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Shein made major headlines this week filing IPO paperwork with U.S. regulators setting up what is likely one of the largest U.S. listings in the past decade. The fast fashion giant has quickly dominated the Western fashion markets with its inexpensive products and best-in-class supply chain sourcing products directly from Chinese manufacturers. However, what is getting less publicity is the company’s war with Temu which involves lawsuits and dirty tactics to win market share. It all started in December when Shein sued Temu for IP infringement accusing Temu of misleading consumers into thinking they were the same brand by selling products with the word “Shein” in search ads. Shein also claimed that Temu is behind three fake X accounts using names like “Shein_USA” with links to Temu’s app and website. Temu has responded by filing its own complaint with the District Court of Massachusetts accusing Shein of forcing its suppliers into exclusivity agreements, so they won’t work with Temu. If these suppliers break an exclusivity agreement, they could face fines from Shein and public backlash from the company. This tactic according to Temu has led to 10,000 products being pulled from the platform with Temu struggling to replace these suppliers since only a handful of manufacturers can keep up with the fast turnaround speeds required by these companies. Prior to Temu entering the space Shein was soaring growing its U.S. fast fashion market share from just 12% in January 2020 to 50% by November 2022 surpassing well-known competitors such as H&M, Zara, ASOS, and Forever 21. Now Shein is facing its first major challenge from Temu who has replicated the Shein model and is marketing themselves as an even cheaper alternative to Shein. Temu’s app downloads have soared 57% in 2023 topping rankings on all major app stores as heavy investments in online ads have built strong brand awareness and increased their online traffic. As far as we know Temu has successfully replicated the Shein business model of extremely low prices utilizing the same manufacturing/distribution model as their rival. Temu is owned and operated by Chinese e-commerce giant PDD Holdings giving the platform nearly infinite resources to compete with Shein both for market share and resolving legal battles. The war between these two low-cost producers will likely drive more aggressive promotions resulting in lower prices pushing struggling Western brands closer to extinction.

A recent study of more than 2 million people’s internet usage found no evidence of harm to mental health from activities such as browsing social media and gaming. This study conducted by researchers from the Oxford Internet Institute could not find any evidence to support the popular idea that certain users are more at risk from internet usage or that mobile apps can cause depression and anxiety. This data has been prefaced by the Institute as “incomplete” with additional data required by the internet companies who run these online platforms to establish a causal connection. The Institute’s paper Global Well-Being and Mental Health in the Internet Age was published Tuesday and studied the psychological well-being of 2.4 million people aged 15 to 89 across 168 countries between 2005 and 2022. They contrasted this data with the growth in internet subscriptions over that time as well as tracking associations between mental health and internet adoption in 202 countries from 2000-2019. The results of the study showed no support for the idea that smartphones or internet access are actively promoting or harming mental health globally. The study did report there is “some evidence” of greater associations of mental health problems and technology in younger demographics but this evidence appeared small in magnitude. This study goes against the overwhelming body of research in recent years that has connected things such as anxiety and depression to the smartphone era and social media. Andrew Przbylski a researcher and professor at the institute says that previous studies have focused on English-speaking countries despite 90% of young people living outside North America and Europe. This study presents an interesting perspective that the current mental health crisis in the U.S. could be caused by a multitude of factors rather than just technology usage. In the current landscape in which lawmakers continue to push for technology regulation studies like this one are necessary to help distinguish fact from popular belief in creating fair technology laws that do not overly punish companies and consumers.

Start-ups that raised billions during the pandemic to buy independent brands on Amazon are in survival mode with companies in discussions about possible deals to help strengthen their balance sheet. These startups raised more than $16B as the pandemic drove consumer spending. To take advantage of this boon these startups started acquiring independent Amazon brands at ludicrous prices looking to expand their product portfolio on the largest e-commerce platform. Today, the strategy is backfiring with some of these companies breaching lending covenants, others looking to become profitable through scale, and many concerned about rising interest rates and the macro environment. The sector is in flux and is attracting investors who are looking to snap up popular brands at great prices. Many of these aggregators entered during the peak of the pandemic fighting to purchase independent brands. Now they are working together on potential mergers or asset sales in a bid for survival. The merger of these aggregators is extremely complex due to their vast product portfolios and numerous equity and debt stakeholders which may hold out for more favorable terms. Despite the complexity these mergers are being pushed by lenders and management as bankruptcy looms for many of these aggregators if they are unable to make the necessary deals to rework their balance sheet. Some aggregators such as Negotiatore have decided to sell all their individual assets to buyers looking to get popular individual brands at a major discount. Like many other sectors, the pandemic brought great fortune but it turned out to be fool’s gold with many ambitious companies likely exiting the market after poor decision-making on the back of unsustainable tailwinds.