E-com player Temu sues Shein for ‘Mafia-style’ intimidation of merchants

SAN FRANCISCO: Growing e-commerce marketplace Temu has sued its rival Shein, alleging that the online shopping giant is using "Mafia-style" intimidation tactics on merchants.

In the lawsuit filed in the US, Temu alleged that Shein deployed increasingly aggressive strategies to “illegally interfere with Temu’s business.”

“Shein chokes the ultra-fast-fashion suppliers with exclusivity requirements and mafia-style intimidation and detention scare tactics against suppliers who dare to sell to Temu, including false imprisonment and seizure of cell phones during meetings Shein calls on false pretenses,” read the lawsuit.

Shein also “coerces suppliers into blanket transfers of their IP rights to Shein as part of the Exclusive-Dealing Agreements,” Temu claimed.

The lawsuit comes as Shein prepares to go public in 2024.

According to the lawsuit, Shein has gone so far as to falsely imprison merchants doing business with Temu, including “detaining merchant representatives in Shein’s offices for many hours while Shein confiscates the merchants’ electronic devices, obtains access to proprietary Temu information through the merchants’ seller accounts, and threatens the merchants with penalties for doing business with Temu”.

The two companies have previously filed suits against one another.

Temu earlier accused Shein of bullying manufacturers to try to stop them from working with the marketplace.

In another case, Shein accused Temu of instructing influencers to make “false and deceptive statements” against Shein while promoting Temu.

Both lawsuits were dropped in October this year.

Following its pandemic-related boost, Shein reportedly was valued at over $100 billion as of early 2022.

Following the US entry of Temu, however, Shein’s valuation reportedly fell by over $30 billion, so “Shein hatched a desperate plan to eliminate the competitive threat posed by Temu”, according to the lawsuit.