Shein and Temu linked to over 8 000 lost jobs in South Africa

As South Africa continues to battle the scourge of unemployment, a new report by the Localisation Support

Fund (LSF) has found that fast-growing Chinese online retailers Shein and Temu may have cost the country more than 8 000 potential jobs over the past five years.

The report examined the effect of offshore e-commerce retailers on South Africa’s clothing, textile, footwear, and leather (R-CTFL) industry.

“In 2024, Shein and Temu collectively achieved approximately R7.3 billion in sales, accounting for 3.6% of the total R-CTFL market and 37% of the sector’s e-commerce sales,” the report noted.

“This rapid growth has come at a notable cost to the local economy.

The estimated displacement is estimated to include R960 million in lost local manufacturing sales, 2 818 associated manufacturing jobs that may have materialised, and 5 282 unmaterialised retail jobs from 2020 to 2024”.

According to the report, this disruption is largely driven by Shein and Temu’s highly digitised and cost-efficient business models, which allow them to offer a wide variety of products at ultra-low prices that local retailers struggle to match.

“Their business models also leverage significant cost advantages through de minimis trade allowances, offshore manufacturing, low shipping costs, and data-driven consumer targeting,” the report notes.

“Despite growth in e-commerce penetration in South Africa – from 2.4% in 2015 to 9.9% in 2024 – local penetration remains significantly below the global average (35.6%) and those of comparator emerging markets such as Brazil and Vietnam.

“This indicates structural and logistical challenges, including limited last-mile delivery infrastructure and entrenched consumer habits favouring physical retail”

Earlier this year, in response to its growing popularity in the country, Temu also announced the launch of a local warehouse in South Africa with the move aimed at improving delivery times and offering a broader product range to South African consumers, however, critics have argued that move could further deepen its footprint in the local market.

In response to the report, Shein acknowledged its growing presence in the country and outlined its business approach.

“We are proud that millions of consumers around the world, including our large and growing customer base in South Africa, choose to shop with us because they recognise our focus on value and quality.

We are committed to building on this by empowering more local brands and creative talent to engage with Shein consumers around the world, as demonstrated by our recently-announced partnership with local South African brand, House of One,” the company told IOL.

The company also summarised its business model as “customer-driven” and “on-demand,” leveraging digital supply chain technology to adapt procurement decisions according to customer preferences and purchases.

“We operate a customer-driven, on-demand business model.

Instead of trying to forecast trends and customer demand, Shein leverages digital supply chain technology to adapt our procurement decisions according to our customers’ preferences and purchases.

This model is fundamentally different from traditional mass-production approaches, specifically in reducing excess inventory waste.

We believe our approach represents part of the solution by reducing overproduction and waste at the source, and maintaining affordability.”. – IOL Business

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