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How Western Retailers Are Adapting to the Threat from Asia

The brand names Temu, Shein, and Alibaba are increasingly associated with the word threat. It's becoming a bit of a broken record. Temu is raising advertising prices, Shein is taking sales from established fashion brands, Alibaba is expanding into Europe, and so on and so forth. When companies fully realized the consequences of the arrival of cheap Chinese goods suddenly not being sold under their own names, they started to act.

How Western Retailers Are Adapting to the Threat from Asia
Source: Depositphotos

Chinese giants like Temu and Shein are rapidly gaining market share in Europe and even in the American market, mainly due to their aggressive pricing policies and massive investments in marketing. This situation is forcing Western companies to seek new strategies to adapt and retain their customers.

About You’s Response: Adapting to Asian Competition

The Hamburg-based fashion business About You has decided to follow the example of its Asian competitors’ success. The company plans to offer goods directly from manufacturers this year, which should ensure more competitive prices and stop the loss of customers.

This decision is a clear sign that even big players in the market must innovate and adapt their business models to remain competitive.

American giant Amazon is planning to implement a similar strategy, also looking for ways to compete with Chinese providers. The pressure on these companies is enormous, especially when we consider the huge sums that Temu and Shein are pouring into marketing. It’s precisely because of this that they’re managing to gain large market shares.

Zalando: A Cautious Approach to Changes

German Zalando has taken a different approach. David Schröder, Zalando’s Chief Operating Officer, emphasized at the K5 digital conference in Berlin that rapidly introducing direct deliveries from manufacturers would be risky. Zalando claims that quality and brand protection are key for them, and they must be careful when making rapid changes. The exact steps they plan to take to deal with this are therefore not known.

Impact of Customs Rules on the Market

The current situation is further influenced by customs exemptions that apply to shipments valued at less than 150 euros from countries outside the European Union. However, the European Commission plans to abolish this exemption, which could significantly impact cheap Chinese online stores.

To put it into perspective – last year, they sent up to 2.3 billion cheap postal shipments to Europe, with a record 350 million packages in April alone. However, it seems that implementing these measures won’t be easy. Customs services are already overloaded, and implementing new rules would be challenging.

Criticism of Chinese Players

Chinese players Temu and Shein face criticism for various reasons. There are serious doubts about the safety, quality, and sustainability of the products they sell. In May, 17 members of the European Consumer Organisation (BEUC) filed complaints against Temu. The company was accused of withholding information and using manipulative techniques.

Temu defends itself by saying it’s new to Europe and needs to learn local rules and customs.

The current situation in e-commerce is a challenge for everyone in the market. Established Western European brands should be on alert, but so should smaller local entrepreneurs. There are some unfair tricks being used by Chinese companies. Stealing photos and cheap copies of the products are hurting sales and ultimately undermining customer trust. Customers think that handmade work is just an empty phrase used to cover up the shallow selling of Chinese products.

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