Fast-fashion giant Shein’s throne challenged by rival with one of hottest US apps

by admin
Fast-fashion giant Shein’s throne challenged by rival with one of hottest US apps

[ad_1]

BEIJING – It took Shein a decade to catch up to Inditex’s Zara as the world’s top fast-fashion retailer. Now, a new online upstart wants to topple Shein, at least on one measure, within a year.

Temu, a shopping platform that’s owned by Chinese e-commerce heavyweight PDD Holdings, set a lofty sales target for its North American business last month: report at least a single day of gross merchandise value (GMV) that tops Shein’s between now and Sept 1, to mark the anniversary of its entry into the US market, according to people familiar with the matter.

It’s the first step in Temu’s broader plans to dominate the online shopping landscape. The company views Shein as its biggest rival in the near-term, and wants to surpass its dominance within the next few years, said the people. But the firm, which sells anything from clothes to kitchen supplies, is ultimately aiming to take on global behemoths Amazon.com and eBay, they said.

Temu’s growth is already surging and it’s been one of the top-ranked apps in the United States for months. The firm achieved about US$500 million (S$672 million) GMV in the US during its first five months of operation, according to data analytics firm YipitData. In January alone, sales were almost US$200 million, the data show. Temu launched in Canada, its second market, in February.

Comparative data on closely held Shein’s finances are difficult to obtain, but the scant details that have emerged indicate Temu’s target requires its rapid pace of expansion to accelerate.

Shein already dominates the US fast-fashion market, far surpassing rivals Zara and H&M, according to YipitData. The Financial Times reported last month that Shein predicts global GMV will grow to US$80.6 billion in 2025 up 174 per cent from last year. Revenue could increase to US$58.5 billion in 2025, up from US$22.7 billion last year, according to the report, which cited a management presentation shown to investors.

Temu staff haven’t been given a daily sales target – it’s a figure held tightly among senior managers. They’ve instead been told to shift from growing the base of users for their app and website to devising ways to boost how much customers spend, the people said.

Shein’s rapid success has paved the way for a raft of newcomers wanting to get into the booming e-commerce market, but Temu is widely viewed as the most serious competitor. The latter is already headhunting Shein employees and targeting suppliers, while also leveraging the deep pockets, extensive supply chains and expertise – particularly in consumer data that allows rapid changes in offerings – of parent PDD, which already controls roughly 13 per cent of Chinese online retail through its Pinduoduo platform.

While both firms are synonymous with cheap, easy-to-get products, Temu operates more like a marketplace than a self-run brand such as Shein. It doesn’t handle design and production, instead recruiting suppliers to offer a list of products, which Temu selects from and then allows a store to open on its platform. After sellers send products to Temu’s warehouses in China, the company takes care of delivery, marketing and promotion, and after-sales services.

Temu is betting that a huge marketing campaign will drive sales growth. The company made its Super Bowl advertising debut in mid-February, running two 30-second spots – which typically cost millions of dollars to produce and air – that featured a trendy shopper twirling and dancing in an array of outfits. It’s also rolling out social marketing practices that are similar to Pinduoduo’s strategies in China, including offering discounts, cash rewards and free gifts to customers who refer their friends.

The strategy is bearing fruit, with visits to its website surpassing Shein in January. If Temu is able to sustain its momentum it will also join just a handful of Chinese-owned internet services to have succeeded in the US, including Alibaba’s Aliexpress and ByteDance’s TikTok. BLOOMBERG

[ad_2]

Source link

You may also like