Shein, Temu ramp up advertising in UK and France as US tariffs hit

Highlights:

• Shein and Temu face competition from established brands like Zara and H&M
• UK ad spending boosts Shein and Temu app downloads, but user growth is slow
• Temu's Brazil ad spending surges ahead of 2024 market entry

Shein and Temu, fast-fashion e-commerce platforms that ship merchandise from China, boosted their spending on digital ads in Europe in April, data from market intelligence firm Sensor Tower showed, a shift away from the US where the companies face crushing tariffs.

Shein and Temu's ad spending rose the most in France and the UK compared to other European countries. Shein boosted spending 35% in France and the UK, while PDD Group's Temu increased by 40% and 20% month-over-month, respectively, according to Sensor Tower data provided exclusively to Reuters.

The boost in advertising in Europe, which includes France, Germany, Italy, Spain, and the United Kingdom, comes as the retailers grapple with US President Donald Trump's ban on de minimis, a trade exemption that previously allowed for packages valued under $800 to enter the country duty-free. The exemption was a key factor in Shein and Temu's rapid growth in selling $12 dresses and $5 accessories in the US, where both companies get a majority of their sales.

The two companies, which ship merchandise from China, slashed digital ads in the US last month ahead of the May 2 ban on de minimis. Both companies are hiking prices as Trump's trade policies crack down on cheap imports and the moves are expected to pinch their margins.

Singapore-based Shein and Temu became known in the US for selling cheap apparel and accessories, often undercutting competitors including Gap's Old Navy, Inditex's Zara, H&M and some dollar stores on price. The e-retailers also drove up the prices of digital ad bids during the most recent holiday shopping season.

Kimber Maderazzo, marketing professor at Pepperdine Graziadio Business School, said Shein and Temu "probably won't be able to gain as many customers as they were" in the United States. She said the two companies are now focusing on retaining the American shoppers they already have, a counter to their new international digital advertising strategies.

Advertising in the UK is helping Shein and Temu secure more app downloads, Sensor Tower said, with Shein downloads increasing 25% month-over-month and Temu more than doubling. Despite the increase in advertising and app downloads, daily active users of the apps have increased only marginally month-over-month. Shein's UK daily active users increased 5% and Temu's increased 10%.

On a year-to-year basis, Temu increased its ad spending in the UK by 20% and in France by 115%. Shein increased it by 45% in France and 100% in the UK from last year in April.

Temu's daily average US ad spending on Facebook, Instagram, TikTok, Snap, X and YouTube declined a collective average of 31% in the two weeks from March 31 to April 13 compared with the previous 30 days, Sensor Tower estimated. Shein's daily average US ad spending on Facebook, Instagram, TikTok, YouTube and Pinterest fell a collective average of 19% over the same period.

Shein and Temu are also shifting some digital advertising to Brazil. Shein, which manufactures goods in Brazil for its Latin American markets, increased its digital ad spending 140% in April from a year earlier in an effort to compete with Temu's entry into the market, Sensor Tower brand and digital analyst Kara Lee said.

Temu's ad spending in April was 800 times larger in Brazil this year than last year, when the company was ramping up advertising there ahead of its June 2024 launch.

Shein did the same thing when Temu entered the US market in September 2022, Lee said. "My guess is that they're probably utilizing a similar strategy in Brazil as well."