According to news on December 26, before Christmas this year, the number of packages shipped by fast fashion company Shein and Pinduoduo’s cross-border e-commerce platform Temu to American customers has surged, almost as much as that of several well-known American retailers. The two fast-growing shopping platforms ship an average of about 1 million packages a day in the United States, according to data from package shipping consulting firm ShipMatrix. Although this number is still a small percentage of the total number of packages shipped in the United States every day, it is growing rapidly.
Temu and Shein already deliver more than twice as many packages to U.S. customers every day as TV shopping networks and online retailers QVC and HSN, which deliver about 413,000 packages a day across the country. Amazon ships an average of more than 20 million packages in the United States every day.
ShipMatrix president Satish Jindel said both Temu and Shein were busier during the current peak shipping season. ShipMatrix estimates that the average daily package delivery in the United States during the quarter was approximately 82 million.
Analysts said Shein and Temu helped boost air cargo volumes at a time when the rest of the shipping industry struggled with sluggish demand.
Shein was founded in China more than a decade ago and debuted in the United States in 2017. Currently, Shein is headquartered in Singapore. It achieved revenue of US$23 billion last year and submitted listing documents in the United States this year. Pinduoduo launched Temu in the United States last year and ran an ad during the NFL Super Bowl in February.
"Their volume in the U.S. is staggering and growing rapidly," said Sunandan Ray, CEO of logistics and freight forwarding company Unique Logistics International.
There are signs that both companies are growing in popularity in the United States. According to data from digital data and analytics company SimilarWeb, Temu ranked 10th among multi-category retailers in website and app visits, ranking second only to J.C. Penney on Black Friday. Apple also said earlier this month that Temu will be the most downloaded free app on the US iPhone in 2023.
Temu and Shein are both U.S. retail disruptors, selling products like sweaters and wireless headphones for $5, as well as pricier items. The two retailers said that thanks to their advantages in logistics, they are able to provide consumers with lower-cost goods.
Individual packages destined for the same zip code or geographic area in the United States are first packed together on pallets in China, skipping the step and higher cost of sorting in the United States. Typically, U.S. retailers store imported inventory in warehouses across the country, then sort and pack it for delivery to stores or individual customers.
Temu said that most of the company's merchants are in China, and they send their products to Temu's warehouses for inspection, packaging and shipping. "By inspecting and packaging products at the source, we eliminate many traditional logistics steps," a Temu spokesperson said. Processing large volumes of orders also helps reduce shipping costs, he added.
Shein said that its on-demand business model matches the supply of goods with market demand, and its close cooperation with manufacturers also avoids the problem of overproduction and reduces storage costs. While Shein has logistics facilities in Indiana and California to handle its most popular items, most packages are still packed in China, according to the logistics consultancy. A spokesperson for Shein said the company has also established relationships with warehouse operators in the United States to support its express delivery business.
After recent ship attacks in the Red Sea, logistics industry analysts are closely monitoring the security situation to determine whether cargo owners need to move sea cargo from the region to aircraft. However, the situation is unlikely to affect U.S. consumers shopping on Shein and Temu, as the two companies typically rely on aircraft to transport goods across the Pacific.
Logistics company representatives said Temu and Shein minimized package sizes and bet on customers being willing to accept longer delivery times in exchange for other compensation.
According to data from the Shein website, 76% of orders are delivered to U.S. customers within 10 days if standard shipping is used. Temu's website says its packages typically arrive within five to eight business days after U.S. customers place an order.
After Temu and Shein's pallets were flown to the United States, they were trucked to the package carrier's facility. Delivery companies say they have more time to get packages to end customers, meaning they can save on expensive long-distance trucking on tight deadlines.
Andy Whiting, founder and CEO of last-mile delivery company BetterTrucks, said: "We benefit from processes such as pre-sorting in the supply chain. We can provide them with lower delivery costs because their work reduces our workload."
ShipMatrix estimates that the average order value for QVC's packages is $46, compared with $29 for Temu and $39 for Shein.
Felicia Johnson, a 27-year-old New York kindergarten teacher who often shops on Shein, said: "I feel like I can save so much money and have the ability to pay. That's why I will continue to shop on this platform."
Shein and Temu also benefit from the so-called deminimis rule, which exempts customers buying imported goods from abroad from customs duties and other taxes on goods valued at $800 or less. This provision is intended to reduce the complexity of low-value, high-frequency shipments between foreign sellers and U.S. customers.
Still, many U.S. lawmakers and businesses say the exemption is a loophole that leaves companies like Shein and Temu with little scrutiny from customs. They called for greater scrutiny of the companies.
Shein and Temu said their growth did not depend on minimum rules and that the U.S. accusations were "completely baseless." (little)