Temu just filed an antitrust lawsuit against Shein, alleging the fast-fashion company intimidated manufacturers.
Temu/Shein
Shein and Temu are battling it out for the title of the world's favorite shopping app. In the process, both companies have filed separate lawsuits against one another.
In December, Shein's parent company sued its e-commerce rival, Temu, alleging that Temu created fake accounts on Twitter under Shein's name and trademark. Shein recently sued Twitter to release data about the accounts in question.
Now Temu is fighting back with its own lawsuit against Shein, filed last week. It alleges that Shein violated antitrust laws by intimidating manufacturers not to work with the company, Reuters reported.
The e-commerce companies have much in common, including their target audience — Gen Z. And they have much to fight about, as evidenced by the myriad of lawsuits they've filed against each other. Still, their legal issues don't seem to be getting in the way of their growth.
Shein is a Chinese-owned fast-fashion company based in Singapore that works with roughly 6,000 manufacturers in China to produce apparel quickly and cheaply. The company, which launched in 2018, uses AI technology to identify trends and an online-only model to churn out thousands of garments in record time.
In 2022, Shein was valued at $100 billion, but after a slump in sales last year, its valuation dipped to $66 billion, the Wall Street Journal reported. The company is rumored to be eying an IPO, although the company has denied the reports.
Temu is a subsidiary of a Chinese commerce company, Pinduoduo, that sells heavily-discounted products in a wide range of categories, from apparel to home goods. When Temu launched in the US last September, it set a goal to surpass Shein in total merchandise value within a year, Bloomberg reported. The app skyrocketed in popularity after airing a Super Bowl ad and it overtook Shein's title as the most downloaded app on Apple's iOS app store in 2023, Bloomberg reported.
Competition between the two ecommerce companies really seemed to heat up over the last few months. In May, Shein opened up its marketplace to third-party sellers and in June began selling categories beyond apparel into home, beauty, and electronics. In the same month, US spending on Temu was 20% higher than on Shein, Bloomberg reported.
In Shein's lawsuit against Temu, the company alleged that Temu attempted a deliberate scheme to impersonate the Shein brand by creating fraudulent Twitter accounts. Shein also alleged that Temu contracted influencers to make disparaging comments about Shein. Not to be confused with the Shein influencer factory tour, which sparked controversy.
In Temu's lawsuit against Shein, the company alleged that Shein forced clothing manufacturers to sign agreements not to work for its rival. The filing says this makes prices higher for customers and hinders growth in the fast-fashion market.
"Since our launch in September 2022, Temu has been the target of Shein's unlawful exclusionary tactics, including, but not limited to, forcing exclusive-dealing arrangements on Temu's merchants, threatening and thwarting merchants from engaging with Temu, and punishing merchants for engaging with Temu by imposing extrajudicial fines," a Temu spokesperson said. "Even worse, Shein unilaterally changed its contract with merchants, forcing merchants to purportedly assign their IP rights to Shein, so that Shein can enforce its ill-gotten rights against the very same merchants on the Temu platform."
In a statement to Insider, a Shein spokesperson said Temu's lawsuit was "without merit, and we will vigorously defend ourselves."
Do you have a story to share about working or shopping at Temu and Shein? Reach out to this reporter at jortakales@insider.com or call (646) 768-4742 using the Signal app.
