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`Case 1:23-cv-11596-DJC Document 1 Filed 07/14/23 Page 1 of 38
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`UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF MASSACHUSETTS
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`No. __________________
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`JURY TRIAL DEMANDED
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`WHALECO INC.
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` Plaintiff,
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`v.
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`SHEIN US SERVICES, LLC, SHEIN
`DISTRIBUTION CORPORATION, and
`ROADGET BUSINESS PTE. LTD.
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` Defendants.
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`
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`COMPLAINT
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`Plaintiff Whaleco Inc. (“Temu” or “Plaintiff”), by its attorneys, Boies Schiller Flexner
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`LLP, bring this Complaint against Shein US Services, LLC, Shein Distribution Corporation, and
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`Roadget Business Pte. Ltd. (collectively, “Shein” or “Defendants”) and alleges, upon personal
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`knowledge as to events or actions taking place in its presence, and upon information and belief
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`as to all other events or actions, as follows:
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`NATURE OF THE ACTION
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`1.
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`Temu and Shein are at the vanguard of ultra-fast fashion, where technology and
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`highly efficient supply chains meet to satisfy consumer demand for cutting-edge fashions at
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`ultra-low prices. The speed of communications and rapidly changing consumer preferences and
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`fashion have created strong consumer demand for the ultra-fast fashion business model.
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`Critically, that model relies on relationships with tens of thousands of clothing manufacturers
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`capable of meeting the rigors of the ultra-fast fashion business model.
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`Case 1:23-cv-11596-DJC Document 1 Filed 07/14/23 Page 2 of 38
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`2.
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`Temu and Shein both have extensive experience with ultra-fast fashion in Asian
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`markets. Shein entered the United States market in 2017 and obtained a monopoly position.
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`Temu entered the U.S. market in September 2022. Temu quickly became U.S. consumers’
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`favorite ultra-fast fashion retailer, topping the app store charts and consistently offering lower
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`prices than Shein. An analysis of identical products that were offered on both Shein and Temu’s
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`platforms showed that the prices on Temu were usually 10-40% less than those on Shein.
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`3.
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`In response to Temu’s entry and lower prices, Shein chose not to compete on the
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`merits by offering better prices, terms, service, or quality to maintain or expand its U.S. business.
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`Instead, Shein has undertaken a Scheme as alleged herein to protect and expand its power in the
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`United States ultra-fast fashion market.
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`4.
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`Specifically, Shein has engaged in a campaign of threats, intimidation, false
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`assertions of infringement, and attempts to impose baseless punitive fines and has forced
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`exclusive dealing arrangements on clothing manufacturers. As the dominant ultra-fast fashion
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`retailer, Shein knows that manufacturers need Shein’s volume and its access to the U.S. market
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`and it is, therefore, able to coerce manufacturers into arrangements that force manufacturers not
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`to do business with Temu. The intent and effect of Shein’s anticompetitive conduct is to exclude
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`Temu so that Shein can charge higher prices to consumers while offering a smaller selection and
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`lower quality than Shein would if it faced competition from Temu.
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`5.
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`As detailed below, Shein’s conduct violates Sections 1 and 2 of the Sherman Act,
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`the Clayton Act, as well as the Massachusetts Consumer Protection Law, and further constitutes
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`common-law tortious interference. Shein’s Scheme harms consumers and competition by raising
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`prices to consumers, restricting choice and innovation, and impairing the expansion of the ultra-
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`fast fashion market in the United States.
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`2
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`Case 1:23-cv-11596-DJC Document 1 Filed 07/14/23 Page 3 of 38
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`BACKGROUND
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`6.
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`On December 24, 2022, as the peak shopping season in the U.S. was about to take
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`a short break to celebrate the holidays, The Wall Street Journal published an article dedicated to
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`a retailer that had entered the market only three months prior. “American Bargain Hunters Flock
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`to a New Online Platform Forged in China” read the headline. The byline continued, “Temu, a
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`marketplace with deep discounts and copious coupons, has become the most downloaded app in
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`the U.S.”
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`7.
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`Temu entered the U.S. market in September 2022. Its goal: To drastically reduce
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`consumer prices and increase responsiveness to new fashion trends and consumer demands.
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`8.
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`On February 12, 2023–Super Bowl Sunday–Temu took out two spots to run a
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`commercial depicting a young woman buying a number of dresses and other apparel at
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`affordable prices and finishing with the message “shop like a billionaire” in reference to the
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`affordability of the clothing and other items available on the app.
