Temu sues shein in the US, escalating cross-border e-commerce war

The war in the cross-border e-commerce circle has started again.

Temu filed a lawsuit against Shein , and the two sides fought in the United States. The plot was bloody and exciting. The cross-border battle between the two overseas giants quietly started, and the future development of the industry is still a long way to go.

The fight escalates: Shein sues Temu for plagiarism and infringement, Temu counter-sues for antitrust

Last week, Temu filed a lawsuit in the United States, accusing Shein of violating U.S. antitrust laws. Temu claimed that Shein had a 75% share of the U.S. fast fashion market by 2022, and required about 8,338 manufacturers to sign exclusive distribution agreements, preventing them from offering products on Temu or providing products to Temu sellers.

In response to the accusations, Shein called them groundless, saying the lawsuit had no basis and that she would use strong legal means to protect her rights.

One stone stirs up a thousand ripples. Temu 's accusation made the tension between the two sides even more intense. This was not the first confrontation between the two sides. The war between Shein and Temu had already started.

Temu entered the North American market in September 2022. At the end of December, shein accused Temu of collaborating with influencers to make defamatory remarks about shein on social media. Shein also claimed that Temu tried to impersonate her, misleading consumers into believing that the two had a brand connection, and deceived customers into downloading Temu . Several imposter accounts @shein_DC, @shein_USA and shein_NYC (now deleted) provided download links for Temu on their pages . Temu applied to dismiss the lawsuit, but the court has not yet made a decision.

In March this year , shein once again updated the lawsuit, accusing Temu of plagiarism and infringement, mentioning Temu's trademark counterfeiting and infringement, including plagiarizing shein brand products and pictures, selling products and counterfeit products with shein brand logos, and covering up the infringement facts through photo editing and face changing , diluting the shein trademark , engaging in unfair competition, placing false advertisements, defrauding consumers , infringing shein's copyright, defaming its business reputation , and making unjust enrichment and other accusations.

Not only shein, but many Amazon sellers also complained that their product images were copied and sold on Temu , even the copywriting was the same, and the price was half of that on Amazon, which seriously impacted their sales. Anker, a top seller on Amazon, also seemed to be not spared. One seller found that the image of a popular headset on Temu was exactly the same as the image of Anker's best-selling headset.

Cases of stolen images are common on Temu . Many Amazon sellers admit that the strategy of Temu sellers is to look for various hot-selling products on Amazon's best-selling list, and then go to suppliers to wholesale the same products and directly copy the products.

"I thought Amazon would sue Temu for poaching, but I didn't expect Temu to sue shein." A seller said at Temu 's investment conference. According to the sellers, many Amazon and shein sellers will receive Temu 's invitation to join, and even Temu will give priority to listing the same products as shein .

Can Temu shake shein’s brand moat ?

In response to Temu 's accusation, shein signed an exclusive distribution agreement with suppliers , not allowing them to cooperate with Temu . Many sellers said they had not heard of this. According to an anonymous industry insider, " Temu is targeting shein after targeting Amazon sellers ."

Another industry insider said bluntly: " It's good enough that Shein didn't sue Temu . Almost all of Temu's clothing materials come from Shein, and even most of the pictures are directly taken from Shein. However, Shein's fast fashion moat is not something Temu can change just because it wants to. "

As a fast fashion retailer, shein sells its clothing in a self-operated model. A factory owner confirmed that shein first places a small batch order to purchase trial models. If they sell well, they will receive a reminder to arrange the order, produce according to shein's production and quality standards, and finally sell them with shein's brand and trademark.

This independent brand business model is completely different from the model where suppliers simply supply goods to the platform. Temu 's lawsuit against shein is aimed at the clothing category, accusing the latter's clothing brand manufacturer of antitrust . Data shows that based on credit card payments of American users, Temu , which has been online for less than a year and is also positioned in fashion and clothing, has sold 20% more than shein in May. The clothing and fashion market has long been a fully competitive market, not to mention the many large and small players at home and abroad such as H&M, ZARA, Uniqlo, GAP, and even Amazon, Walmart, and domestic Tmall and Taobao platforms. Behind this complaint, it also reflects that Temu filed a lawsuit in a hurry to pursue profits.

The resurgence of lawsuits also means that the competition between giant shein and newcomer Temu is intensifying. In February this year, Temu set a "small goal": to have at least one day of GMV exceeding shein before September 1, 2023. Also in February, Temu spent a lot of money on advertising in the Super Bowl, playing a 30-second ad "Shop like a billionaire", and the number of downloads surged by 45%.

Facing the competition from competitors, shein was unwilling to lag behind. In May this year, it launched a platform model and introduced third-party sellers to target all categories. Many sellers rushed to shein, including 3C giant Anker. Some sellers who have settled in the market reported that they received orders as soon as their products were put on the shelves. However, this also brought new challenges to the construction of shein's logistics, warehousing and other infrastructure.

The four little dragons going overseas are in a state of internal competition, and the road to cross-border export is long and difficult.

Like Temu and shein, there are many other players aiming to expand overseas.

Relying on the foundation of China's supply chain and using digital innovation, shein has established a flexible supply chain with small orders and quick response. It started with its own brand model and expanded its platform model to other categories based on its own clothing brand. It is a self-owned brand + platform model. Temu adopted a fully managed platform model as soon as it entered the market, with merchants playing the role of supply. Not only Temu , but also AliExpress and TikTok have successively launched managed models. Amazon has always adopted a self-operated + platform model.

Obviously, only by being close to the upstream domestic supply chain resources and relying on high-quality and low-priced goods can the four little dragons go global and have a chance to penetrate into the heart of Amazon and grab a place from Amazon's accumulated first-mover advantages in warehousing and distribution, after-sales service, and huge traffic.

Suppliers are also happy to see giants compete with each other, after all, it gives them one more choice. However, the competition between platforms is about high-quality, low-priced products and good services. With the entry of Temu , which wins by low prices , all platforms seem to be a little anxious. The internal circulation wave comes one after another, and product prices are pushed down lower and lower, which will inevitably put pressure on suppliers and bring new challenges to merchants in disguise.

Temu 's price verification rules repeatedly lower suppliers' prices until there is little profit left. Sellers believe that with the four little dragons concentrating on going overseas, the full trusteeship model has lowered the threshold for cross-border operations, but it obviously has higher requirements for the competitiveness of the goods themselves .

For suppliers, if they do not want to fall into the vicious cycle of balancing quality and low prices, one way out is to develop their own brands and take the path of creativity and innovation. They cannot simply and crudely copy other brands' products, which will only drag them into a vicious cycle of internal circulation and homogenization. To break out of this vicious circle, they can only form brand differentiated competition and choose a platform that is more suitable for their own advantages and operating methods.

SHEIN

Temu