Temu’s logistics power play puts Shein on the defensive in the US

While the US’ de minimis exemption is intact for now, the writing is on the wall: Sooner or later, Washington will shut down the tax loophole that has allowed Chinese ecommerce platforms like Shein and Temu to flood the US market with low-cost goods.

The exemption currently allows goods with a value of less than US$800 to enter the country duty-free.

For fast-fashion giant Shein, this presents a major challenge. The company’s reliance on direct shipments from China to the US has been one of its core strengths.

The removal of the de minimis exemption would mean import tariffs on nearly every package, eroding the company’s cost advantage and forcing a shift in its logistics and supply chain strategy.

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General ecommerce platform Temu, on the other hand, is better insulated from this looming disruption. Its semi-consignment model – where merchants ship bulk inventory to US warehouses before the platform sells them – positions the company for a future without relying on de minimis benefits.

Temu’s game changer

The semi-consignment model is one of Temu’s most significant strategic shifts. According to an AB Bernstein report from 2024, semi-consignment accounts for roughly 25% of Temu’s US gross merchandise value, and that number has likely grown since then.

Unlike Shein’s traditional direct shipping approach, where each order is shipped from China to the US in individual parcels, Temu’s model can mean faster shipping times and avoids the risks associated with de minimis restrictions.

This shift also allows the PDD Holdings-owned platform to expand into larger product categories with higher average order value, such as appliances and home goods, where faster shipping and bulk logistics matter more to consumers.

See also: Temu’s Vietnam pivot could trigger direct showdown with Shopee

From an operational standpoint, semi-consignment reduces reliance on expensive air freight, lowering logistics costs and improving margins. It also provides greater control over inventory management, allowing Temu to improve its fulfillment processes.

Temu’s revenue trajectory underscores the strength of this model. In 2023, the company achieved over US$18 billion in GMV and hit US$20 billion in the first half of 2024 alone.

Image credit: Timmy Loen

So why can’t Shein do the same?

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