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`Case 1:23-cv-11596-DJC Document 1 Filed 07/14/23 Page 4 of 38
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`9.
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`Until Temu’s launch, Shein comfortably dominated the segment of the fashion
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`industry generally referred to as the ultra-fast fashion market in the United States.
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`10.
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`The ultra-fast fashion business distinguishes itself from fast fashion by offering
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`not only an overwhelming number of products, but also frequently replacing those products with
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`new designs. Unlike high-end fashion—which is characterized by exclusivity, high prices, and
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`slow style refreshes—ultra-fast fashion offers a huge number of ever-changing styles for
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`extraordinarily low prices.
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`11.
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`As it announced during the Super Bowl, Temu had entered the market to provide
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`U.S. customers with another option for affordable, quality products on its own website and
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`mobile app (the “Temu Platform”). Temu’s demonstrated ability to offer hundreds of thousands
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`of new and frequently updated products at low prices poses a direct competitive threat to Shein.
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`12.
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`There has been quick public recognition that Temu is creating a competitive
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`constraint on Shein.1
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`13.
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`Temu is better situated than any other firm to challenge Shein’s dominance and
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`deliver better consumer value.
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`14.
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`Though new to the U.S., Temu’s affiliated companies are some of the most
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`successful online retailers. Shein is well aware that Temu has the experience and ability to
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`identify and source from the most efficient apparel manufacturers and build an agile business
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`model that offers an ever-evolving product line to lure customers to its platform. Temu’s entry
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`into the U.S. market was, therefore, a disruption to Shein’s easy dominance in ultra-fast fashion.
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`As a result, Shein now views itself as being “at war” with Temu and has engaged in an elaborate
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`
` THE CHINA PROJECT, Temu vs Shein: Which platform will rule the ecommerce world? (March 17, 2023)
`(available at https://thechinaproject.com/2023/03/17/temu-vs-shein-which-platform-will-rule-the-ecommerce-
`world/.
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`4
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`Case 1:23-cv-11596-DJC Document 1 Filed 07/14/23 Page 5 of 38
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`and anticompetitive Scheme aimed at stymieing Temu’s business. The U.S. market is the
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`primary theatre of this war.
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`15.
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`Faced with direct competition from another platform capable of taking on its
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`business model, Shein retaliated with exclusionary conduct to lock up the supply chain, and
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`directed other unlawful conduct at Temu to undermine its ability to offer similar products at
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`prices that are consistently lower than Shein’s. Specifically, Shein has implemented at least four
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`strategies geared toward stifling competition from Temu (collectively, the “Scheme”):
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`(a)
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`Shein forces manufacturers to enter into adhesion agreements that
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`effectively create exclusive supplier relationships with Shein and threatens
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`manufacturers with onerous fines and penalties if they supply product to
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`Temu;
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`(b)
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`Shein forces manufacturers to sign loyalty oaths certifying that they will
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`not do business with Temu, but which are silent as to any other competitor
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`or potential competitor;
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`(c)
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`Shein issues public penalty notices and imposes extrajudicial fines on
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`disobedient manufacturers for supplying product to Temu, practices that
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`simultaneously punish manufacturers that dare to do business with Shein’s
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`closest competitor and warns other manufacturers that Shein will not
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`tolerate any manufacturer’s doing business with Temu; and
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`(d)
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`Shein sends numerous false notices of copyright infringement to Temu in
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`order to disrupt sales of products that are offered for sale on Temu. These
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`notices are almost always aimed at products that Temu sells at lower prices
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`than Shein charges for identical or similar products.
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`5
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`Case 1:23-cv-11596-DJC Document 1 Filed 07/14/23 Page 6 of 38
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`16.
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`By October 2022, Shein had begun engaging in all the anticompetitive conduct
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`that forms the Scheme. Since that time, more than 10,000 product listings have been pulled from
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`Temu because of Shein’s Scheme.
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`17.
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`Appropriate and competitive responses to a new market entrant include offering
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`better terms, features, or prices. Shein instead chose to engage in its anticompetitive Scheme of
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`coerced exclusivity, threats, intimidation, and direct financial punishments. Shein’s conduct is
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`the opposite of competing fairly and within the bounds of applicable law.
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`18.
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`Shein’s conduct harms competition, and its effects are felt by the merchants it
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`threatens and penalizes, by U.S. consumers, and by Temu’s U.S. business.
