 |
|
|
|||||
Activists have decried Shein for years, calling out its devastating impact on the environment and exploitation of workers. But with a stroke of his pen, President Donald Trump appears to have upended Sheins business model, making it harder for the Chinese fast-fashion brand to keep selling clothes at rock-bottom prices. During the pandemic, Shein and online marketplace Temu exploded in popularity in the United States. Both companies manufacture low-quality goods in Chinese factories using cheap labor, then sell them to American consumers at extremely low prices. But Shein and Temu also had a distinct advantage over their competition. While American companies like Gap ship large quantities of inventory from overseas factories into U.S. warehousespaying all the requisite taxes and tariffsthese Chinese companies ship products directly from factories to consumers’ houses. This allows them to take advantage of an obscure loophole in the U.S. tax code called de minimis, which allows packages containing less than $800 of merchandise to ship duty-free. In 2022, Shein and Temu paid $0 in import taxes, whereas Gap paid $700 million and H&M paid $205 million. American and European brands pass their costs on to customers in the form of higher-priced goods, which has sent many shoppers looking for deals elsewhere. This was their basic advantage, says Kinshuk Jerath, a Columbia Business School professor. [Shein and Temu] built their entire business model on de minimis. This week, that competitive advantage vanished, as Trump imposed a 10% tariff on all goods imported from China and also ended the de minimus tax exemption. Given how quickly these tariffs were rolled out, there’s a lack of clarity about exactly how much companies will have to pay. Logistics agents who import goods to the U.S. are already asking vendors to pay an extra 30% on the retail price of goods shipped from Hong Kong and China. Depending on the actual tariffs U.S. Customs imposes, these agents will either return part of that fee or seek additional payments. Experts say Shein and Temu will have to raise their prices in response. And since these companies’ main selling point is their low prices, consumers may be less inclined to shop with them. This, in turn, could shake up the retail landscape in the U.S. Garment packages at a textile factory that supplies clothes to fast-fashion e-commerce company Shein in Guangzhou, China [Photo: Jade Gao/AFP/Getty Images] Could Shein and Temu find a way keep costs down? While many were taken aback by how quickly Trump abolished the de minimus exemption, lawmakers from both parties have been trying to get rid of the loophole for several years. The rule first came about in 1930, when most small-value packages were sent between individuals, and the government didnt think it was worth the administrative cost for the tax revenue it would collect. In 2016, the exemption limit was raised from $200 worth of goods to $800, to further reduce the administrative burden. But then Shein and Temu entered the scene. They were almost single-handedly responsible for increasing the number of such shipments from 140 million in 2014 to 1 billion in 2023. Many experts believe that Shein and Temu will have no choice but to raise their prices. These companies have already found ways to slash costs throughout the supply chain, leaving little room for cuts elsewhere. Shein has been accused of exploiting workers, forcing them into 17-hour shifts to make hundreds of garments a day at a base salary of $20, which would then be slashed by $14 if they made any mistakes. While it is possible for Shein and Temu to absorb the cost of these taxes for a short time, Jerath doesn’t believe thats a viable long-term strategy. These companies do have big pockets, he says. But they will not be able to absorb costs indefinitely while keeping the company profitable. And the question is, if you have to keep selling at a loss forever, at what point is the business model no longer successful? Giacomo Santangelo, senior economics lecturer at Fordham University, says American companies like Amazon and Uber were willing to take a loss for some time in order to put their competitors out of business. This strategy won’t work for Shein and Temu because there’s no chance they will be able to successfully wipe out their competitors, he says. [Photo: Nikos Pekiaridis/NurPhoto/Getty Images] Shaking Up Consumer Preferences Forcing Shein and Temu to pay taxes levels the playing field for other brands. But perhaps more important, it changes the market, says Itamar Zur, CEO of Veho, a shipping company that serves brands like Macy’s, Sephora, and Stitch Fix. With these ultracheap Chinese players on the market, many brands felt forced to compete on price. But as prices even out, brands can start competing across other dimensions, like the speed of delivery and quality. Shipping products from China took seven to ten days, but consumers were willing to wait to get their products at such low prices, Zur says. But if it costs the same or just a little more to buy from a U.S. brand that can ship the products in two days, many consumers might opt for the U.S. brand. Shein does have some warehouse spce in the U.S. that allows it to ship products faster. It has already started driving American customers to buy products shipped locally by prioritizing these items in search results. Zur says that Shein may shift more of its inventory to U.S. warehouses, but this would effectively upend its business model. Until now, Shein has made products on demand based on consumer preferences. It adds 2,000 to 10,000 new items to its website every day, and mass-produces only the items that consumers seem to like. But if the company chooses to warehouse clothes in the U.S., it will need to predict what consumers will want to buy weeks in advance and send that inventory over. And, of course, this inventory would be taxed. Brands might also start to compete on the make and longevity of a product, Zur says. Shein and Temu are known for selling very low-quality products, and if they raise their prices, consumers may opt to shop for items that are more durable. As a consumer, your entire calculation changes when these ultralow prices are off the table, he says. If you’re going to spend more money, you might not want your T-shirt or dress to be disposable. In fact, you might choose to spend a few dollars more for a shirt you can wear for years. While Trump’s tariffs have the capacity to transform the market and consumer behavior, Fordhams Santangelo warns that things are changing quickly and its still possible that the administration will reverse its decisions. Trump was going to impose a 25% tariff on Mexico and Canada on Tuesday, but decided to postpone for 30 days; its unclear whether those tariffs will eventually take effect. It’s a very fluid situation, Santangelo says. We can’t really make predictions because everything might change again overnight.
