What: Chinese e-commerce giants Shein and Temu have captured 3.6% of South Africa's retail clothing market and 37.1% of e-commerce fashion sales, surpassing traditional international retailers' market share in just five years.

Why it is important: This unprecedented market penetration demonstrates how digital-first retailers can rapidly disrupt established retail hierarchies in emerging markets, challenging both local and international competitors through aggressive pricing and strategic marketing.

Shein and Temu have achieved remarkable success in South Africa's retail, clothing, textile, footwear and leather (CTFL) market, generating 7.3 billion rand (US$405 million) in sales in 2024. Their combined 3.6% market share matches and exceeds that of established international brick-and-mortar brands like H&M, Zara, and Cotton On, who collectively hold 3.4% after 13 years of presence. This rapid ascent has particularly impacted domestic retailers, whose market share has declined from 75.3% in 2011 to 74% in 2024. The companies' success stems from aggressive pricing strategies and strategic marketing, though their initial advantage through tax loopholes was curtailed by regulatory intervention last year. Their dominance is particularly evident in the e-commerce sector, where they command 37.1% of South Africa's online CTFL market, with Shein alone accounting for 28% of online ladies' CTFL sales. This swift market capture demonstrates the transformative power of digital-first retail strategies in emerging markets.

IADS Notes: The rapid market capture by Shein and Temu in South Africa mirrors broader global trends in retail transformation throughout 2024-25. Their combined 3.6% market share achievement parallels similar success in other markets, such as France, where Shein alone captured 23 million customers. However, this growth model faces mounting challenges, as evidenced by Trump's elimination of the $800 duty-free threshold in the US, which led to a 51% drop in Temu's monthly active users :cite[duj]. The impact of regulatory changes on market dynamics is further demonstrated by similar interventions in Vietnam :cite[drk] and the EU's consideration of new fees on small packages. While e-commerce continues to evolve, with notable shifts in consumer behavior and spending patterns, companies are adapting through strategic partnerships, as seen with Shein's collaboration with Reliance Retail in India. The South African experience particularly highlights how digital-first retailers can rapidly disrupt established markets, though recent global developments suggest this model may face increasing scrutiny and regulation.

Shein and Temu outpace global retail giants in South Africa’s fashion market