Temu reverses pricing adjustments

Temu and Shein Adjust Business Strategies in Response to Tariff Changes

In the wake of increased tariffs on imports from China, two major fast fashion retailers, Temu and Shein, have announced changes to their pricing and supply chain strategies.

According to reports, Temu has decided not to change prices for U.S. customers, despite the tariff hikes. This move is part of the company's ongoing efforts to improve service levels, as stated by the company. On the other hand, Shein has announced that it will raise prices to account for the tariff impacts.

Temu's decision not to increase prices could be due to the fact that it has been actively recruiting U.S. sellers to join its platform. This move allows local merchants to reach more customers and grow their businesses, putting it in competition with established players like Amazon and Walmart. Temu's U.S. sales are now handled by locally based sellers who fulfill orders within the country.

Shein, however, may not feel the impacts of the closing of the de minimis loophole as strongly, due to its competitive pricing in the U.S. The company's apparel products remain competitive from a pricing standpoint, according to analyst Balaam. Shein's more limited categories of products and better product data systems may have allowed it to continue shipping to the U.S., while Temu's parcels could have faced issues.

Both companies have posted customer notices regarding the price changes. The notices, which were identical with the exception of their respective brand names, stated that the changes were in response to global trade rules and tariffs.

Martin Balaam, CEO and co-founder of AI firm Pimberly, stated that Temu will likely face margin pressure as suppliers attempt to unload excess inventory outside the U.S. This could lead to increased competition and potentially lower prices for consumers.

Temu's decision to stop shipping Chinese imports to the U.S. could also be due to the 145% tariff on imports from China, which would hit the company hard due to its supply chain in the region. The opposite may have been the case for Temu's parcels, which could have faced issues at the border, according to Balaam.

The move to end the de minimis exemption, a provision that generally exempts shipments into the U.S. worth less than $800 from additional customs review and duties, would likely face blowback from companies like Temu. This could lead to further adjustments in the retail industry as companies seek to navigate the changing trade landscape.