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Low-cost e-commerce companies Shein and Temu drop court cases

Low-cost e-commerce companies Shein and Temu drop court cases
Low-cost e-commerce companies Shein and Temu drop court cases

Shein and Temu (owned by PDD Holdings) have withdrawn legal cases filed against each other in the US courts in Chicago and Boston. 

Joint declarations were filled by their lawyers requesting the two separate cases to be made null and void by the judges, according to Reuters.

Details about the joint filings to drop the case without prejudice are sketchy for now. Neither company has been available for comments. 

In December 2022, the two companies turned to the courts. Shein first challenged Temu, accusing it of working with influencers to “belittle Shein on social media.” As the new kid on the block, Temu didn’t stand back and filed papers in July in Boston federal court accusing Shein of “intimidating fashion manufacturers not to work with them.”

According to court papers, Temu accused Shein of “signing loyalty oaths certifying that they do not do business with Temu.” 

Temu and Shein aiming for the same target

Shein has been a popular low-cost e-commerce platform that tapped into the budget-tight customer base. It had a strong global presence, with over 50 million Brazilian customers, followed by the US and Mexico. According to Statista, Shein was the most downloaded fashion app and the most visited fashion site globally in 2022.

But in the fall of 2022, the new rival Temu was launched, also targeting low-earning customers on the chase for bargains. 

Fast-fashion competition

Shein and Temu target the same market – young people, also known as the Gen Z audience. The Chinese-founded company Shein entered the US market in 2017 with a $66 billion valuation. In 2022, the fast fashion e-commerce scene had many large players. Zara, H&M, and Forever 21 are all classified as fast fashion brands.

The two e-commerce companies manufacture and produce high volumes of clothing at fast rates, offering items at a cheap price. 

Virtually unknown Temu

Temu’s instant shot to fame at a record time is what business entrepreneurs can only dream of. The founder of PDD Holdings, Colin Huang, is the 30th richest person in the world and third in China. He increased his wealth at a rapid rate and is now worth nearly $40 billion. 

The tough economy and tight budgets keep the low-cost e-commerce platform on the winning path. 

About the author

Mia is a multi-award-winning journalist. She has more than 14 years of experience in mainstream media. She's covered many historic moments that happened in Africa and internationally. She has a strong focus on human interest stories, to bring her readers and viewers closer to the topics at hand.

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