Chinese e-retailer Temu files lawsuit in US against rival Shein
Shein Sues Temu for Plagiarism and Infringement, Temu Countersues Antitrust
Last week Temu filed a lawsuit in the US accusing Shein of violating US antitrust laws. Temu claims that Shein has a 75% share of the US fast fashion market by 2022, and requires about 8,338 manufacturers to sign exclusive distribution agreements, preventing them from offering products on Temu or providing products to Temu sellers. In the face of this accusation, Shein pointed out that the lawsuit has no basis and will use strong legal means to protect his rights and interests. This is not the first confrontation between the two sides, the war between Shein and Temu has already started.。
In September 2022, Temu entered the North American market. At the end of December, Shein accused Temu of cooperating with internet celebrities and posting remarks defaming Shein on social media. Shein also alleged that Temu tried to impersonate itself, inducing consumers to believe that the two had a brand connection, and tricked customers into downloading Temu. Several imposter accounts gave Temu download links on their pages. Temu applied to dismiss the lawsuit, but the court has yet to decide. In March this year, Shein updated the complaint again, pointing to Temu’s plagiarism and infringement, mentioning Temu’s trademark counterfeiting and infringement, including plagiarizing products and pictures of the Shein brand, selling products with the Shein brand logo and counterfeit products, and covering up by retouching. Infringement facts, as well as multiple allegations of unjust enrichment. Not only Shein, but many Amazon sellers also complained that their product pictures were plagiarized and sold on Temu, even the copywriting was the same, and the price was directly half that of Amazon, which seriously affected their sales. Picture theft cases are very common on Temu. The strategy of Temu sellers is to find all kinds of hot-selling products in Amazon’s best-selling list, and then go to suppliers to wholesale the same style and copy the products directly.
In response to Temu’s allegations this time, Shein signed an agreement with the supplier, not allowing the supplier to cooperate with Temu. Many sellers said they have not heard of this for the time being. As a retailer in the fast fashion industry, Shein’s clothing category is sold in a self-operated model. Shein first places a small order to purchase trial models, and if they sell well, they will mass-produce them, and finally sell them with Shein’s brand and trademark. This self-owned brand business model is completely different from the model in which suppliers simply supply to the platform.
The road to cross-border is long, merchants should choose their own path
Like Temu and Shein, there are still many overseas merchants in China. Relying on the foundation of China’s supply chain and utilizing digital innovation, Shein is following the independent brand plus platform model. Temu, on the other hand, adopts a fully managed platform model, and merchants play the role of suppliers. AliExpress and TikTok have launched hosting models one after another. Amazon has always adopted a self-operated plus platform model. With competition between giants, suppliers can have more choices. However, the comparison between platforms is about products with high quality and low price and good service. With the entry of Temu, which wins with low prices, the price of products has been lowered and lowered. Disguise has brought new challenges to merchants.
Temu’s price rules repeatedly lowered the supplier’s price until the profit was almost zero. Sellers believe that the full custody model has lowered the threshold for cross-border operations, but obviously has higher requirements for the competitiveness of the goods themselves. As far as suppliers are concerned, if they do not want to fall into the dead cycle of balancing quality and low price, one of the ways out is to create their own brand and take the road of creativity and innovation. To avoid entering this introversion mode, merchants can only form brand-differentiated competition and choose a platform that is more suitable for their own advantages and operating methods.
