Chinese-Owned Rival to Shein Makes Splashy Super Bowl Debut
Comment of the Day

February 13 2023

Commentary by Eoin Treacy

Chinese-Owned Rival to Shein Makes Splashy Super Bowl Debut

This article from Bloomberg may be of interest. Here is a section: 

PDD Holdings Inc.’s service, which like Shein has gained a reputation for cut-rate pricing and fast delivery, ran two 30-second spots featuring a trendy shopper twirling and dancing to phrases like “Cha-ching! I feel so rich, oh yeah.” PDD, formerly known as Pinduoduo, said it’s also giving away a total of $10 million to users via online sweepstakes.

Temu launched in September and rapidly scaled Apple’s US app store. It’s now considered a serious competitor to Shein, the fast-fashion phenomenon that’s also fired up American shoppers. But PDD, which plans to launch Temu in Canada as soon as this month, offers a broader range of goods from pet supplies to groceries. 

Eoin Treacy's view

A decade ago I was impressed by the speed with which China’s fast fashion domestic brands could get new inventory into stores every day. Inditex is coming close to approximating that pace today but it is heavily reliant on the integrity of the global supply chain.

Amazon campaigned heavily in China to have companies list directly on international marketplaces. The result is half of all sellers on the platform are now operating directly from China. That process educated companies to the potential of international markets. It solved the excess supply issue many factories were experiencing.

Significant capital is now being devoted to capturing market share on the bet price beats convenience. Amazon is more expensive but delivers quickly. Chinese companies are cheap but delivery takes time. Amazon is closing distribution centres and today announced an auction system for additional storage at its warehouses. That also suggests there are going to be empty distribution centres which Amazon has abandoned and are open for well-heeled competition to try and carve a niche.
PDD remains in a consistent uptrend following the completion of its base formation in early December.
Amazon needs to at least sustain a move above the 200-day MA to begin to signal a return to demand dominance and check the downtrend.
Inditex has been ranging with a downward bias for six years. It is now short-term overbought and approaching the sequence of lower rally highs. A sustained move above €32.50 will be required to confirm a return to medium-term demand dominance.

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