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Online retailers Temu and Shein have seen once-rapid user growth reverse in the US after President Donald Trump imposes sudden tariffs on Chinese goods and shuts down a tax loophole that could undercut rivals.
According to data from the Market Intelligence Firm Sensor Tower, between March and June, Temu’s monthly active users plummeted from 51% to 40.2mn between March and June.
The number of US shoppers using Shein’s app has also shrunk in the same period, although not dramatically. According to Sensor Tower, first fashion retailers fell by 12% to 41.4mn in monthly active users.
Shein and Temu have pioneered a new model of e-commerce that has disrupted the retail industry across the Western world over the past five years.
Both of them escaped import operations by sending Chinese-made goods directly to consumers’ homes as individual packages. Cheap prices and social media ad blitz allowed Shein and Temu to gather a huge customer base in a few months.
Shein tried to capitalize on its growth with stock market floats, but struggled to win regulatory support for the US and UK lists.
Reuters last week reported that Shane was planning to apply for an IPO in Hong Kong. Shein declined to comment on the listing plan or business performance.
On May 2, Trump abolished the low-value goods exemption in the United States known as “de Minimis” due to parcels arriving from China and Hong Kong, calling it “a big scam happening against our country.”
The president replaced the exemption, which allowed parcels under $800 to enter US tax exemptions, replacing them with 90% tariffs. It has since dropped to just 30% as part of a broader exhaustion of trade tensions with China.
In the aftermath of Trump’s policy change, Temu overhauled its business model in the US. Instead of shipping products from factories in China, we began shipping orders from US-based sellers.
The decline in Temu and Shein usage could also be linked to a decline in advertising spending for each company. Over the past three months, Temu’s US ad spending fell 87%, while Shein fell 69% compared to the same period last year, according to Sensor Tower.
Last year they were ranked among the 10th and 11th largest digital advertisers in the US. They are currently ranked outside the top 60, the researchers said.
As the US environment became more hostile, Temu and Shein switched their focus to Europe.
According to Sensor Tower, the number of people using Temu’s apps increased by 76% in France, 71% in Spain and 64% in Germany in Germany. Meanwhile, Shein’s monthly active users rose from 13% to 20% in the UK, Germany and France.
However, as the EU plans to collect a fee of 2 euros for a small package entering the bloc, European growth could also be at risk, and the UK government is considering ending its own import duties exemption scheme.
Temu declined to comment on business metrics and ad spending, but said its focus was on “cooperating with merchants across the region.”
“After fully opening the market to local sellers in over 20 markets.
