Market Grabs and Regulatory Jabs: Looking Back on China-Founded E-Commerce in 2024

In an effort to get ahead of changes to de minimis and to ship to U.S. consumers quicker as Shein and Temu claw to grow their respective market shares, they have been working to set up infrastructure and logistical architecture in the country.

Juozas Kaziukenas, founder of Marketplace Pulse, said that indicates a certain agility some critics didn’t think the company had.

“The biggest change [to low-cost e-commerce] this year was the aggressive move to storing inventory locally, or to selling inventory that is already stored locally, as opposed to shipping goods from China. That, I think, is most applicable to Temu,” Kaziukenas said. “Knowing that de minimis changes are coming…this is only going to get accelerated next year.”

Temu has been partnering with various logistics companies in the U.S. and has onboarded a variety of its China-based sellers looking to provide quick-turnaround delivery to consumers previously forced to wait over a week for their parcels.

Now, the company has amped its game in the U.S. even further as it continues to push its gamified, ultra low-cost peddling platform into a lucrative market.

A Temu spokesperson told Sourcing Journal the company has pushed its focus toward U.S.-side sellers—that is to say, sellers based in the U.S., selling goods from the U.S., rather than sellers based in China, selling goods in the U.S.

“Temu is opening the door for local U.S. sellers—no invitation needed,” the spokesperson said. “Sellers can now ship directly from U.S. warehouses, delivering products to customers faster than ever—sometimes in just one business day.”

That attitude, to experts, indicates two things: Temu has faith in its ability to grow market share among U.S. consumers, and it seeks preemptive solutions to potential de minimis changes.

Jason Goldberg, chief commerce strategy officer at Publicis Groupe, said that while holding larger quantities of inventory in the U.S. may seem like a strange move for sellers based outside of the U.S., it could help preserve their businesses should de minimis collapse.

“You either ship things in individual envelopes and put them on an airplane and pay a fortune for air freight but don’t pay any duties or taxes, or you put 4,000 of them in a container and ship them on a boat and pay much less for freight, but you have to pay duties and taxes,” he said. “The price between those two models isn’t that different.”

But Ram Ben Tzion, CEO and founder of Ultra Information Solutions, contends that for Shein, Temu, AliExpress and others heavily reliant on the de minimis provision today, choosing between low-volume air freight and high-volume cargo shipments may not be the road taken.

“I think we will see a lot of fraud related to the value of goods, a lot of undervaluation and misclassification tactics that will try to minimize the associated tariffs,” he told Sourcing Journal. “Customs today does not have the capacity to independently verify the real price and real classification of every USB cable or small gadget that comes from Temu. So you should expect that, instead of trying to either absorb the cost or transfer the cost, they’ll try to cheat their way through it.”

Regardless of how Temu, Shein, AliExpress continue to morph their strategies if de minimis is altered by the U.S. government, Goldberg said he doesn’t believe low-price e-commerce will disappear alongside it.

However, such changes could curtail the genesis of further direct-from-China platforms.

“No new, small entrant is going to be able to come in and compete, because they’re not going to have the volume day one to ship all the goods here on container boats, and they’re not going to have the economic wherewithal to stage a bunch of goods in the U.S.,” Goldberg said. “So if the administration followed through and [killed] de minimis, I think it would make it harder for a new Chinese entrant to be born, but I don’t think it would stop Temu or Shein in any way.”

Ben Tzion argued that, should Temu and Shein pass the cost of tariffs or taxes on to their respective consumers, it has the potential to negatively impact their sales and business. That’s because, at the core of their business remains a promise to consumers that their pennies can turn to clothing, home goods, accessories and a profusion of other knick-knacks.

When it comes to Shein, Temu and AliExpress, their value proposition is value. But another platform gaining steam among U.S. consumers has grown on the faith of its merchants paired with a boost from influencers and social commerce platforms.

Ben Tzion said TikTok Shop’s positioning in consumers’ minds makes it less likely to fall due to consumer price sensitivity.

“TikTok is well positioned to offer products that are compliant with [incoming] regulations, because the value they offer is not just being cheap,” he said. “Even if they do need to source from China and comply with a new tariff regime, people will be willing to pay the additional cost because it comes with a story.”

