Shein takes drastic measures against Temu

Online fast fashion has become all the rage as American consumers appear to be spending their money more wisely amid rising prices, opting for value over luxury.

The demand for fashionable clothing at an affordable price has allowed fast fashion to outpace its more luxurious counterparts, increasing competition among mass online fast fashion retailers.

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On August 19, 2024, the Shein company filed a complaint in a federal court in Washington against Temu, a brand owned by PDD Holdings.

According to the lawsuit, Shein sued Temu for pretending to be an e-commerce marketplace where independent sellers can sell their products. Instead, Shein claims that Temu has full control over every aspect of its sellers’ business, as it grants authority over the products its sellers can list and the prices at which each item should be marked.

In addition, Shein stated that Temu violates the intellectual property rights of its sellers and prevents them from removing products, even after the products have been proven to copy those of other companies.

Shein also claims that Temu does not profit from its products; instead, it loses money on every trade. The company sets its prices so low that it has to subsidize every sale to minimize its losses, which is illegal in the US.

When asked for comment on the matter, Shein made the following statement to The Street:

“Temu is massively, continuously and unlawfully infringing SHEIN’s rights directly and through its suppliers, whom Temu controls. Temu uses deceptive and illegal tactics, including stealing trade secrets, trademarks, and copyrights. SHEIN is confident that the evidence will prove Temu’s involvement in the breach. activities, which mislead consumers, suppliers and the public.”

Ontario, CA – October 19: Shoppers Christopher Lewis, of Fontana, and his finance Raysa Rubio, of Rancho Cucamonga, are among the first group of shoppers to take advantage of the opening day of fast-moving e-commerce giant Shein, which is hosting a pop-up inside Forever 21 at Ontario Mills Mall in Ontario on Thursday, October 19, 2023. (Allen J. Schaben/Los Angeles Times via Getty Images)

Allen J. Schaben/Getty Images

A never-ending battle between mainstream e-tailers

Shein and Temu have been enemies for years, making several claims against each other and even taking legal action.

In 2023, Shein and Temu filed a lawsuit against each other, alleging copyright infringement and antitrust violations. Both sides eventually dropped the suit in October.

Later in December 2023, Temu again filed a lawsuit against Shein, this time for “mafia-style intimidation”. The e-retailer alleges that Shein intentionally sought personal information about the company’s employees and merchants, infiltrated merchant accounts and stole trade secrets.

Related: Shein Failed to End 75-Hour Workweeks in Factories

Shein’s controversial practices

However, Shein is no stranger to being sued. The e-tailer has been accused of taking advantage of and stealing other brands’ designs and using unethical labor practices.

Earlier this year, he was sued by Uniqlo for copying his designs and by several fashion designers in July 2023 for racketeering and organized crime, to name a few.

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Similar business models of Shein and Temu

The business models of Temu and Shein are similar but not identical. Temu sells various Chinese-made products to its overseas consumers, while Shein has contracted manufacturers, primarily in China, whose products it sells and delivers to its global consumers.

Both online retailers have the ability to quickly respond to trends through mass production and sell their products at incredibly low prices.

Shein is a global online retailer based in China with a primary focus on women’s fashion. Although a private company, it was valued at around $68 billion at the end of 2023.

The company has more than 74.7 million users annually, of which 13.7 million are from the U.S. Its largest markets are the U.S., Mexico, and Brazil.

This online fast fashion retailer adds an average of 2,000 new items to its site daily. Due to its ability to keep up with demand, it was reported to have overtaken Amazon as the top shopping app in the US in May 2021.

As for Temu, it is owned by a Chinese technology company called PDD Holdings. The online retailer was valued at approximately $15.33 billion in 2023 and had a merchandise value of $6.62 billion.

The online retailer has 167 million monthly active users worldwide, of which 50.4 million visit the US site at least once a month. As of May 2024, the site had 213.2 million site visits.

When asked for comment on the matter, Temu made the following statement to The Street:

“The audacity is unbelievable. SHEIN, buried under its own mountain of intellectual property lawsuits, has the audacity to invent accusations against others for the misconduct they are repeatedly sued for.”

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