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`JURISDICTION AND VENUE
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`19.
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`The Court has subject matter jurisdiction under 28 U.S.C. § 1331 (federal
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`question), 28 U.S.C. § 1337(a) (antitrust), and 15 U.S.C. § 15 (Clayton Act) because Plaintiff
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`asserts claims for violations of the federal antitrust laws. The Court also has supplemental
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`jurisdiction pursuant to 28 U.S.C. § 1367(a).
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`20.
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`The Court has personal jurisdiction over each Defendant. Each Defendant has
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`transacted business, maintained substantial contacts, and/or committed overt acts in furtherance
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`of the illegal monopolization Scheme throughout the U.S. and in this District specifically. The
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`anticompetitive Scheme has been directed at, and has had the intended effect of, causing injury
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`to persons residing in, located in, or doing business in this District, and throughout the United
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`States. The anticompetitive Scheme directly affects import commerce.
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`21.
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`Venue is proper in this District pursuant to 15 U.S.C. § 15(a) (Clayton Act), 15
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`U.S.C. § 22 (nationwide venue for antitrust matters), and 28 U.S.C. §1391(b) (general venue
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`provision), because Defendants reside, transact business, are found, or have agents in this
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`District. Defendants use social media to target consumers in Massachusetts to join their platform
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`6
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`Case 1:23-cv-11596-DJC Document 1 Filed 07/14/23 Page 7 of 38
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`and purchase their products, and they ship consumer goods to and imports into Massachusetts.
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`Moreover, Shein’s anticompetitive Scheme expressly targeted their most direct and significant
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`competitor, Temu, a corporation with its principal place of business in Boston, Massachusetts, by
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`sending knowingly false notices of copyright infringement to Temu in Massachusetts and
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`punishing manufacturers who sought to do business in Massachusetts with Temu. As a result, a
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`substantial part of the interstate trade and commerce involved in and affected by the violations of
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`the antitrust laws was and is carried on in part within this District. The acts complained of have
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`and will continue to have substantial effects in this District.
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`PARTIES
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`22.
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`Plaintiff Whaleco Inc. (d/b/a Temu) is a Delaware corporation with its principal
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`place of business in Boston, Massachusetts.
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`23.
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`Defendant Roadget Business Pte. Ltd. is a private limited company organized
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`under the laws of Singapore. Roadget Business Pte. Ltd. owns the website https://us.shein.com
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`and the corresponding mobile application.
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`24.
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`Defendant Shein Distribution Corporation (“Distribution Co.”) is a Delaware
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`corporation with its principal place of business in Los Angeles, California. Distribution Co. is an
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`affiliate and licensee of Roadget Business Pte. Ltd.
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`25.
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`Defendant Shein US Services, LLC is a Delaware limited liability company with
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`its principal place of business in Los Angeles, California.
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`26.
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`Discovery will reveal the precise responsibilities and roles of each of the Shein
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`entities in connection with the Scheme, but a substantial part of Scheme’s conduct has occurred
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`in the United States. For example, Shein job postings at the time of filing indicate that Roadget
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`has and seeks U.S.-based employees whose responsibilities include ensuring “that sellers
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`understand and adhere to SHEIN’s policies and procedures.” Shein has stated that U.S.-based
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`Case 1:23-cv-11596-DJC Document 1 Filed 07/14/23 Page 8 of 38
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`Distribution Co. employees manage supplier “relationships” and Shein’s “opportunity pipeline,”
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`as well as “renegotiate” contracts.
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`FACTUAL ALLEGATIONS
`The Evolution of Traditional, Fast-Fashion, and Ultra-Fast Fashion Markets
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`27.
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`Since the late 20th century, the increasing speed of communications and fast pace
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`of change in fashions has led to strong consumer demand for retailers that can quickly and
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`cheaply manufacture and distribute the latest trends. The first generation of such companies
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`were known as “fast-fashion” companies, which created and replaced styles and stock keeping
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`units (“SKUs”) offered with new and different products—far more frequently than high-end
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`fashion brands. The speed with which such companies make new products available in response
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`to new trends earned this industry segment its “fast fashion” label.
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`28.
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`This first generation of fast fashion was comprised of companies like Zara, H&M,
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`Forever21, Primark, Boohoo, and GAP, with some additional niche players such as Uniqlo.
