/cdn.vox-cdn.com/uploads/chorus_asset/file/24016885/STK093_Google_04.jpg)
/cdn.vox-cdn.com/uploads/chorus_asset/file/24808816/Starfield__The_Settled_Systems___Supra_Et_Ultra_____Starfield__The_Settled_Systems___Supra_Et_Ultra_2023_7_25_94252.263_1440p_streamshot.png)
GET FREE SHINE UPDATES
we will send you one myFT Daily Digest Latest Email Rounding she in News every morning.
Teemu and Sheen have taken the apparel industry by storm with their $2 swimsuit and $10 pair of shoes. Now the rivalry between the two Chinese online platforms has come to the fore. Teemu is suing Sheen in the US.
The pair specializes in “ultra-fast fashion” – clothes designed, made, sold and discarded in days instead of weeks. This could be a game in which the only winner is the consumer, regardless of which company wins legally.
Teemu alleges that Sheen pushed the manufacturers into a supply arrangement that caused Teemu to be illegally excluded from entering the US in 2022. Sheen has said the lawsuit is without merit.
The rapid success of both means they are becoming an online threat to Inditex and H&M, which also operate extensive store estates.
Sheen reportedly has more than three-quarters of America’s ultra-fast fashion market. Teemu is catching up. Its monthly typical merchandise value, or total value of goods sold, tripled in the three months to $635 million in April. It surpassed US sales of Sheen in May.
Sheen and Teemu are among the fastest growing start-ups in the world. The personal assessment of both is excellent. Sheen is worth about $66 billion based on May’s fundraising tally. TEMU is estimated to be worth more than $100 billion, which is higher than the market value of parent company PDD Holdings.
Getting products quickly from trusted manufacturers is the key to success. Legal documents show Sheen purchases from more than 8,000 suppliers. Teemu claims that these represent about 80 percent of businesses capable of supplying ultra-fast fashion goods.
Retailers are constantly on the lookout for supply, cutting prices. This same dynamic has eroded margins in China’s shrinking ecommerce sector.
Shares of PDD have declined 16 percent in six months as growth slowed in China, the home market for its Pinduoduo grocery business. At 18 times forward earnings, they trade at a discount to global peers.
The problem for investors is that online ultra-fast fashion platforms compete primarily on speed and cheapness. Margins continue to be under pressure. Competitive advantage is momentary. Otherwise, Teemu and Sean would not be quarreling over suppliers.
Hear Lex deputy editor Ellen Moore talk to creators, companies and critics about the next era of social media in the FT’s new Tech Tonic Podcast Series,
