The news: US sales at Temu and Shein dropped precipitously after both marketplaces raised prices, according to an analysis of credit and debit card data by Bloomberg Second Measure.

• Shein’s sales slid 23% during the week of April 25 to May 1 compared with the prior seven days.
• Temu saw a smaller but still sizable drop of 17% for the period.

Why it matters: While the data may be slightly distorted by shoppers panic-buying in the weeks leading up to the price hikes, it is nevertheless a bright red flag for the two companies as they struggle to find a model that works in the US.

• The noticeable decline likely influenced Temu’s decision to pivot to a local fulfillment model, selling goods only from domestic sellers, a move that helps it avoid hiking prices (and raising shoppers’ hackles with tariff-related fees at checkout).
• The sales drop could also hasten Shein’s attempts to shift production away from China, although doing so could come at the expense of the supply chain flexibility that has been key to the retailer’s fast-fashion dominance.

Our take: Even with the impact of tariffs factored in, Temu and Shein have a price advantage over competitors. But that may not be immediately evident to consumers, since the two platforms have been repeatedly singled out as victims of President Donald Trump’s reciprocal tariffs and the end of de minimis. It doesn’t help that both companies have cut back sharply on US digital ad spending, giving them fewer opportunities to plead their case to shoppers.

With their US prospects dimming, it’s no surprise that Shein and Temu are looking to friendlier markets to make up for the losses. Both companies are increasing ad spend in Europe, especially in the UK and France—although such relief may be short-lived, given that both countries are also considering crackdowns on de minimis imports.