But the ByteDance-owned app faces regulatory issues of its own.

Brands’ sweetheart faces ban

When comparing TikTok Shop with its competitors, two glaring differences arise: it’s trusted by a variety of well-known brands and it offers consumers a different type of experience than Shein or Temu.

While Shein and Temu are all about the gamification—prize wheels, countdown timers and more—TikTok works to capitalize on its main function: video.

And Ben Tzion said that focus, paired with the fact that it doesn’t compete only on price, makes the app a viable option for consumers.

“TikTok Shop. That’s the place. That’s my vision of future consumption in e-commerce. It’s an immersive experience, whereby the content that you consume [mirrors] your consumption habits,” he noted.

New data showed that already, U.S. consumers are spending more on TikTok Shop than they are on Shein—and among Shein shoppers, TikTok Shop’s market share is nearly equivalent to Temu.

But the social commerce darling has one additional issue: it’s facing a ban in its most major market.

Set to take effect on Jan. 19, the ban—which, as it stands, would only activate if ByteDance doesn’t agree to sell TikTok to a non-Chinese company—would prevent U.S. consumers from downloading or updating the app, and would likely force the data already collected on said consumers to be offloaded to China. The company has been fighting—and losing—battles in court, arguing that such a ban is unconstitutional.

But now, the stakes have raised even higher; the Supreme Court said this month it will hear the company’s case arguing that the Protecting Americans from Foreign Adversary Controlled Applications Act—the law that, with bipartisan support, stipulates TikTok’s fate—violates the First Amendment.

Nonetheless, several courts have decided not to grant TikTok and ByteDance’s requests to block the law until the legal proceedings have concluded. That could indicate that the Supreme Court anticipates issuing its decision ahead of Jan. 19.

Should the app actually face a ban, the marketplace function would simultaneously go by the wayside, causing brands selling on it to overhaul their social commerce strategies.

As one China-founded e-commerce platform grapples with the fact that the U.S. government will soon determine its kismet, a legacy e-commerce player has put in its own bid to join the fun in the low-cost market.

A new—but old—kid on the block

After rumblings it might do so, Amazon launched a low-cost Temu competitor in 2024.

Ben Tzion said Amazon Haul is likely an indication that the e-commerce giant harbors some nerves about the rapidity of the PDD Holdings-owned company’s growth.

“The Amazon experience has not significantly changed over the last five years, and then comes Temu and wins the market—not by superior technology or products, but by offering a completely different consumption experience: ‘Shop Like a Billionaire,’” Ben Tzion said. “Amazon Haul is a nervous reaction to a market reality that highlights the fact that Amazon has not been able to innovate…so it’s losing market share. Is [Haul] going to succeed? Probably not.”

Goldberg said it can prove dangerous to underestimate Amazon, but said at the moment, the company has served up “a nothingburger.” He noted that some of the items sold on Haul are also sold on Temu at a lower cost. And Haul doesn’t yet feature the familiar haunts of Temu and Shein: gamification, partnerships with micro creators and more.

It’s also of note that, should de minimis changes truly creep in, Haul features a strict direct-from-China model; all items are sent directly from overseas and take up to two weeks to arrive. Amazon has not elected to use any of its stateside facilities to fulfill the low-cost Haul orders, which could leave it vulnerable to regulatory changes in a way that Shein, Temu and others have been fighting against proactively.

Data underscoring consumer sentiment or spending on Amazon’s new platform is scarce so far, but Kaziukenas, who keeps his eye on e-commerce platforms’ growth, said Haul remains a small hitter in today’s e-commerce environment.

“Relative to everyone else in this industry, [Haul] is very, very small. It’s clearly going to get bigger; it’s clearly going to add more selection. But at the same time, it’s unclear yet how Amazon is going to position this and how aggressive they’re going to be in promoting this to customers,” he said. “If anything, we’re giving it a little bit too much credit just because it’s Amazon doing it. But at this point, it doesn’t deserve a seat at the table with Shein and Temu and AliExpress because of how small it is and how early it is in its journey.”