Shein and Temu are shaking up the American express delivery industry

The rapid rise of Chinese e-commerce giants Shein and Temu in the US market has not only changed the shopping habits of American consumers but also brought unprecedented opportunities and challenges to the American logistics industry.

According to reports, the two cross-border e-commerce companies send over 1 million packages to American consumers every day, creating a huge market demand for logistics service providers and driving innovation and transformation in the entire industry.

New companies rising with the help of Chinese cross-border e-commerce

To meet the growing delivery demands of Shein and Temu, a group of logistics startups have emerged.

Take Hailify, founded in 2017, for example. Initially an application for ride-hailing drivers to manage work across multiple platforms, Hailify successfully transformed into a parcel delivery company to seize the opportunities brought by the emerging e-commerce market. Today, Hailify has become a key link connecting Chinese sellers and American consumers.

In addition to Hailify, many other startups have found their positions in this wave:

PiggyExpress, established in 2021, mainly serves Temu. The company adopts a flexible operating model, using temporary locations such as parking lots as pickup points for drivers to keep operating costs low.

Based in Vancouver, Canada, UniUni has raised over $100 million since its establishment in 2019, with its rapid growth largely attributed to orders from Shein and Temu.

Established in 2022, GOFO Express quickly became the primary last-mile delivery service provider for Temu in the US.

Also founded in 2022, SpeedX, currently receives 60% of its business volume from international retailers like Shein and Temu, providing the foundation for the company to expand into new markets.

The success of these startups lies in their widespread adoption of a light-asset model, relying on temporary workers and flexible temporary locations to maintain low operating costs. This model enables them to quickly adapt to changing market demands and compete on pricing with traditional logistics giants. However, this model also brings some potential risks, such as unstable service quality and issues related to employee rights protection.

Traditional logistics giants actively seeking change

Faced with the opportunities brought by emerging e-commerce, traditional logistics giants are also actively positioning themselves.

The United States Postal Service (USPS) is currently Shein's main delivery partner in the US, providing Shein with discounts of up to 70%. This significant discount reflects USPS's aggressiveness in the parcel delivery business and demonstrates Shein's bargaining power as a major customer.

As the fourth-largest courier company in the US, OnTrac is actively expanding its national business, with Shein and Temu being among its largest customers. This collaboration not only brings substantial business volume to OnTrac but also provides valuable experience in its competition with giants like UPS and FedEx UPS, on the other hand, has adopted a different strategy by providing return services for Shein through its subsidiary Happy Returns. David Sobie, CEO of Happy Returns, revealed to the media that Shein has become one of its top five revenue-generating clients. In addition, UPS is also in talks with Temu for potential return service cooperation. This focused strategy on specific segments allows UPS to find its niche market in intense competition.

Price Wars in the Express Delivery Industry in the United States

Despite bringing significant opportunities to the U.S. logistics industry, Shein and Temu also face various challenges.

Firstly, there is price pressure. These two companies are known for their tough price negotiation strategies, which may squeeze the profit margins of logistics service providers. Reports indicate that Shein has secured contracts with USPS with discounts of up to 70%, which not only affects large logistics companies but also poses a severe challenge to profit-challenged startups.

Secondly, as consumer demands for delivery efficiency increase, relying solely on low prices is no longer sufficient to win orders. Part of the success of Shein and Temu in the U.S. market is attributed to consumers willing to accept longer delivery times in exchange for lower prices.

However, recent trends indicate that accuracy and on-time delivery rates are becoming increasingly important factors for these companies when choosing logistics partners. According to reports, Temu is even considering shifting towards using major carriers like FedEx to reduce customer complaints about delivery delays and errors.

Lastly, over-reliance on a single customer may lead to business instability. Many emerging logistics startups have placed most of their bets on Shein and Temu, and while this strategy can create rapid business growth in the short term, it may pose potential risks in the long run. If these e-commerce giants change their strategies or encounter market fluctuations, logistics companies relying on them may suffer significant setbacks.

For startups, striking a balance between maintaining flexibility and establishing a sustainable business model will be crucial. They need to find a balance between service quality and cost control, actively expand their customer base, and reduce reliance on a single customer