The Chinese eCommerce app Temu is taking the world by storm. Within a year of its launch in fall 2022, Temu was downloaded nearly 40.5 million times worldwide. The fast fashion retailer SHEIN has experienced similar explosive success, with 208 million app downloads worldwide between January 1 and October 10, 2023.

What’s their secret? In part, the extremely low prices – that consumers appreciate more than ever due to the rising cost of living and inflation. But price isn’t everything. In this article, we will explore the other factors that have helped Temu and SHEIN disrupt the eCommerce market.

Temu’s Strategy: An Overview

What’s Temu’s strategy? The brand’s main appeal is the incredibly low price. The marketplace sells products for up to 90% less than other retailers – and throws in free shipping.

The app uses unique strategies to encourage sales. Gamification, discovery-based shopping, and social shopping (in the form of group discounts) all make buying fun and encourage users to return.Finally, Temu’s successful affiliate programs and extremely aggressive marketing strategy have driven its exponential growth. Temu is omnipresent on YouTube, TikTok and in-app advertisements, and even ran a Superbowl ad that reportedly cost $14 million.

What’s Behind Temu’s Success?

Temu’s USP is the discovery-based approach to shopping. When you open the app, you’re shown an endless, customized stream of product recommendations. It encourages users to scroll for entertainment, increasing the chances that they’ll hit the “Buy” button. Users are also kept entertained with in-app games that let them win rewards.

Social shopping and affiliate discounts encourage users to invite their friends to the app. In social shopping, buyers team up to purchase items, receiving a group discount if a certain threshold is reached.

Finally, Temu uses an innovative strategy called reverse-manufacturing to align product inventory with customer demand in real-time. Initially, small quantities of a product are produced. Production of popular items is ramped up, while less popular products are dropped. This allows the company to launch new products at an incredible speed while staying cost-effective.

Temu’s Controversial Side

Temu has faced criticism for several reasons. Given the extremely cheap prices, the quality and durability of products from Temu are said to be inevitably low. Consequently, Temu has been criticized for its poor sustainability practices and the amount of waste that its products produce, raising environmental concerns. 

Additionally, they allegedly strictly control their merchants and often force them to accept price cuts. Reports of worker exploitation are rife too. Long working hours and low wages reportedly have led to accusations of labor exploitation. Most shockingly, an investigation by the US government found there was a “very high risk” Temu was selling garments made from forced labor.

SHEIN’s Strategy: An Overview

SHEIN’s strategy is similar to Temu’s in terms of pricing and speed of product launch – all their clothing is cheap and produced “on-demand,” and they offer deep discounts and an abundance of different coupons to encourage sales.

Influencer marketing is a key part of SHEIN’s strategy. They collaborate with both micro-influencers and Western celebrities, like Katy Perry or Rita Ora, who are popular with young audiences.

Because they are targeting Gen Z, TikTok is essential. SHEIN is the number one brand on TikTok, and they drive users to their platform with a stream of coupons and discount codes.

What’s Behind SHEIN’s Success?

SHEIN’s influencer collaborations have helped SHEIN precisely target a young, fashionable audience and have played a significant role in its rapid growth.

On both TikTok and YouTube, customers, fashion bloggers, and influencers can be seen filming “unboxing” videos. These show the customer unpacking their clothes, trying them on, and talking about where they found them for such a bargain.While SHEIN pays celebrities for their endorsements, smaller influencers receive free products on a regular basis in exchange for their unboxing videos. In addition, some influencers participate in a referral program. They offer SHEIN discount codes to their followers and receive a 10% to 20% commission on referral sales.

SHEIN’s Controversial Side

SHEIN has received criticism on a number of different issues. One major accusation is that their factory employees are subject to poor and potentially unsafe working conditions.

Like Temu, SHEIN also receives criticism for allegedly producing cheap, low-quality items. Not only is this disappointing for customers; but it is also a sustainability concern. There have also been complaints about the unrealistic beauty standards that the brand’s advertising promotes, as well as a lack of cultural sensitivity.

Even their tried-and-test influencer strategy couldn’t help. To rehab its image, the brand brought several influencers on an all-expenses paid “brand trip” to view the SHEIN “innovation center” in China. However, this trip – and the influencers who went on it – were heavily criticized and accused of “greenwashing”.

What Gives SHEIN and Temu their Competitive Advantage?

Temu and SHEIN’s strategies have a lot in common. So much, in fact, that it has led to a lawsuit, and analysts believe that they will begin to cannibalize each other’s customer base. They both target Gen Z and have used influencer marketing to position themselves as cheap, trendy, and exciting – with Temu adding gamification into the mix to up the shopper’s dopamine rush.

What’s Next for the Chinese eCommerce Giants?

Temu and SHEIN have faced heavy criticism for producing huge volumes of low-cost, low-quality items that will end up in the trash sooner rather than later. The environmental and social impact of their extreme pricing strategy is something both Chinese fast fashion brands should address.

Temu, in particular, is burning through cash, flooding the US with over $1 billion of advertising in 2023. In addition, their strategy of offering unbelievably cheap products along with free shipping is costing them money on every order. While this strategy may be effective for short-term growth, it probably won’t be sustainable long-term.

The best way for established Western brands to stay competitive? eCom businesses should focus on their unique strengths such as quality, sustainability, and ethical practices, as these aspects are increasingly valued by consumers.

Essentially, the success of Temu and SHEIN offers established brands the opportunity to re-evaluate and reinforce their values. By emphasizing their core values and responding to changing consumer needs, these brands can compete effectively and set new standards in the eCommerce market by balancing profitability with social and environmental responsibility.

Which strategies should you steal from the Chinese fast-fashion brands? Get the comprehensive guide on Temu and SHEIN by clicking the link below. To beat them, you have to learn from them: