Last year I wrote an article on the birth of a new business model—E-commerce
retailers shipping directly to U.S. consumers from their warehouses in China. The report, “Retail Competition, direct to you from the other side of the world,” focused
on Shein, a Chinese women’s fashion e-tailer.
Shein’s entry to the U.S. market was meteoric. As Bloomberg News put it in its article, “How Trump’s Trade War Built Shein, China’s First Global Fashion Giant,”
Shein ended Amazon’s 152-day streak as the most downloaded shopping app in the U.S., a remarkable feat for any seven-year-old clothing brand, let alone one most Americans over 30 still haven’t heard of.
How did they do it? By offering products at incredibly low prices. Their secret was a loophole in U.S. Customs regulations. Any package is exempt from duty if its value is less than $800.
Temu, owned by Pinduoduo, launched its American website on September 1. It follows Shein’s business model. So, like Shein, if you order from Temu, your order is shipped from a warehouse in China. The consumer will have to wait for one to two weeks to receive their order, but the savings will likely offset any impatience they may have.
Unlike Shein, which sells women’s fashion, Temu offers an array of products. That smorgasbord includes toys.
I visited Temu and searched for toys. There were 244 SKUs listed. I could not find any branded toys. All of the toys look to be open market goods. Here is a screenshot of few of the items:
Should U.S. retailers be concerned about Temu? I think yes.
Yes, because, although Temu does not carry name brands, it does offer toys that will compete for consumers spending. Any dollar that goes to Temu is a dollar that may not go to a U.S. domestic retailer.
And yes, as I wrote in my article about Shein,
Before e-commerce, a retailer competed with the store down the street or at the mall. With the advent of digital shopping, competition could be from anywhere in your country. Now, it can come from the other side of the world.