The Survival Playbook of Shein and Temu
Shein, Temu, TikTok Shop in Trade War 2.0
The U.S.-China tariff war intensified sharply in 2025, disrupting global trade flows. On February 1, the U.S. raised tariffs on Chinese imports by 10% and eliminated the $800 duty-free exemption. Tariffs reached 20% by March 3, with some goods exceeding 40%. In April, the introduction of "benchmark + reciprocal tariffs" pushed rates to 54%, followed by a dramatic surge to 145% for small parcels by mid-month.
Although a May 12 truce in Geneva temporarily reduced tariffs on some goods to 30%, small-parcel rates remain at 54%. E-commerce platforms like Shein and Temu, reliant on direct small-parcel shipping, are among the hardest hit and are scrambling to adjust.
Shein: Price to Premium
Shein had already begun shifting gears long before the tariff shock:
U.S. POP Launch: In end April, Shein rolled out its U.S. POP self-operation model—sellers ship from China while Shein-approved carriers handle logistics and inventory. Sellers retain pricing control but cover their own shipping fees.
Ad Spend Shuffle: From late March to mid-April, Shein's U.S. ad spend fell 19%, while France (+45%), the U.K. (+100%) and Brazil (+140%) saw big increases.
Operational Efficiency Optimization: In early 2025, Shein consolidated its product categories into four primary groups, streamlining management and marking a shift from competing on price to focusing on efficiency.
Semi-Managed, Fully Global: After Europe and U.S., Shein is expanding its semi-managed model to Canada, the Middle East, Japan, and Australia in 2025. The approach—local inventory and fast delivery—helps improve service and sidestep tariffs. After launching in Japan (March) and the Middle East (April), Shein teamed up with JD Logistics in May to recruit local sellers. Meanwhile, on May 9, it ramped up U.S. hiring for warehousing and logistics roles.
Vietnam Warehouse: Shein is leasing 15 hectares near Ho Chi Minh City for its first Vietnam warehouse, Reuters reported May 16. The facility—roughly 26 football fields—will store goods from local contractors ahead of export.
Temu: Blitz to Balance
Temu swiftly pivoted to local fulfillment and broader market reach, reshaping its operations to reduce reliance on China and mitigate geopolitical risks.
Y2 Model: On April 27, Temu launched its Y2 model, allowing sellers to use their own carriers to ship directly from China to the U.S after receiving confirmed orders. Though listings still say "Local Warehouse" and "No Import Fees," "Pre-sale Delivery: 11 to 14 Business Days" are noted.
Transitioning Sellers to Semi-Managed Model: Previously, fully managed sellers shipped goods to Temu’s domestic warehouses, with the platform handling everything from ocean freight to last-mile delivery. Now, under the semi-managed model, sellers must manage these logistics themselves—a more complex arrangement. While a return to the fully managed model in the U.S. is being considered as tariffs ease, insiders say its feasibility depends on policy shifts.
Ad Strategy Shift: In early April, Temu cut U.S. ad spend on Meta, YouTube, and X by 31% and halted Google Shopping ads entirely after April 9. U.S. app downloads fell 62%, with the app dropping from the top 10 to No. 69. Meanwhile, ad spend rose 40% in France, 20% in the U.K., and surged 800x in Brazil.
Expanding Overseas Seller Network: Temu is leveraging local warehouses to grow its network of international sellers while increasing product exports to Southeast Asia and Latin America. Morningstar predicts that by the end of 2025, 15% of Temu’s GMV will come from products exported outside of China.
TikTok Shop: Views to Value
TikTok Shop's key edge over rivals lies in its creator-driven model. Alongside expanding fulfillment, the platform doubled down on content while accelerating global rollout in 2025.
Global Push: TikTok Shop ramped up its global reach this year, launching in Mexico, Brazil, and Japan. Mexico lured sellers with 90 days of zero commission. Japan's self-operated store offers both direct-from-China and local delivery, with full openings set for June 3. In Europe, it expanded into Germany, Italy, and France in March—completing coverage of six key EU markets—while easing access for Chinese and Hong Kong sellers to run one store globally with unified content.
Logistics Upgrades: TikTok Shop's PEAKS plan, unveiled April 17, adds flexible shipping options—mixing direct and warehouse fulfillment—rolling out in May. A new "TikTok Shipping" program, expected in Q2, aims to cut delivery costs by up to 20%. Sellers can handle fulfillment themselves, lowering entry barriers and capturing margins through platform-backed subsidies.
Views to Value: As of May 15, TikTok Shop is doubling down on original content. Certified posts earn 20% more traffic, top creators get twice the reach, and local warehouse-stocked goods enjoy a 30% search boost. Platform fees dropped for beauty and electronics. AI-generated portraits are banned, and shipping speed now factors into seller ratings.
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