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`These competitors were distinguishable from high-end fashion brands and the rest of the garment
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`industry because of (a) their variety of styles, which still touched on all the latest trends; (b) their
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`extremely short turnaround time between when a trend or style is seen at a fashion show or in
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`celebrity media and when it hits the shelves; (c) their product offerings that changed routinely
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`within a single season; and (d) their lower price points compared to high-end fashion brands.
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`29.
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`A group of high-end—and high cost—fashion designers published a proposal to
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`“rewire” the fashion industry to address what they viewed as a “problem”—fast fashion’s ability
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`to get new trends to consumers “quickly” and “cheaper.” They derided fast-fashion’s ability to
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`bring style to the masses at a low cost as “disposable fast fashion.” In truth, those designers were
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`recognizing that a large and identifiable segment of consumers now demanded the unique
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`Case 1:23-cv-11596-DJC Document 1 Filed 07/14/23 Page 9 of 38
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`combination of quick response and efficient distribution that brand-name designers and high-
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`overhead retail models could not match.
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`30.
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`Notably, fashion industry participants generally do not have any intellectual
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`property ownership over the style of apparel they offer. Except for trademarks, fast fashion
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`players generally lack any intellectual property interest in any garment offered for sale.
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`31.
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`A distinct new retail approach beyond fast-fashion—called “ultra-fast fashion”—
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`evolved over the past decade. This new market for ultra-fast fashion consists of companies
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`including, among others, Shein, Temu, FashionNova, Zaful, and Cider.
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`Ultra-Fast Fashion Competitors Offer Significantly More Styles,
`at Much Lower Price Points With Even Higher Churn and Faster Design-to-Retail Cycles
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`32.
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`Compared to the rest of the garment industry, including the fast-fashion segment,
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`the defining characteristics of ultra-fast fashion retailers are (a) significantly more styles or
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`SKUs of clothing offered, (b) more frequent turnover (or “churn”) of styles or SKUs
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`(approximately 5-6,000 per week as opposed to 4-500 per week in fast fashion or once per
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`season in high-end fashion), (c) materially lower price points, (d) quicker design-to-retail time;
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`and (e) a direct-to-consumer model that emphasizes dispatch from at or near the point of
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`manufacture to consumers—i.e., a distribution system that keeps little-to-no inventory on hand
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`and links manufacturers and consumers more closely than ever before keeping costs down while
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`removing supply and distribution bottlenecks.
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`33.
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`The distinct ultra-fast fashion market has been recognized by the fashion industry,
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`including in trade journals and fashion publications such as Business of Fashion, Fashion Week
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`Online, and Fashion United.
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`34.
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`The unique characteristics of the ultra-fast fashion model satisfy the demands of
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`consumers for whom trends are increasingly driven by consumer-to-consumer communications
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`Case 1:23-cv-11596-DJC Document 1 Filed 07/14/23 Page 10 of 38
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`via the internet and social media. Unlike fast-fashion, for example, ultra-fast fashion firms such
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`as Temu and Shein look to online trends and influencers for style inspiration, rather than
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`imitating trends set on runways and by traditional fashion houses, as fast-fashion retailers do.
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`Ultra-fast fashion also meets the unique demands of today’s decentralized and increasingly
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`consumer-driven trends by offering more new styles faster by more closely linking the
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`manufacturer and the end customer than fast-fashion’s relatively high-overhead model does.
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`35.
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`Because the ultra-fast fashion market does not require waiting until fashions hit
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`the runway or premier in seasonal catalogues, competitors in the ultra-fast fashion market can
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`focus on offering as many choices as possible, as fast as possible, at very affordable prices.
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`Consumers who shop at ultra-fast fashion retailers might also shop at fast fashion outlets, as well
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`as high-end fashion brands, but do not perceive the broader set of fast fashion retailers, general e-
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`commerce retailers, or high-end fashion brands to be close enough substitutes for ultra-fast
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`fashion purchases because the other types of apparel retailers have significantly higher prices,
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`fewer styles, and less frequently changing styles available at any given time.
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`36.
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`Ultra-fast fashion players like Shein and Temu “avoid the need for
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`overproduction typically associated with filling physical storefronts and [prevent] much of the
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`waste and environmental impacts associated with running a traditional retail store.”2 For
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`example, for each new product sold on Temu or Shein, the initial production run can be as low as
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`100-200 units per SKU, compared to the thousands or tens of thousands of pieces typically
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`produced per SKU by traditional fast fashion retailers. Ultra-fast fashion retailers thus carry
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`little inventory and instead produce products nearly on-demand.
