[NEW YORK] Shein Group and Temu saw double-digit sales declines in the week after they raised retail prices to cover the costs of increased US tariffs, an initial sign that US President Donald Trump’s punitive trade measures have taken a toll on the shopping platforms’ popularity.
Shein posted a 23 per cent drop in observed US sales during the week of Apr 25 to May 1, compared to the prior seven days when the price increases had not set in, according to Bloomberg Second Measure, which analyses credit and debit card data.
PDD Holdings-owned Temu’s sales fell 17 per cent in the same period, the data show. The sales drop seen by both online marketplaces contrasted with a sales surge in March and early April as consumers hoarded products from kitchenware to clothing in anticipation of upcoming price hikes.
The initial sales plunge is one of US consumers’ earliest reactions to price hikes induced by Trump’s decision to remove the so-called “de minimis” tax loophole Temu and Shein have long relied on to ship small duty-free parcels from China to US consumers.
Trump has also hiked tariffs on Chinese imports to 145 per cent, with US consumer confidence – already squeezed by cost-of-living pressures – dropping to an almost five-year low in April. Evidence is mounting that consumer inflation has set in, and will only grow.
The risk of further price hikes looms for major US retailers, too. Companies such as Walmart and Target have not raised prices yet, but some Chinese suppliers say they will refuse to absorb the cost of tariffs, fuelling uncertainty about whether retailers and shoppers could be forced to pick up the tab.
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Amazon.com’s decision not to display the cost of tariffs on its products after a complaint from Trump showcased a new dilemma faced by retailers: Either pass cost increases to the consumer, or see profit margins narrow.
Temu and Shein rely heavily on China’s supply chain. Both companies adjusted their prices from Apr 25 as operating expenses soared due to the tariffs, and Temu has since passed on nearly all of Trump’s new import taxes to American consumers on products directly shipped from China, with the cost of some goods nearly doubling.
The average price of Shein’s top 100 beauty and health products have more than doubled compared to Apr 15, when Bloomberg started tracking the prices of hundreds of products daily. The average cost of items in the toys and games category has gone up over 60 per cent, home and kitchen goods have jumped nearly 40 per cent, and women’s clothing is up 10 per cent.
The tariffs’ impact on Shein goes beyond pricing, with its initial public offering plan slowing to a crawl as the retailer assesses the impact on its business and awaits regulatory approvals, Bloomberg reported this month.
Temu now plans to ditch its successful model centred around cheap Chinese imports and switch to a “local fulfilment” model. Under the plan, it will aim to sell only goods from local merchants in the US market for the foreseeable future, a way to sidestep import tariffs.
Temu started displaying more local warehouse products on its bestseller pages after Apr 25. Prices for those products have remained largely stable since then, data compiled by Bloomberg show, as they are already stored in the US and are not subject to tariffs. Beginning Apr 30, hundreds of products tracked by Bloomberg News were shown as now all being locally shipped. BLOOMBERG
