Overseas demand has been strong since the beginning of this year, U.S. online retail sales have continued to strengthen, and Chinese e-commerce has become popular overseas due to its high cost-effectiveness. Among all the e-commerce companies going overseas, the two giants Temu and Shein quickly emerged and started a fierce battle for the king. So, who will have the chance to become the king of cross-border e-commerce in the future?

Essence Securities compared the differences between the two cross-border giants from three aspects and found that the Temu platform's category composition is relatively scattered and pursues more cost-effectiveness, while Shein focuses on fast fashion and is faster in the globalization of the supply chain.

There are differences in operating models, pricing and global supply chain construction.

As overseas online retail becomes more prosperous, the penetration rate of e-commerce is gradually increasing. In Q3 2023, U.S. online retail sales reached US$271.653 billion, a year-on-year increase of 7.8%, and the e-commerce penetration rate was 14.9%. Anxin said that compared with local e-commerce companies in the United States such as Amazon and eBay, my country's cross-border e-commerce companies can quickly open up the market with their price advantages and market response advantages.


Temu is a cross-border e-commerce platform owned by Pinduoduo. Its sales have grown rapidly, reaching US$1.184 billion in October 2023, an increase of 34% month-on-month. In terms of categories, the Temu platform’s category composition is relatively scattered, with clothing, shoes, home kitchen, sports and outdoor, and beauty and health categories accounting for a large proportion.


Temu’s monthly active users and downloads have performed well, and the number of new customers has grown rapidly. In 2022, the Temu app ranked second with nearly 15 million downloads. From the perspective of MAU, data is growing rapidly. In August 2023, STMAU reached 10.852 billion, a month-on-month increase of 9%, and DataAIMAU reached 11.999 billion, a month-on-month increase of 20%.


Shein specializes in B2C fast fashion cross-border e-commerce. Its website has become the fast fashion website with the fastest traffic growth in North America in 2022, with average annual traffic as high as 183.45%, GMV as high as 30 billion U.S. dollars, and the Series F valuation has exceeded 100 billion U.S. dollars.


Shein includes three operating models: the new self-operated model, the fully managed model, and the POP model, of which the new self-operated model is the dominant one; the Temu model is similar to Shein's fully managed model. It is a self-operated operating model rather than a pure platform. The final pricing of products is determined by Temu.


Temu uses small items and daily necessities as differentiation points in its category selection. It places more emphasis on product practicality and adopts a low-price strategy to provide high-quality and affordable products. The GMV of products under 10 US dollars accounts for the majority of the total GMV. Shein focuses on fast fashion categories, emphasizing the fashionability of products, rather than blindly pursuing low prices.


Essence Securities said that considering the uncertainty of cross-border regulatory policies and the advantages of overseas supply chains with higher timeliness and more favorable taxes, it has become an inevitable trend to deploy overseas local supply chains.

Shein has begun to accelerate the construction of overseas supply chains. It has built factories in Brazil and Turkey, and plans to build a factory in Mexico. In the future, Brazil will radiate to Latin America, Mexico will radiate to North America, and Turkey will radiate to the Middle East and Europe. Shein has earlier announced that it will focus on Latin America and accelerate the localization process in Brazil. It has signed partnerships with 330 suppliers and logistics service providers in 12 states in Brazil. It plans that by 2026, 85% of its sales in Brazil will be composed of locally produced products.

Temu has not yet started overseas supply chain construction, and its suppliers are still in China.