The Fall of Fast Fashion Giants: Shein and Temu Face New Realities
June 9, 2025, 5:12 am
Location: Singapore
Employees: 10001+
Founded date: 2012
The landscape of e-commerce is shifting. Fast fashion giants Shein and Temu, once riding high on waves of consumer demand, are now feeling the sting of new tariffs and tax regulations. Their decline in the U.S. and South Africa is a wake-up call for the industry.
In the U.S., the closure of the de minimis loophole has sent shockwaves through the market. This loophole allowed low-cost goods under $800 to enter the country without tariffs. With its closure, Shein and Temu are grappling with a new reality. Data reveals a staggering 52% drop in Temu's daily active users in May compared to March. Shein isn't faring much better, with a 25% decline. The numbers tell a story of retreat.
Advertising spend is shrinking. Temu slashed its U.S. ad budget by 95% year-on-year. Shein followed suit with a 70% cut. The decline in visibility is palpable. Once top contenders in app rankings, both platforms have plummeted. Temu's average rank fell from the top three to 132. Shein dropped from the top ten to 60. The market is tightening its grip.
Tariffs are the heavyweights in this bout. President Trump’s sweeping tariffs on Chinese imports have altered the playing field. The de minimis exemption, once a lifeline, is now a ghost. The new tariff rate stands at 54%, a far cry from the previous 120%. This change has forced both companies to rethink their logistics. They are moving away from drop shipping, a model that allowed them to ship directly from China to U.S. consumers. Instead, they are investing in U.S. warehouses. This shift is costly and complex.
The implications are profound. Analysts warn that a 50% tariff could strip Temu of its competitive edge. The company’s parent, PDD Holdings, recently reported disappointing earnings, citing tariffs as a significant pressure point. Meanwhile, Shein's future hangs in the balance as it navigates these turbulent waters.
Across the globe, South Africa is echoing similar sentiments. The closure of its own de minimis loophole has led to rising prices. Local retailers are seeing a shift in consumer behavior. The CEOs of Mr Price and TFG reported that the new regulations have slowed down international competitors. Social media is buzzing with outrage over higher prices, a clear sign that consumers are feeling the pinch.
In South Africa, the Revenue Service ended the practice that allowed low-cost goods to bypass hefty duties. This change is leveling the playing field. Local retailers are now pushing for even stricter measures, advocating for a 45% import duty on all clothing, regardless of price. They argue that fairness is key in a market dominated by international players.
The fallout from these changes is palpable. Local brands are investing heavily in technology and expanding their product ranges. Mr Price plans to invest R1.6 billion in new stores and supply chain improvements. TFG is also on the offensive, with plans to open over 100 new stores. They are not just reacting; they are strategizing for growth.
As Shein and Temu grapple with these challenges, their future hangs in the balance. The e-commerce giants must adapt or risk being left behind. The landscape is changing, and the competition is fierce.
The rise of local brands is a testament to resilience. They are seizing the moment, leveraging the challenges faced by international giants. The shift in consumer sentiment is palpable. As prices rise, loyalty may shift as well.
The story of Shein and Temu is not just about declining numbers. It’s about the evolution of the market. It’s about consumers who are becoming more discerning. They are looking for value, quality, and fairness.
In the end, the fast fashion giants must navigate a new reality. They must find ways to connect with consumers who are increasingly aware of the implications of their purchases. The days of unchecked growth may be over.
The e-commerce landscape is a battlefield. The rules are changing, and the stakes are high. Shein and Temu must adapt or risk fading into obscurity. The future is uncertain, but one thing is clear: the era of easy profits is coming to an end.
As we watch this unfold, the implications for the global market are significant. The rise of local brands and the tightening of regulations signal a shift in consumer behavior. The giants of fast fashion must rethink their strategies. The world is watching. The question remains: can they pivot in time? The clock is ticking.
In the U.S., the closure of the de minimis loophole has sent shockwaves through the market. This loophole allowed low-cost goods under $800 to enter the country without tariffs. With its closure, Shein and Temu are grappling with a new reality. Data reveals a staggering 52% drop in Temu's daily active users in May compared to March. Shein isn't faring much better, with a 25% decline. The numbers tell a story of retreat.
Advertising spend is shrinking. Temu slashed its U.S. ad budget by 95% year-on-year. Shein followed suit with a 70% cut. The decline in visibility is palpable. Once top contenders in app rankings, both platforms have plummeted. Temu's average rank fell from the top three to 132. Shein dropped from the top ten to 60. The market is tightening its grip.
Tariffs are the heavyweights in this bout. President Trump’s sweeping tariffs on Chinese imports have altered the playing field. The de minimis exemption, once a lifeline, is now a ghost. The new tariff rate stands at 54%, a far cry from the previous 120%. This change has forced both companies to rethink their logistics. They are moving away from drop shipping, a model that allowed them to ship directly from China to U.S. consumers. Instead, they are investing in U.S. warehouses. This shift is costly and complex.
The implications are profound. Analysts warn that a 50% tariff could strip Temu of its competitive edge. The company’s parent, PDD Holdings, recently reported disappointing earnings, citing tariffs as a significant pressure point. Meanwhile, Shein's future hangs in the balance as it navigates these turbulent waters.
Across the globe, South Africa is echoing similar sentiments. The closure of its own de minimis loophole has led to rising prices. Local retailers are seeing a shift in consumer behavior. The CEOs of Mr Price and TFG reported that the new regulations have slowed down international competitors. Social media is buzzing with outrage over higher prices, a clear sign that consumers are feeling the pinch.
In South Africa, the Revenue Service ended the practice that allowed low-cost goods to bypass hefty duties. This change is leveling the playing field. Local retailers are now pushing for even stricter measures, advocating for a 45% import duty on all clothing, regardless of price. They argue that fairness is key in a market dominated by international players.
The fallout from these changes is palpable. Local brands are investing heavily in technology and expanding their product ranges. Mr Price plans to invest R1.6 billion in new stores and supply chain improvements. TFG is also on the offensive, with plans to open over 100 new stores. They are not just reacting; they are strategizing for growth.
As Shein and Temu grapple with these challenges, their future hangs in the balance. The e-commerce giants must adapt or risk being left behind. The landscape is changing, and the competition is fierce.
The rise of local brands is a testament to resilience. They are seizing the moment, leveraging the challenges faced by international giants. The shift in consumer sentiment is palpable. As prices rise, loyalty may shift as well.
The story of Shein and Temu is not just about declining numbers. It’s about the evolution of the market. It’s about consumers who are becoming more discerning. They are looking for value, quality, and fairness.
In the end, the fast fashion giants must navigate a new reality. They must find ways to connect with consumers who are increasingly aware of the implications of their purchases. The days of unchecked growth may be over.
The e-commerce landscape is a battlefield. The rules are changing, and the stakes are high. Shein and Temu must adapt or risk fading into obscurity. The future is uncertain, but one thing is clear: the era of easy profits is coming to an end.
As we watch this unfold, the implications for the global market are significant. The rise of local brands and the tightening of regulations signal a shift in consumer behavior. The giants of fast fashion must rethink their strategies. The world is watching. The question remains: can they pivot in time? The clock is ticking.