Temu sued Shein for anticompetitive practices with suppliers

Shein and Temu are in a fight to conquer the American fast fashion world, and the war has – once again – reached the courts. For the past year, the Asian e-commerce giants have sued and fought each other until they settled dropped the lawsuits in October. But on December 13, Temu filed a new lawsuitand says Shein has “stepped up” anti-competitive practices.

Temu accused Shein of “mafia-style intimidation of suppliers,” claims he detained dealer representatives in Shein’s offices for hours, confiscated their devices, forced them to give up passwords and transaction records with Temu, threatened fines for doing business with Temu, and forced them to pledge allegiance only to Shein promise.

As Nikkei reportsShein “believes[s] this lawsuit is without merit, and we will vigorously defend ourselves.”

Temu’s revival of the litigation tug-of-war and accusations of strong-arming suppliers comes at an important time, with Temu – at least at the moment –seem to have the upper handwhile Shein is preparation for an IPO.

The two brands of Chinese origin have already gone behind other competitors such as H&M, Fashion Nova, Forever 21 and Zara in building revenue and market share. Brands big and small from Jane.com to Etsy to Gap blamed both Shein and Temu for disrupting the US retail world order.

Temu as a threat to Shein, by the numbers

$30 billion: How much Shein’s valuation ear $100 billion early 2022—dropped after the US entry of Temu. It’s last valuation was $66 billion.”[So] Shein devised a desperate plan to eliminate the competitive threat posed by Temu,” the new lawsuit alleges.

61 million: Customers who had Temu in the US in September 2023, a year after its launch. It’s quickly playing catch up with Shein.

3 times: Temu’s US sales in November vs. Shein’s

18 minutes: Time users spend on the Temu app daily, compared to 10 minutes for Amazon and 11 for Alibaba-owned Ali Express

100: Pages in Temu’s latest complaint—almost triple the length of his original lawsuit

63%: Part of takedown notices Temu says he received were from Shein between January and October 2023. The remaining came from 2,200 different copyright holders combined.

Quotable: Shein and Temu are changing American fast fashion

“Shein and Temu are not just retailers. They are groundbreaking technology-enabled platforms that are changing the nature of business. In the old days, a brand like General Motors used its marketing and distribution power by buying up manufacturers. A brand like McDonald’s used franchising to achieve the same goal. Shein and Temu rely on IT to do the job.”

—John DeightonHarold M. Brierley Professor of Business Administration Emeritus at Harvard Business School.

A brief timeline of Shein and Temu in the US

2017: Shein enter the USAadvertising on daytime television, partnering with influencers in retail transportation, and building a robust brand on TikTok.

September 2022: Temu is launched in the US.

December 2022: Shein drag Temu to US federal court, accusing it of contracting social media influencers to make disparaging comments about Shein in their promotions, and of impersonating the Shein brand online. This is the first legal battle between the two.

April 14, 2023: The US-China Economic and Security Review Commission specifically calls out Shein and Temu in a brief warning against Chinese fast fashion platforms, citing “exploitation of trade loopholes; concerns about production processes, procurement relationships, product safety and use of forced labour; and violations of intellectual property rights.”

July 14, 2023: Temu sued Shein about “unlawful lockout tactics,” accusing it of tying manufacturers into exclusive contracts, and even levy fines to work with his competitor.

Nov 28 2023: Shein file paperwork confidentially to begin its initial public offering (IPO) process in the US.

Nov 30 2023: Temu parent company PDD—also the owner of Chinese e-tail giant Pinduoduo-see its e-commerce market valuation surpassing longtime leader Alibaba’s

One big number: The multibillion-dollar cost of Temu’s aggressive growth tactics

$3.65 billion: That’s the operating loss Temu could experience this year despite global sales of more than $13 billion, according to analysts at Sanford C. Bernstein. The dirt-cheap prices and free shipping with no spending minimums are enticing to customers, but not helpful to the bottom line.