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` Shein, A Unique Business Model, https://www.sheingroup.com/our-story/a-unique-business-model/.
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`Case 1:23-cv-11596-DJC Document 1 Filed 07/14/23 Page 11 of 38
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`37.
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`In other words, ultra-fast fashion innovates by taking out two middlemen that the
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`fast-fashion industry left in place. Ultra-fast fashion cuts out the old brand-name fashion houses
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`that have acted as arbiters of style even for fast fashion firms. And, ultra-fast fashion shuns the
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`higher-overhead, lower-speed marketing, inventory, and distribution systems used by brick-and-
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`mortar and traditional internet retailers.
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`38.
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`The unique characteristics of ultra-fast fashion requires market participants to act
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`as e-commerce retailers, meaning all or virtually all of their sales come from online sales. In
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`contrast, for fast fashion companies including Zara, H&M, and Forever21 only approximately
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`30-35% of their sales occur online rather than in their brick-and-mortar stores. Because ultra-
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`fast fashion players offer a large number of styles in relatively small runs, combined with a high
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`style churn on a daily basis, a brick-and-mortar channel with space and physical restrictions is
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`not feasible.
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`39.
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`As a result of these efficiencies, ultra-fast fashion also offers an even lower price
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`point than fast fashion. This substantial price difference further delineates the ultra-fast fashion
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`from the fast fashion markets, and satisfies the demands of ultra-fast fashion’s younger, social-
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`media trend driven consumer, who has a strong preference for maximizing their ability to chase
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`new trends on a tight budget.
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`40.
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`Price points are a key differentiator in today’s fashion marketplace. For example,
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`a cotton-blend t-shirt from one of the high-end fashion brands could be priced above $300 when
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`a similar t-shirt from a fast fashion retailer like GAP is approximately $30. Other fast fashion
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`brands might offer a similar t-shirt at prices comparable to GAP. Yet, t-shirts on Shein or Temu
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`likely will be offered at less than $10.
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`Case 1:23-cv-11596-DJC Document 1 Filed 07/14/23 Page 12 of 38
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`41.
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`Other garment retailers, including fast fashion retailers, are not reasonable
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`substitutes for the ultra-fast fashion outlets in part because ultra-fast fashion platforms offer
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`significantly more new styles, and these styles change effectively on a daily basis. For the ultra-
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`fast fashion consumer, other options are not viable substitutes in part because of the staleness of
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`the styles and the limited style options available.
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`42.
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`Price points also differentiate fast fashion and e-commerce retailers from the
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`ultra-fast fashion market. Retailers not in the ultra-fast fashion market—such as H&M, Zara,
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`Forever21, Walmart, and Amazon—all sell at significantly higher price points than do Shein,
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`Temu, and other ultra-fast fashion companies. Shein’s specific targeting of Temu via the
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`Scheme alleged herein also demonstrates that Shein considers Temu its most significant (if not
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`only) competitive threat, further demonstrating that Temu and Shein directly compete in a
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`separate and distinct market for ultra-fast fashion.
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`43.
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`Ultra-fast fashion outlets must obtain their supply from manufacturers that
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`possess a unique combination of capabilities and expertise. Ultra-fast fashion manufacturers
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`create a high volume of new products and styles, requiring fast design and rapid changeover
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`from one product to another. They must act as their own designers by creating their own styles,
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`be sophisticated in e-commerce, and be able to fit into the high-speed ultra-fast fashion supply
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`chain because, as part of doing away with the middleman, ultra-fast fashion outlets use a
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`“manufacturer-to-consumer” model that cuts out the design house and the high-overhead retailer.
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`And ultra-fast fashion manufacturers must do all of this on tight margins. As a result, the pool of
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`actual and potential ultra-fast fashion manufacturers is significantly smaller than manufacturers
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`capable of producing apparel for export.
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`Case 1:23-cv-11596-DJC Document 1 Filed 07/14/23 Page 13 of 38
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`44.
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`For all the reasons above, the relevant antitrust product market is the ultra-fast
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`fashion market. It is also possible to view ultra-fast fashion as a distinct antitrust “sub”-market
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`within a market that includes the first-generation of fast-fashion retailers together with ultra-fast
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`fashion retailers.
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`Shein is the Dominant Player in the U.S. Ultra-Fast Fashion Market
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`45.
