minimum of 800 square meters of factory floor space, the FT reported.

With so many suppliers off the Shein gravy train, the offloading has meant an opportunity for China-based Temu:

  • Temu, which is owned by the Nasdaq-listed PDD Holdings, operates more like a marketplace of a wide range of products than a brand-name retailer, so it doesn’t have the same requirements as Shein. Plus, if a supplier has excess inventory from a Shein order, Temu is often there to buy whatever is left over. 
  • Business for suppliers isn’t much better at Temu, though. One supplier who runs a handbag factory told the FT that his profit margin at Shein was less than 20%, but only about 15% with Temu. And if the product is selling well enough, Temu will order similar products from other factories, forcing suppliers to compete and cut prices.

Battling Bezos: Temu may have overtaken Shein in US sales, but it’s still not No. 1. After a recent drop in US customers and sales, Temu has been on an advertising blitz here — it aired six commercials during the Super Bowl and offered $15 million in coupons and other giveaways. The goal: surpass Amazon. Bezos’s baby still has faster delivery times, but Temu has it beat on prices. One toy factory owner in China told the FT that Amazon asked him to “provide lower-priced products” in the second half of last year as Temu was gaining popularity in the US. It’s not every day you see the $1.75 trillion behemoth Amazon start to sweat.