Temu and SHEIN sue again! Start the cross-border e-commerce ＂the battle of the king＂

　　Recently, two cross-border e-commerce giants, Temu and SHEIN, went to court overseas, which triggered a heated discussion in the industry. Temu, a subsidiary of Pinduoduo, filed a lawsuit against SHEIN in the US federal court, accusing the latter of violating the US antitrust law.

　　According to Temu's indictment, SHEIN used market dominance to force manufacturers to sign exclusive agreements with Temu, prohibiting them from cooperating with Temu. If manufacturers supply products to Temu, they will face responsibilities and other punitive consequences. In addition, SHEIN also sent a large number of false statements of copyright infringement to Temu (mainly referring to Temu's low-priced products), which disrupted the normal sales of Temu.

　　It is worth noting that SHEIN has also taken Temu to court before, accusing Temu of trademark infringement, commercial slander and unjust enrichment. Since the launch of Temu in September last year, these two "dark horses at sea" went to court several times and fought hand in hand in the United States.

　　Can Temu's initiative shake SHEIN's dominance?

　　1) Supply chain dividend dispute

　　With more than 8,000 garment manufacturers in China, SHEIN has built a flexible supply chain model. Temu, also backed by China's powerful supply chain, provoked the war this time, and the key lies in the dispute over supply chain dividends between the two sides.

　　SHEIN's core suppliers are concentrated in Panyu, a garment production base in China. Temu also set its headquarters here, which is only a few kilometers away from SHEIN's headquarters. Both SHEIN and Temu are deeply bound to the local clothing industry. Now SHEIN has signed exclusive delivery agreements with 8,338 China manufacturers, locking up the supply chain, which will inevitably cause a serious blow to the back-end grain and grass of Temu.

　　Temu said that these 8,338 manufacturers account for 70% to 80% of the total suppliers of fast fashion. And these manufacturers also have unique and key technologies: including the ability to quickly upgrade new products, SKU agility, and "efficient logistics and professional knowledge and facilities needed for fast fashion".

　　Previously, Temu had offered huge profits to openly rob suppliers and tried to poach SHEIN employees with multiple wages, so SHEIN also announced that employees who quit Temu would never be hired.

　　This time, SHEIN released a big move, which not only locked in suppliers exclusively, but also required manufacturers to strictly abide by the "exclusive agreement", or they would face costly public punishment.

　　According to statistics, SHEIN has now seized 70% of the American fast fashion market. If the status quo remains unchanged, neither Temu nor other potential challengers can overthrow SHEIN's "hegemonic rule".

　　2) The war between the two sides escalated.

　　Temu's complaint also pointed out that the exclusive clause stipulated by SHEIN was specifically aimed at Temu, and the manufacturer was forced to sign a loyalty oath and promised not to do business with Temu. This exclusive agreement does not apply to similar manufacturers on other platforms.

　　After the above measures of SHEIN came into effect, Pinduoduo Temu found that some manufacturers systematically deleted their products sold on the platform and stopped putting new products on the shelves, and some manufacturers also stopped cooperating with Temu.

　　In Temu's view, he is currently SHEIN's most powerful competitor, both in terms of supply chain and customer satisfaction.

　　In terms of style and product quantity, SHEIN and Temu are several orders of magnitude higher than traditional fast fashion brands. As we all know, low price is one of the most important success factors for SHEIN to seize the American market, while Temu, which entered the sea track not long ago, also focused on the sinking market, constantly grabbing users' minds at low prices, and the price war "intensified".

　　In SHEIN's previous complaint, it was pointed out that the price on Temu is usually 10~40% lower than that of similar products of SHEIN. According to industry sources, SHEIN has set up a team to compare Temu prices in order to improve the bidding advantage.

　　3) It is hard to see the "dispute over the king"

　　This time, SHEIN's countermeasures are similar to Alibaba's famous "two-choice-one" strategy, which requires brand merchants who have settled in the platform not to sell products on Alibaba and JD.COM platforms at the same time, but only to choose one platform for sales.

　　On the surface, it is a reasonable commercial means, but the essential purpose is clear, that is, to suppress competitors and control the market with a higher attitude.

　　In the case of Alibaba, the China government finally intervened and implemented the anti-monopoly law to curb this kind of behavior, and Alibaba was also fined $2.8 billion for abusing its dominant market power.

　　In addition, Shopee, an e-commerce giant in Southeast Asia, has also adopted such radical strategies. Shopee once asked merchants to close their Lazada stores during the promotion period in order to obtain preferential benefits.

　　It is not clear whether China will intervene in the game between Temu and SHEIN again, because both of them are headquartered abroad-SHEIN is headquartered in Singapore, Temu is located in Boston, and Temu's parent company, Pinduoduo, is located in Dublin, and neither Shein nor Temu sells products to domestic consumers.

　　However, the war between SHEIN and Temu is not only a simple monopoly struggle, but also reflects the extremely cruel competitive pattern of cross-border e-commerce. Therefore, this lawsuit is likely to develop into a protracted "dispute over the king."

　　Xiaobian Irene/Brand Ark

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