Shein’s throne is being challenged by a rival with one of America’s hottest apps

It took Shein a decade to overtake Inditex SA’s Zara as the world’s biggest fast fashion retailer. Now, a new online upstart is looking to topple Shein, in at least one measure, within a year.

Temu, the shopping platform owned by Chinese e-commerce heavyweight PDD Holdings Inc., last month set a lofty sales goal for its North American store: report at least one day’s gross merchandise value that exceeds that of Shein between now and Sept. 1. , marking the anniversary of its entry into the U.S. market, according to people familiar with the matter, who asked not to be identified because they were not authorized to speak publicly.

This is the first step in Temu’s wider plans to dominate the online shopping landscape. The company sees Shein as its biggest rival in the near term and wants to surpass its dominance in the next few years, the people said. But the company, which sells everything from clothes to kitchenware, is ultimately looking to take on global behemoth Amazon. com Inc. and eBay Inc., they said.

Temu’s growth is already taking off and has been one of the top-ranked apps in the US for months. According to data analytics firm YipitData, the company had about $500 million in GMV in the US in its first five months of operation. According to the data, sales in January alone amounted to almost 200 million dollars. Temu launched in Canada, its second market, in February.

Comparative data on Shein’s finances is hard to come by, but the scant details that have been revealed suggest that Temu’s target needs rapid expansion to accelerate.

According to YipitData, Shein already dominates the US fast fashion market, far outstripping rivals Zara and H&M. The Financial Times reported last month that Shein forecast global GMV to grow to $80.6 billion in 2025, up 174% from last year. Revenue could grow to $58.5 billion in 2025, up from $22.7 billion last year, according to the report, which cites an executive presentation to investors.

Temu’s staff were not given a daily sales target – a figure closely guarded by senior management. Instead, they were told to shift from growing users of their app and website to developing ways to increase customer spending.

The company did not respond to inquiries.

Shein’s rapid success has paved the way for a slew of newcomers looking to enter the burgeoning e-commerce market, but Temu is widely seen as the most serious competitor. The latter is already headhunting Shein’s employees and suppliers while leveraging the deep pockets, extensive supply chains and expertise of parent PDD, which controls roughly 13% of China’s online retail, — especially in consumer data that allows it to quickly change offerings. the Pinduoduo platform.

While both companies are synonymous with cheap, easy-to-find products, Temu operates more like a marketplace than a stand-alone brand like Shein. It doesn’t do design and manufacturing, instead recruiting suppliers to offer a list of products that Temu selects and then allows to open a store on its platform. After sellers send products to Temu’s warehouses in China, the company handles shipping, marketing and promotion, and after-sales services.

Temu is betting that a massive marketing campaign will drive sales growth. The company debuted Super Bowl advertising in mid-February with two 30-second spots — which typically cost millions of dollars to produce and air — featuring a fashionable customer twirling and dancing in an array of outfits. It also implements social marketing practices similar to Pinduoduo’s strategies in China, including offering discounts, cash rewards and free gifts to customers who refer their friends.

The strategy is paying off, in January the website’s traffic surpassed Shein’s. If Temu can maintain its momentum, it will also join some Chinese-owned Internet services that have been successful in the United States, including Alibaba’s Aliexpress and ByteDance Ltd’s TikTok.