Shein and Temu Face Major Crackdown with New Shipping Rules | Pivot

Kara Swisher and Scott Galloway discuss new shipping rules that will prevent Shein, Temu, and Alibaba from exploiting a longstanding trade law. What impact will the new rules have on fast fashion brands? And will the playing field be leveled? Subscribe to Pivot on Apple Podcasts: https://podcasts.apple.com/us/podcast/pivot/id1073226719 Subscribe to Pivot on Spotify: https://open.spotify.com/show/4MU3RFGELZxPT9XHVwTNPR Follow us on Instagram and Threads at: https://www.instagram.com/pivotpodcastofficial Follow us on TikTok: https://www.tiktok.com/@PIVOTPODCAST Send us your questions by calling us at 855-51-PIVOT, or at https://podcasts.voxmedia.com/show/pivot #pivot #podcast #shein #temu #fastfashion #trade #onlineshopping

Kara SwisherhostScott Gallowayhost

Sep 16, 20243mWatch on YouTube ↗

WHAT IT’S REALLY ABOUT

Biden Targets Shein, Temu Loophole As Software-Driven Retail Dominates

The episode discusses new Biden Administration shipping rules aimed at closing a duty-free loophole heavily used by Shein, Temu, and other Chinese platforms. These companies have avoided import taxes that traditional retailers like Gap and H&M pay, creating a major cost advantage. Scott Galloway, a Shein investor, concedes the loophole should be closed or duties removed for everyone, even though it will only minimally impact Shein’s growth. The conversation emphasizes that Shein’s real advantage is its asset-light, AI-driven business model, which is disrupting legacy retailers regardless of tariff policy.

IDEAS WORTH REMEMBERING

5 ideas

Closing the de minimis loophole is economically fair, but politically costly.

Shein and Temu currently pay no import duties on many shipments while competitors like Gap pay hundreds of millions; fixing this levels the playing field but will likely raise prices for U.S. consumers.

Shein’s core advantage is software, not tax arbitrage.

Even if tariffs are imposed, Shein’s AI-driven demand prediction and routing, plus an asset-light structure, will preserve most of its cost and speed advantage over legacy retailers.

Asset-light, AI-native companies are capturing outsized market value.

Over the past two decades, firms that outsource physical assets and concentrate on software and data have added tens of billions in market cap; Shein fits this pattern and is rapidly overtaking apparel incumbents.

Real-time demand forecasting reduces waste and returns, enabling lower prices.

By using AI to predict exactly how many units of specific items will sell and where, Shein minimizes overproduction and logistics inefficiencies, allowing it to undercut brands like Zara.

Legacy retailers are constrained by outdated, asset-heavy models.

Traditional players own factories, warehouses, stores, and inventory-heavy supply chains, which limit agility and keep costs high compared to software-centered platforms.

WORDS WORTH SAVING

5 quotes

They are taking advantage, as companies do, of a loophole, and what I would like to see is these taxes done away for everybody.

— Scott Galloway

I think this is hard to argue that this shouldn’t be closed or they shouldn’t get rid of the taxes or the import duties on the other brands.

— Scott Galloway

The really amazing thing, and the reason why I invested in Shein… they don’t own a single factory, a single truck, a single plane, a single warehouse or a single store.

— Scott Galloway

It’s what Zara did to everybody else, these guys are doing to Zara, and it’s all with software.

— Scott Galloway

They deserve to pay the tax. Sorry. Sorry, companies. You have to pay the tax.

— Kara Swisher

Biden Administration’s proposed changes to low-value shipment (de minimis) rulesShein and Temu’s use of a duty-free import loopholeTax and tariff burdens on traditional retailers versus Chinese e-commerce playersShein’s asset-light, AI-driven supply chain and demand forecastingCompetitive disadvantage of legacy retail business models (Gap, H&M, Walmart, Zara)The limited impact of new tariffs on Shein and Temu’s growth trajectoryTechnology and software as the core driver of modern retail dominance

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