China's E-commerce Revolution: Shein and Temu Redefining the U.S. Market

Shein and Temu, the fastest-growing e-commerce platforms in the U.S., have sparked a radical shift in the landscape. Although these giants have become a household name, what's intriguing is the dearth of U.S.-based sellers on their platforms. Surprisingly, more than half of Amazon sellers are based in China, revealing a significant trend in the e-commerce sphere.

Since Shein's marketplace launch in the U.S. last May, it has onboarded tens of thousands of sellers. However, Marketplace Pulse research suggests that nearly all sellers are based in China, thwarting the initial intention of localizing the retailer. Temu, akin to AliExpress, launched as a marketplace and has swiftly amassed over a hundred thousand sellers, all based in China.

Both platforms had intentions of attracting U.S. sellers. Yet, challenges loom over finding local sellers meeting their cost-effective goods criteria. Moreover, their consignment model, where Temu handles pricing and fulfillment, adds another layer of complexity. As they reach out to Amazon sellers, the dominance of the Chinese seller pool remains a prevalent theme.

However, this paradigm shift in consumer behavior, fueled by Shein and Temu, signifies a growing preference for direct consumer-to-manufacturer retailers from China. Despite their staggering growth, concerns about sustainability loom large, especially considering the colossal marketing spend leading to operational unprofitability.

Shein and Temu represent the third wave of Chinese commerce, redefining the norms of U.S. retail with their massive scale, unparalleled marketing efforts, and marketplaces devoid of U.S. sellers. Their quest for localization appears to be a long-term aspiration, currently cloaked in a veil of uncertainty.