US retail giants Shein and Temu announce price hikes due to tariffs imposed by President Donald Trump, warning US customers of higher prices from next week.
Tariffs to Hit US Shoppers: What You Need to Know
Chinese online retail giants Shein and Temu have warned US customers that prices will rise from next week due to President ‘Donald Trump‘s hefty tariffs on goods from China.’ The companies, which have gained tens of millions of customers in the US with their ultra-low prices, are making ‘price adjustments’ from 25 April.
Shein and Temu, popular online fast-fashion retailers, have been facing criticism for frequent price hikes.
According to a study, 71% of customers reported experiencing 'price increases' on their orders.
This phenomenon can be attributed to factors such as fluctuating exchange rates, changing shipping costs, and the companies' business models.
Shein's prices are also influenced by its tiered pricing system, where customers pay more for expedited shipping and other premium services.
The Impact on US Retailers
The imposition of tariffs has put pressure on Amazon, prompting it to launch a new platform called Haul last November, featuring items for under $20. However, other Chinese retail apps continue to be ranked highly in the US, including DHgate in second place and Alibaba’s Taobao at number seven.
China's e-commerce market has experienced rapid growth, with Alibaba and JD.com leading the way.
According to a report by China's Ministry of Commerce, online retail sales reached $2.3 trillion in 2020, accounting for over 20% of the country's total retail sales.
The growth is driven by increasing internet penetration, rising middle class, and government support for e-commerce development.
Chinese online retailers are expanding globally, with Alibaba's Singles' Day sales exceeding $38 billion in 2020.
In almost identical statements, Shein and Temu said they have seen operating expenses rise ‘due to recent changes in global trade rules and tariffs.’ The companies encouraged customers to shop before higher prices kick in, stating that their team is working hard to improve the shopping experience. However, both companies have slashed their advertising spending in the US, with Temu turning off all its Google Shopping ads in the US as of 9 April.
Temu is a relatively new e-commerce platform that connects buyers with suppliers from around the world.
It was launched in 2022 by PDD Holdings, the parent company of Pinduoduo, a popular Chinese e-commerce platform.
Temu allows users to purchase products at discounted prices, often with free shipping and no minimum order requirements.
The Numbers
Since ‘Trump started imposing tariffs,’ Shein and Temu have seen a sharp decline in their app rankings. Temu is now the 75th most downloaded free app on the US Apple Store, down from one of the top five spots in the last two years. Shein is in 58th place, down from number 15 last month. The companies’ average daily US ad spend fell by 31% and 19%, respectively, over the two weeks leading up to 13 April.
A Changing Market
US lawmakers had raised concerns about how these companies had ‘exploited’ the duty-free exemption for goods worth less than $800. An estimated 1.4 billion packages entered the US under this arrangement last year, up from 140 million in 2013, according to US customs authorities. The imposition of tariffs has brought a new challenge to Chinese online retailers in the US market.