Category:
E-Commerce
Imagine youre an academic researcher. Youre writing a pitch for funding to the National Science Foundation (NSF), the independent agency of the federal government that funds projects designed to advance our understanding of the world. But you cant use the words excluded, historically, socioeconomic, systemic, or women. Go. Thats the quandary that researchers across the country find themselves in thanks to a misguided attempt to try to eliminate what President Donald Trump and lackey Elon Musk would likely describe as woke research. The Trump administrations drive to tamp down studies that promote an agenda pushing diversity, equity, and inclusion (DEI) involves hitting small nails with very big, very blunt hammers, with all ongoing and future research projects reportedly being analyzed to see whether they contain any number of newly forbidden words. Among them are terms that Trump and others might dislike, such as diversity, inequities, or multicultural. But there are also words that almost certainly get caught in the dragnet inadvertently, including women and historically. The mood is pretty glum here, says one academic, granted anonymity because of a fear of reprisals. While my work has implications for DEI, its not explicitly DEI in writing. For academics who do work in this space, its a death knell. It really seems like a huge mess, says a second academic researcher, also granted anonymity to be able to speak over fear of reprisals or their research being targeted as a result of speaking out. The list is long and vague enough that all kinds of research will potentially be harmed. Everything from biomedical research to engineering to research in the social sciences. That researcher says they believe the guidelines have been drawn vaguely by design, not an accident, in order to give the governmentthrough the NSFenough leeway to block anything they want to. The Institute of Electrical and Electronics Engineers, the worlds largest technical professional organization for tech research in academia, declined to comment for this story. ACM supports technology research in a wide array of areas and understands that priorities for funding of research can shift for a variety of reasons, Jody Westby, vice chair of the Association for Computing Machinerys US Technology Policy Committee, wrote in a statement to Fast Company. ACM hopes, when this happens, that funding from other sources also shifts to fill gaps so needed research can continue. Researchers will still likely pursue their work under the current administration, even if the NSFs list of forbidden words stymies them. It just means they may have to take a page out of the book of online content creators, and understand how to deploy algospeakor the rephrasing of words in order to avoid blocks put in place by online platforms, most commonly found on social media. There have been many examples of researchers using different terms to try to get their work funded by different organizations, particularly private philanthropic foundations which often have an only slightly hidden political or ideological alignment, the anonymous researcher says. Euphemistically referring to subjects that might otherwise be seen as sensitive using a crude check of content in order to evade censorship could well be a path that researchers have to follow, fears Carolina Are, a researcher at the Center for Digital Citizens at Northumbria University. Are has studied platform censorship and how rank-and-file users avoid its clutches. With the broligarchs in power greatly affecting and influencing the way the U.S. is run, bolstered by Trumps politics, [what content creators had to do] is being broadened out to research. It’s possible to use doublespeak or euphemism to dance around contentious phrasing, Are explainsbut it does significantly impact the ability to disseminate that content, and finding work-arounds taxes thinking that could otherwise be put to the broader problem that needs addressing. Are also worries that researchers will end up in a cat-and-mouse game with the NSF in the same way that creators are, where terms and words that are being used euphemistically are added to block lists and the effect is nullified, meaning people have to find new ways of subverting barriers. Its not a long-term solution for people, she says. One of the researchers Fast Company spoke to is more pessimistic than that. Im not sure were going to see people successfully using different terms for the banned research terms because when you cant even use words like female or systemic, theres not really a way to get around that, they say. All biomedical research that looks at more than men is potentially out of bounds, and thats by design.
