The two specialists in the sale of low-cost products made in China, Temu and Shein, are in great shape. In a post-inflationary context where consumers are timidly starting to warm up their credit cards again, the two sites are respectively 1st and 2nd in the ranking of brands where the French have increased their spending the most in the first half of 2024 compared to the same period in 2023 (excluding mass distribution), according to Circana.
They are ahead of the second-hand specialist Vinted, which saw the amounts spent on its site drop in the first half according to Kantar. “This second-hand marketplace faces competition from many fashion players who have launched into this niche, not because the business model is profitable – it can only be profitable if the number of goods sold is very large, as on Vinted – but for image reasons »analyse Marc Lolivier, general delegate of the Federation of e-commerce and distance selling.
Temu and Shein are developing on the French market, because “the feeling of loss of purchasing power is shared by an overwhelming majority of French people”pose Emily Mayer, directrice business insight chez Circana in a Linkedin post. However, consumers, who have tightened their belts throughout the inflationary period, want to treat themselves. So they buy cheap products on these two sites.
Temu only opened in France in April 2023. However, the marketplace already has 3.7 million buyers in the first half of 2024, according to Kantar. The number of Shein customers remains stable at 1.8 million. If the fashion site’s purchasing frequency drops a little (it goes from 2 to 1.9 purchases over the period), the average basket increases, going from 29.7 to 35 euros. At Temu it is already more than 30 euros, according to Kantar.
“Postal subsidies”
Consumers therefore spend more with these two players, who siphon market share from French sites. In addition to this economic context favorable to their development, “Marketplaces that offer products from Chinese manufacturers benefit from a significant advantage over other market players: preferential postal rates, to which merchants based in China are entitled under the Universal Postal Union Convention. A text signed for the benefit of developing countries, including China”underlines Marc Lolivier. France has been a member of this organization since… 1875. The amount of these subsidies is currently being revised following the blow to the table by the Trump administration in 2019. According to the Swiss financial media AllNewsthis remuneration should reach by 2025 a maximum of 70% of all costs for a letter or package of the same weight or size distributed between two cities in the signatory countries. Before, it was even less.
Another advantage: “Exemption from customs duties for products shipped from China, amounting to less than 150 €, as provided for by European regulations. Knowing that the average basket on these platforms amounts to 30 €, this exemption therefore allows them to mostly avoid customs duties on the importation of products. The European Commission recently published an estimate that 4 billion parcels worth less than 150 euros, therefore without customs duties, will reach Europe in 2024. In 2023, it was 2.3 billion. 80% of these packages come from China”explains the leader of Fevad. These logistics “subsidies” put obstacles in the way of sites that market products manufactured in countries considered developed, while competition is already fierce in the e-commerce market.
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