Chinese retail giants Shein and Temu are each shipping an estimated one million packages a day on average, according to data from ShipMatrix, a logistics consultancy firm. Research published in the Wall Street Journal (WSJ) show these volumes surpass those of well-known American retailers, marking a transformative shift in the industry.
Their logistics operations, including sorting packages in China and an on-demand business model, contribute to cost-effectiveness, despite calls for transparency and issues concerning sustainability. Further concerns about customs scrutiny and the de minimis rule, which exempts duties on low-value shipments, have been raised by some lawmakers and businesses, WSJ said.
Packages destined for the same U.S. ZIP Code or geographic area are consolidated on pallets in China, bypassing the need for sorting in the U.S. This practice deviates from the typical approach of U.S. retailers, who store imported inventory in domestic warehouses and later sort and package items for delivery to stores or individual customers.
The majority of Temu's suppliers are located in China, sending products to Temu-affiliated warehouses for inspection, bundling, and shipping, WSJ notes. According to a Temu spokesperson, this strategy streamlines the logistics process by eliminating several traditional steps, and the high order volume contributes to securing more favorable shipping rates.
Despite these challenges, the retailers continue to thrive with their e-commerce platforms, with Shein recently recording 23 billion dollars in revenue and filing for an IPO.