If you shop online, there's no doubt you've come across SHEIN or Temu. These two e-commerce retailers have grown rapidly over the last few years, sending millions of orders yearly and bringing in massive revenue streams. Many people wonder how they've managed such fast success, but we can tell you the answer.
Direct-to-consumer (DTC) shipping gives online brands an edge, cutting out middlemen in shipping and allowing them to focus on providing their customers with the best experience. Keep reading to discover more about SHEIN and Temu's success and how they achieved it through DTC shipping.
SHEIN and Temu are two massive e-commerce retailers that have rapidly increased in popularity in the last few years.
SHEIN is currently one of the world's largest fashion sites, and almost everyone has heard of it at least once. It was first formed as ZZKKO in 2008 by Chris Xu as a wedding dress fast fashion brand, but in the 2010s, it started introducing womenswear to many different international markets. It is now active in over 25 countries, and by the end of 2023, SHEIN's mobile app had reached over 250 million downloads.
According to the most recent statistics, SHEIN shipping has the largest market share in the fast fashion segment in the United States, at 40%. In the same year, it was also the fifth-biggest earning e-commerce store worldwide, bringing in a total of $26.15 billion.
Temu is another huge online marketplace owned by PDD Holdings, a Chinese company based in Ireland. It hasn't been around as long as SHEIN, only launching in September 2021. Temu shipping offers consumers a vast product range, similar to SHEIN, but with less focus on fashion. All its goods are known for their low prices, making it the most popular app in many countries in 2023.
According to the most recent statistics, Temu's parent company's total revenue was $18.93 billion in 2022, and no doubt a large portion came from Temu. In May 2023, it even had 20% more sales than SHEIN. Temu was downloaded over 40 million times in September 2023 alone. In the same month, it had 82.4 million US-based users.
Both companies have expanded massively in the last few years, especially Temu, which has exceeded SHEIN in some aspects of the market in such a short amount of time.
But how have they managed to do this? One of their main tools for success is the utilization of direct-to-consumer shipping.
DTC shipping is a distribution business model in which products are shipped directly from the manufacturer to the customer without intermediaries or middlemen. There's no need for wholesalers, distributors, or land-based retailers, making the process much simpler. This is different from traditional retail channels and standard shipping and comes with a wide range of benefits.
Here are some of the main benefits of DTC shipping:
Both SHEIN and Temu chose to use DTC shipping over traditional retail processes, and much of this decision has contributed to their fast-paced growth. They've both used a wide range of technologies and logistics processes to streamline their supply chain and optimize the overall efficiency of their operations.
The two e-commerce companies get the most out of DTC shipping and enhance the customer experience by using automated order processing and inventory management systems with real-time tracking. This gives them much more control over their supply chain network, especially when adding hundreds of new SKUs to their platforms daily.
There's no doubt that SHEIN and Temu have partnered with reliable logistics providers like Portless to integrate their manufacturing, warehousing, and distribution operations. Companies like this can help them find the best transportation routes and ensure minimal delivery hiccups.
Similarly, since SHEIN and Temu are both Chinese companies, they need to find a way to reduce their shipping costs so they can offer their products to customers internationally. Since the US is a big part of their audience, they leverage Section 321 of the US Customs and Border Protection regulations. About one third of packages entering the USA under Section 321 are from SHEIN and Temu.
This allows for duty-free entry of shipments under $800 (the de minimis amount), cutting customs costs and clearance times. It streamlines their international supply chain and also allows them to offer low pricing and fast shipping.
While many people love SHEIN and Temu, especially because of their low prices, accessibility, and fast delivery times, others question their products' quality. However, it's good to note that not every brand that operates out of China or uses DTC shipping has a quality issue. This is because it's entirely up to the brand to determine their manufacturing processes, and they're the ones that own the quality.
Therefore, when considering utilizing DTC shipping from China yourself, you can reap all the benefits we've mentioned and even possibly become as big as SHEIN or Temu. However, you must ensure you provide your customers with the quality products they deserve.
SHEIN and Temu have become household brand names in many countries, and much of that can be attributed to their utilization of DTC shipping from China. It's a way to provide excellent customer service, quicker shipping times, and lower prices.
If you're considering using this sort of DTC shipping yourself for your own e-commerce brand, then Portless is here to help. We fulfill online orders directly from China straight to your customers' front doors, allowing you to reap all the benefits. Contact one of our experts to get started today.
