Since the start of the current tariff war, the market has generally been pessimistic about the future growth momentum of Temu and SHEIN. These two Chinese e-commerce platforms, now popular worldwide, owe their competitive edge to low prices and rely heavily on the U.S. market.
The duo had leveraged China’s extensive supply chain and the “de minimis” loophole to send millions of parcels cross-border into the US market every day. They had both anticipated the policy shift (maybe not the magnitude) and had begun taking actions to mitigate the reliance on both the cross-border business model and the U.S. market.
In Southeast Asia, we have seen an increase in Temu’s marketing spend, where in multiple markets it has become the top ranked app; Brazil has been a bright spot for both Temu’s GMV and SHEIN’s marketplace model; while in Europe Temu managers have been working hard to build a network of warehouses that can fulfil orders across the continent.
But the bigger question is, with “de minimis” removed and their price advantage heavily curtailed, can SHEIN and Temu still be viable in the U.S.? The Economist asked: “Can Shein and Temu survive Trump’s trade war?” The Wall Street Journal and The Straits Times both focused in May that “Temu Stops China Shipments to U.S. Consumers”, and “Temu, Shein see double-digit drop in US sales in first week after tariff price hikes”.
However, last week, Chinese business media outlet LatePost reported both companies still maintained double digit growth in the first half of 2025. (Originally article in Chinese here).
Below are some excerpts from the article which we find interesting, translated into English by the MW team. Do note that the numbers in the excerpts are reported by LatePost, Momentum Works is not endorsing their accuracy. In fact, sources closer to the truth told us that the numbers “might not be very accurate“, but nonetheless there are some interesting pointers in the report to help us better piece together the ongoing dynamics.
We have also built a cheat sheet below for the multiple fulfilment models mentioned in the article:
- SHEIN’s gross merchandise value (GMV) for the first half of this year was about US$27 billion, maintaining a YoY growth rate of 15–20%. Temu, which has been online for less than three years, had a global GMV of around US$35 billion in the first half, with a YoY growth rate of 50%; (MW note: SHEIN’s growth is drastically slower than 2021-2023, but then those years were exceptional in many ways); A source quoted by LatePost stated in the article that Temu’s full-year GMV target for this year is US$100 billion. SHEIN’s GMV last year was around US$52 billion, and its target set at the beginning of this year was a modest “slightly over US$60 billion”;Both SHEIN and Temu denied these numbers – as they have almost always done with performance numbers reported by Chinese media outlets. (MW note: LatePost usually has stronger sources compared to many other outlets – although as we have mentioned above, the numbers here “might not be very accurate”);In February, before the outbreak of the full tariff war, SHEIN and Temu had already experienced a “live drill.” At that time, President Trump signed an executive order canceling “de minimis”. Temu and SHEIN both sharply raised prices, and sales immediately plummeted. Three days later, severe congestion at U.S. customs forced the suspension of the new policy, and both platforms lowered prices again; (MW note: as you can see, it was a live drill for the U.S. enforcement as well.)In April, when the full tariff war erupted and “de minimis” cancelled for good, the two platforms had already prepared multiple contingency plans. Many products that lost competitiveness after the tax increase were directly removed from listings. Temu delisted a large number of items shipped directly from its own warehouses in China to the U.S. through the “full consignment” model; (MW note: “having contingency plans” does not mean these plans are easy to execute. However, as an industry insider once told us: “once you are out of other options, you unleash your full potential”)Users were guided toward buying products shipped directly from warehouses in the U.S., a model called “half consignment” or “half management”. Under this model which Temu started promoting last year, sellers would take the effort to ship these goods from China to the U.S. through B2B import beforehand; For direct-shipped B2C parcels from China to the U.S., tariffs are levied based on retail prices. In contrast, for goods pre-stocked in U.S. warehouses , the declared value follows the typical “purchase cost” used in business-to-business trade, meaning the taxable base differs between the two. In this way, the adjustment from “full consignment” to “half management” cushioned some of the impact of the new tariffs. However, it means that merchants will have to undertake cashflow constraints and inventory risks by pre-stocking goods in the U.S. warehouses;Temu also explored new logistics models while direct cross-border products were delisted. For example, it also introduced the “Y2 semi-managed” plan for full consignment merchants: after receiving an order, merchants could ship goods by air from any country (including China) without pre-stocking overseas warehouses. The overall fulfillment time requirement was relaxed from 2–7 days to 6–14 days. However, the adoption of Y2 does not seem to be very high, with many sellers using it mainly to test new products; (MW note: it is often quite hard for analysts to fully understand PDD/Temu’s tactical moves before the company changes course again – PDD/Temu is known to adapt very fast to situations while keep the core consumer value propositions consistent)The increase in logistics costs for SHEIN and Temu is limited, as both companies now have enough scale to consolidate shipments in various ways, and negotiate good terms with logistics providers; (MW note: cost is one thing, complexity and resulting delays are another. However, you could argue that the latter also translates into costs)A former SHEIN executive noted that as a fast-fashion platform, even if the platform slightly raises new product prices to cover marginal increases in logistics costs, consumers are unlikely to notice; (MW note: we take this notion with a pinch of salt – because it does not explain up to which point consumers will start to notice)Beyond pricing factors, what’s more important is that these platforms have also made structural adjustments. The U.S. now accounts for less than 30% of SHEIN’s global GMV, while the figure for Temu is 35%. A SHEIN insider said that even if U.S. sales were to drop by 20 percentage points due to tariffs, the actual impact on SHEIN’s global sales would be only about 6% (30% × 20%); (MW note: it is fair to say that both companies are actively trying to diversify from the U.S. market)SHEIN’s self-operated model (i.e. retail) accounts for about 70% of its GMV. Since 2020, SHEIN has been developing a marketplace model that allows merchants to open stores, with core rules requiring them to select and price their own products and handle fulfillment. Merchants may also choose to use SHEIN’s logistics and advertising services. This year, to support more third-party merchants, SHEIN launched a “10-billion traffic support” programme for on- and off-platform promotion in regions including Europe, North America, the Middle East, Japan, and South Korea;As for Temu, it completed an organisational restructuring in late July this year. Among its nearly 20 second-tier managers, eight now oversee Chinese sellers with various management and logistics models, while the remaining were assigned to overseas markets to recruit “local merchants”, as well as handle domestic logistics and other local operations.
The LatePost article ends with the following – do you agree?
Every day, goods worth hundreds of millions of U.S. dollars are shipped from China via the two platforms. While the cheapest cross-border postal parcels are facing obstacles in Europe and the U.S., both companies are now large enough to charter their own planes and containers for overseas shipping, keeping logistics costs largely unaffected. Each parcel shipped daily is like a microcosm of global trade – there will always be some people who want to stop it, but that’s nearly impossible.
You can also make reference to the following Momentum Works reports for a more structured understanding of these platforms:
Cross border ecommerce from China
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