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Chinese e-commerce platforms Temu and Shein have announced plans to increase prices for their U.S. customers, effective next week. This decision is attributed to the impact of previous U.S. trade policies, particularly the high tariffs imposed by former President Donald Trump aimed at addressing the trade deficit between the United States and China.
Temu, a subsidiary of PDD Holdings, and Shein, which operates from Singapore, issued similar statements highlighting rising operational costs influenced by recent global trade modifications and tariff changes. Both companies indicated they would start implementing “price adjustments” on April 25, but did not specify the extent of these increases. The reason behind their similarly worded announcements remains unclear.
Since entering the U.S. market, both Shein and Temu have disrupted traditional retail by offering competitively priced goods, supported by extensive digital marketing strategies and influencer partnerships. However, the 145 percent tariff imposed on numerous Chinese imports, along with the termination of a customs exemption for items valued under $800, is beginning to challenge their business models.
In a move that affects many, President Trump signed an executive order eliminating the “de minimis provision” for imports from China and Hong Kong, which will commence on May 2. This change will mean that products previously exempt from tariffs will now be subject to the aforementioned import taxes.
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As e-commerce platforms like Temu and Shein face pressure from rising costs, the implications for U.S. consumers of low-priced fashion and goods are significant. Retail expert Doug Stephens provides insights into how these tariff changes could reshape the landscape of affordable online shopping.
Approximately four million low-value parcels, predominantly from China, arrive in the U.S. each day under the current exemption. U.S. legislators, law enforcement, and various business entities have advocated for the abolition of this long-standing exemption, framing it as a loophole that unfairly favored low-cost Chinese products and facilitated the entry of illegal substances and counterfeit items into the country.
Shein focuses on cost-effective clothing, beauty products, and accessories, often targeting a younger demographic through influencer collaborations. Temu, in contrast, offers a broader selection of products, including household goods, novelty items, and electronics.
In a competitive move, Amazon recently introduced a budget-friendly online storefront where products, including electronics and apparel, are priced below $20. The offerings closely resemble items typically available through Shein and Temu.
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Shein is also branching out by launching a global online marketplace for third-party vendors, emulating Amazon’s structure. This strategy raises questions about potential environmental and labor ramifications.
In anticipation of the upcoming price hikes, both companies are encouraging customers to continue shopping in the lead-up to the changes. Temu’s message reassured consumers: “We’ve stocked up and stand ready to make sure your orders arrive smoothly during this time. We’re doing everything we can to keep prices low and minimize the impact on you.”
Both companies slashing digital advertising
Both Shein and Temu aim heavily at budget-conscious North American audiences through digital channels. However, recent data indicates that they are curtailing their advertising expenditures across numerous platforms. Marketing analysis from two firms suggests that Temu’s average daily ad spend in the U.S. on major platforms like Facebook, Instagram, TikTok, Snap, X, and YouTube saw a significant reduction of approximately 31 percent between March 31 and April 13, compared to the prior month.
Similarly, Shein’s advertising spend across the same platforms experienced an average decline of 19 percent during this timeframe. Temu has also notably decreased its ads on Google Shopping since April 12, following a surge in advertising activity during the first quarter, as noted by Mark Ballard, director of digital marketing research at Tinuiti.
Representatives from Meta, Google, Shein, and Temu have not yet commented on these developments.
Source
www.cbc.ca