Shein’s recent performance points to potential challenges for PDD Holdings’ Temu. The planned removal of the de minimis exemption for small parcels in the United States and European Union could significantly raise costs, weakening the direct-from-China model Temu has relied on.
The changes, together with rising fulfillment costs and tariffs, are reducing the viability of Temu’s cross-border strategy. Temu may need to shift toward a more asset-heavy model, including localizing its supply chain. That shift could compress margins and weigh on PDD’s growth outlook and valuation.