What the Temu vs. Shein Lawsuit Means for Shoppers
It could have a real impact on Shein that customers should prepare for.
It's a clash of two e-commerce titans. Temu, the quickly growing online retailer, has filed suit against fast-fashion brand Shein, alleging it orchestrated a "multi-faceted scheme" including "mafia-style intimidation" with the intent of interfering with Temu's market growth, per court documents.
As recently as a few years ago, neither Temu nor Shein were household names in the U.S. But both companies have grown enormously as consumers have flocked toward low-cost goods. Shein primarily sells clothing and accessories and also dabbles in home and beauty products. Temu, however, sells a little bit of everything in a similar way to Amazon.
It's not the first time that Temu, which formally operates as WhaleCo, and Shein have gone head-to-head in court. According to Reuters, Shein filed suit against Temu in Dec. 2022, accusing Temu of hiring influencers to describe Shein's items in misleading ways. Temu fired back in July of this year with a lawsuit claiming Shein violated antitrust laws, according to CNN Business. Both companies dropped their respective suits in October.
But on Dec. 13, Temu filed its most recent suit. Read on to learn more about what Shein is accused of, and what the latest lawsuit means for shoppers.
The lawsuit accuses Shein of being a "Potemkin village."
Temu's latest batch of claims is long and extensive, accusing Shein—described by Temu in the suit as a "Potemkin village"—of copyright infringement, intellectual property abuse, misappropriation of trade secrets, and anticompetitive business practices, among other charges. Temu even accused Shein of improperly obtaining and searching through the digital records of merchants selling products on Temu.
"We sued Shein because recently their actions have escalated," a Temu spokesperson told CNBC.
In a statement to CNN, a Shein rep countered, "We believe this lawsuit is without merit, and we will vigorously defend ourselves."
The legal battle between Temu and Shein is undeniably juicy, but it could have real effects for shoppers.
You'll probably see more Temu ads.
Beyond the courtroom, Shein and Temu have spent the past year duking it out for ad space. Temu started operating in the U.S. in 2022, but didn't make it big until its Feb. 2023 Super Bowl ad featuring the splashy tagline "Shop like a billionaire."
As noted in an analysis from Modern Retail, Temu mentioned a forthcoming 2024 Super Bowl ad in its recent lawsuit, a detail that has received some buzz from publications reporting on the suit. Some speculate the legal action could be a PR strategy.
Though the company declined to comment on its strategy to Modern Retail, Temu will certainly come out of this suit with a higher profile, regardless of the ruling. It'll build on that with more traditional publicity methods, too: Wired reports that Temu plans to triple its U.S. ad spend in 2024 to a whopping $4.3 billion.
Shein might have to discontinue a popular feature.
Both Temu and Shein use promotional "games" to offer discounts to consumers. On each platform, you can spin a wheel and get a bonus—for example, a discount on your purchase or certain products for free. Temu accused Shein of copyright infringement for this feature, and also of hiring Temu employees who have inside information about it.
If Shein loses the case, it may have to stop this practice. However, nothing will change for shoppers until the U.S. District Court for the District of Columbia—where WhaleCo filed its suit—makes a ruling.
You'll still be able to shop at Shein (for now).
Throughout all previous lawsuits between these two companies, business mostly continued as usual for Shein and Temu. As of press time, the court has not issued a temporary injunction or any other court orders that would limit Shein's ability to conduct business in light of Temu's recent suit.
For the foreseeable future, it's a safe bet that you'll be able to continue shopping at Shein—and Temu, for that matter.