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`Among the ultra-fast fashion retailers, Shein is by far the largest competitor with
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`more than 75% of U.S. market share in 2022. It also has a 50% share among the combined
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`markets of fast-fashion and ultra-fast fashion. It sells a wide variety of products, including
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`men’s, women’s, and children’s apparel, in the U.S. through its website, https://us.shein.com,
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`and its corresponding mobile app.
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`46.
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`Shein’s customer base and sales have exploded since early 2020. Its global
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`annual revenue is estimated to have grown from around $3 billion in 2019 to around $30 billion
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`in 2022, with approximately $9.6 billion in the United States in 2022. In the first half of 2022,
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`Shein’s app was the most downloaded shopping app in the U.S., eclipsing Amazon, with
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`approximately 22.4 million downloads during those six months
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`47.
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`Shein has a network of approximately 8,338 manufacturers in its ultra-fast fashion
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`line of business.
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`48.
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`Shein did not have significant ultra-fast fashion competition in the United States
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`until Temu’s Fall 2022 entry into the ultra-fast fashion market in the United States, whereupon
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`Temu quickly became U.S. consumers’ favorite ultra-fast fashion app.
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`49.
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`Shein offers hundreds of thousands, if not over a million, apparel SKUs on its
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`platform.
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`Case 1:23-cv-11596-DJC Document 1 Filed 07/14/23 Page 14 of 38
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`50.
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`The ultra-fast fashion market is a separate antitrust market from the fast fashion
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`market. This is seen from the enormous difference in the market actions and activity of Shein
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`compared to the major participants in the fast fashion market. The products offered on the Shein
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`Platform change frequently. According to the trade journal Business of Fashion, Shein adds
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`thousands of new items to its U.S. site each day, while fast-fashion retailers, such as H&M and
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`Zara, add thousands of new items to their U.S. site each year. Business of fashion also reports
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`that Shein added 314,877 new items to its U.S. site over the same period that H&M added 4,414
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`and Zara added 6,849.
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`51.
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`Shein brings those frequently-changing products to its online-only retail store at
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`incredibly low prices, which are significantly lower than fast fashion retailers and e-commerce
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`retailers like Amazon. For example, Shein sells:
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`• Women’s t-shirts for less than $10, including some for less than $3.
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`• Women’s dresses for $10-20, including some for less than $10.
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`• Women’s shoes for less than $20.
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`52.
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`Shein’s prices are often 60 to 70 percent lower than what Zara and H&M can
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`offer to consumers.
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`53.
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`H&M and Zara are not a significant competitive constraint on Shein due to
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`Shein’s much larger and faster-changing product selection and its significantly lower prices.
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`54.
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`Underlying Shein’s rapid commercial growth is its low cost, fast, and flexible
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`supply chain. Specifically, Shein’s network of 8,338 independent apparel manufacturers located
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`in China is critical to its supply chain. Shein’s website states that “Shein does not own or
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`operate any manufacturing facilities. Instead, [it] works with a network of third-party suppliers
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`to manufacture products that carry the Shein brand.”
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`Case 1:23-cv-11596-DJC Document 1 Filed 07/14/23 Page 15 of 38
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`55.
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`According to research by Professor Sheng Lu, an associate professor in Fashion
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`and Apparel Studies at the University of Delaware, companies like Zara and H&M offer about
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`20,000 or 25,000 different styles of products in the market in a given year. Shein can launch as
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`many as 1.3 million.
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`56.
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`Although Shein has a broader product offering and lower prices than fast fashion
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`retailers such as H&M and Zara and large e-commerce retailers such as Amazon and Walmart,
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`Shein (like Temu) has slower shipping speeds than other online retailers. H&M’s and Zara’s
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`standard shipping speeds are 3-5 and 2-3 business days respectively. Amazon and Walmart ship
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`most products within two business days. Shein’s standard shipping takes an estimated 12-14
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`days, which contributes to lower overall costs for the sale of its goods.3
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`57.
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`Despite slower shipping speeds, consumers keep shopping from ultra-fast fashion
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`providers like Shein and Temu and do not substitute to other options in sufficient number to
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`make ultra-fast fashion unappealing. Shein is now larger than all other fast fashion and ultra-fast
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`fashion apparel retailers globally and in the U.S., having created a dominant position in the
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`market for ultra-fast fashion. Shein is dominant in the U.S. market no matter how it is defined,
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`with a share of over 75% of ultra-fast fashion and a 50% share even if ultra-fast fashion and fast-
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`fashion were viewed together in a single market.
