Online shopping giants Temu and Shein have seen a sustained drop in sales in the week after US President Donald Trump scrapped a duty exemption that their small parcels benefit from, suggesting a chilling effect on American consumers who previously flocked to their ultra-cheap wares.
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Shein’s US sales fell 16 per cent to 41 per cent for five days from February 5 while PDD Holdings’ Temu notched a fall of as much as 32 per cent during the period, according to Bloomberg Second Measure, which analyses credit and debit card data.
While the drop so far is only as big as the traditional post-Christmas fall-off in spending on these platforms, it reversed the growth trend seen in late January, and has lasted through February 9, the latest date for which data is available.
The pullback in spending began a day after Trump said that parcels under US$800 from China would no longer be exempt from customs duties, a category that covers the bulk of Shein’s and Temu’s deliveries to US consumers. While the revocation has yet to be implemented, shoppers may be put off by fears that they’ll be on the hook for extra fees.
Other factors like seasonality, market competition and macroeconomic changes may also be weighing on sales.
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The two Chinese online retailers, who have been leveraging the small parcel rule to ship cheap goods to US consumers without paying tariffs, have been accelerating their efforts to mitigate the impact of the fresh US tariffs. Shein is said to ask some of its top apparel suppliers in China to set up new production capacity in Vietnam, while Temu is giving up substantial control of its Chinese supply chain with a so-called “half-custody” framework, Bloomberg News earlier reported.