Category:
E-Commerce
This week, skincare brand Kiehl’s debuted a hairy new font, Starbucks continued to roll out its feel-good nostalgia marketing, and an iconic 80s soda was revived for the year 2025. Here’s all the branding news we’re keeping up with. [Image: Kiehl’s] Kiehl’s gets in on the custom type craze The news: The skincare brand Kiehls just unveiled a new custom font made from an unexpected material: pubic hair. Big picture: The font comes as a response to the backlash that Kiehls received in August for an ad campaign for a new product line targeting ingrown pubic hairs. Those initial ads featured fully covered models with just a glimpse of hair peeking out from the sides of their underwear. But several stores censored or removed the campaign after public criticism. We were taken aback, Steven Waldberg, SVP of brand engagement and communications for Kiehls, told MediaPost. Its not like we were showing peoples genitalia or anything. Now Kiehls is hitting back at the haters with a fuzzy custom font made entirely out of pubic hair. The new print ads, which have taken humans out of the equation altogether, feature sarcastic statements like, Apologies, we wont ever show pubic hair again, and Our photos of models with pubic hair were censored so we removed the models. Why it matters: Weve seen plenty of custom brand fonts latelyfrom the Other Hand font for Cheetos to Kellogg’s logo-centric fontbut we have to hand it to Kiehls, this one might be the most outside-the-box yet. Its not exactly a versatile typeface, but it’s nice to see Kiehls refusing to back down from a challenge. [Illustration: FC] Back-to-basics strategy at Starbucks The news: Starbucks is making a wide-sweeping effort to return to its branding roots, and it seems to be paying off. Big picture: Since CEO Brian Niccols joined the company last September, the brand has been slowly working to incorporate the personal touches that were once its signature, like handwritten names on to-go cups, a free milk station, and an overall focus on craft. The back-to-basics concept at Starbucks has been gradually appearing in a larger campaign this year, with several new ads highlighting the coffee-making process and out-of-home billboards featuring a handwritten look. In an interview with the podcast Rapid Response, Niccols said of the changes, Were in the customer service business, and anybody thats been involved with that knows the details do matter. And the reason why the details really matter for Starbucks is, frankly, those details are our point of difference. Its how we get to another level of connection. Why it matters: The market seems to be responding positively to the changes so far, considering that Starbucks recently beat Wall Streets fourth-quarter earnings expectations with $9.4 billion in revenue. The irony in all of this feel-good messaging is that Starbucks has recently taken the much-criticized step of barring noncustomers from using its restrooms, seating, and patio space. In a column for Fast Company, writer Rob Walker argued that the new code of conduct is really just a de facto admission of what its brand is really about: The coffee giant is not really in the community space business at all. Its a luxury brand, and it has been all along.” [Photo: Suja Life] Sodas new lease on life The news: For the second time in two months, an iconic soda of the 1980s is getting a new lease on life with a revival designed to attract a new era of soda drinkers. Big picture: Slice soda, first launched in 1984 by PepsiCo, is set to return to shelves under the ownership of juice brand Suja Life. To tap into the wellness movement and functional beverage craze, todays Slice will have low sugar, no high-fructose corn syrup, and plenty of gut-healthy prebiotics, probiotics, and postbiotics in a variety of flavors, includig orange, lemon lime, classic cola, grapefruit spritz, grape, and strawberry. Why it matters: Slices return is part of a larger industry trend. Just last month, energy drink company Redcon1 announced it would be bringing back the infamous Jolt Cola from the 80s with a new functional twist. However, as Fast Company noted at the time, the new branding is pretty lackluster. Slice, on the other hand, looks just as cool as it did back in 1984. Suja Life has clearly based its new look on the OG design (rather than the clunkier 90s version), including a typeface thats literally sliced at the bottom, fruity icons dotting each i, and a diagonal label. The design has also been updated for the 21st century with brighter can colors and a trendier secondary font. While Slice certainly looks pretty, its staying power is questionable at best. The brand has already been revived several times, including as a failed sparkling water in 2018, swiftly followed by a failed low-cal soda in 2021. It remains to be seen whether Slices new branding aesthetic will be enough to keep it afloat this go-round. [Photo: Kellanova] Snacking goes cold The news: Eggos and Rice Krispies Treats are getting a frosty glow-up. Big picture: The snack company Kellanova is partnering with Gold West Food Group to turn some of its most popular brands into ice cream treats. On the Eggo side, fans can expect pints of Buttery Maple, Chocolatey Chip, and Blueberry ice cream, as well as waffle sandwiches of those three flavors. For Rice Krispies fanatics, there will be a pint of original flavor ice cream (we can only assume this tastes like the treats themselves), as well as original, strawberry, and triple-chocolate ice cream sandwiches made with Rice Krispies Treats as the sandwich bun. Why it matters: Kellanovas new dessert play comes after a major shake-up in the companys ownership. Back in August, Kellanovawhich also owns Kelloggs (and its three subcompanies), Pop-Tarts, Pringles, and morewas acquired for a whopping $39.5 billion by Mars, owner of M&Ms. At the time, Andrew Clarke, global president of Mars Snacking, told Fast Company that expanding the companys snacking portfolio would be a major priority post-acquisitionand it looks like that starts in the freezer aisle.
Category:
E-Commerce
All news |
||||||||||||||||||
|
||||||||||||||||||