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`58.
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`Amazon and Wal-Mart’s online operations act as both traditional high-inventory
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`retailers and as platforms for third-party sellers, essentially using an online retail model designed
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`to compete directly with traditional brick-and-mortar retail operations. By contrast, Shein and
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`Temu add designs quickly and rely on their agreements with capable manufacturers to deliver
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`fashion at break-neck speed.
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` https://us.shein.com/Shipping-Info-a-280.html
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`Case 1:23-cv-11596-DJC Document 1 Filed 07/14/23 Page 16 of 38
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`59.
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`And, unlike traditional vertically integrated fast-fashion retailers such as
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`Forever21, Shein and Temu have left behind the old seasonal update cycle and high-price
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`infrastructure in favor of a leaner operation and efficiency innovations that enable them to
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`deliver even more up-to-date fashions at a fraction of the price. Consumers demand the unique
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`combination of features that ultra-fast fashion companies offer, and do not consider them
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`interchangeable with traditional retailers or fast-fashion.
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`60.
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`Temu is the firm best situated to take on Shein in the U.S. Though ultra-fast
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`fashion is relatively new to the US, Temu and its affiliated companies have directly competed
`
`against Shein and its affiliates in non-U.S. markets. Over that time, Temu has demonstrated that
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`it is Shein’s fiercest and most successful competitor, both in terms of manufacturer engagement
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`and consumer satisfaction.
`
`Temu Enters the U.S. Ultra-Fast Fashion Market
`and Challenges Shein’s Dominance
`
`61.
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`Due to the similar product offerings, product variety, product churn, and price
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`points, Shein considers Temu to be its closest and most direct competitor in the ultra-fast fashion
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`market. Temu competes with Shein by offering similar products with a high number of clothing
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`styles and a high style-churn rate at similar prices as Shein, and Temu routinely beats Shein on
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`price for ultra-fast fashion apparel products.
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`62.
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`The products offered on the Temu Platform include men’s, women’s, and
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`children’s apparel. Like Shein, nearly all Temu’s product offerings in the United States come
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`from a network of manufacturers located in China. Many apparel manufacturers that sell
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`products on the Temu Platform are also suppliers of Shein, and the apparel product offerings on
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`the Shein Platform and the Temu Platform are naturally similar as they are both geared toward
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`staying abreast of the latest mass-fashion trends desired by consumers. In a recent lawsuit
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`Case 1:23-cv-11596-DJC Document 1 Filed 07/14/23 Page 17 of 38
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`against Temu, Shein labeled Temu “a direct competitor” and said that the same suppliers “sell
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`the same competing (and sometimes identical products) products” on both Temu and Shein.4
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`63.
`
`Temu beats just about everyone else on price. The apparel sold on the Temu
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`Platform is also sold at prices substantially lower than those of H&M and Zara and other e-
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`commerce retailers like Walmart and Amazon—and even lower than Shein’s prices. An analysis
`
`of products that were offered on both Shein and Temu’s platforms showed that Temu usually
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`beat Shein on price by 10-40%.
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`64.
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`Having controlled nearly the entire market in ultra-fast fashion in the U.S.
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`between early 2020 and Temu’s entry in late 2022, Shein was and is a monopolist. Since Temu
`
`entered the market, Shein has attempted to maintain its monopoly by means of its
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`anticompetitive Scheme, desperate to avoid the robust competition Temu brought to the market.
`
`65.
`
`The Temu Platform offers over approximately 1.7 million apparel SKUs, with
`
`approximately 5,000 new SKUs added each day, and has as high a style-churn rate as the Shein
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`Platform. Temu’s customers and sales have grown significantly since its launch in September
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`2022.
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`66.
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`Shein is desperate to keep its ultra-fast fashion monopoly because it has a non-
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`diversified business. As much as 90% of Shein’s U.S. sales are ultra-fast fashion.
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`67.
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`Temu’s demonstrated ability to meet the rigors of ultra-fast fashion, which
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`requires quickly adapting to new fashions and trends, terrifies Shein, and caused Shein to react to
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`Temu’s expansion into the U.S. market with the Scheme.
`
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` Complaint, Roadget Business Pte. Ltd. v. Whaleco, Inc., Case: 1:22-cv-07119 (N.D. Ill. Dece