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South Africa’s Clothing Industry Under Siege from Shein and Temu’s Offshore Dominance

Offshore e-commerce platforms Shein and Temu have quickly captured a significant share of South Africa’s clothing, textile, footwear and leather market. Their growth, powered by low-cost international supply chains and aggressive digital models, has displaced local manufacturing sales and jobs.

By

12 August 2025

 5 minutes
Long Story, Cut Short
  • Shein and Temu jointly secured 37% of South Africa’s e-commerce clothing sales in 2024, worth approximately R7.3 billion.
  • The platforms’ rise resulted in about 8,100 potential jobs — 2,818 in manufacturing and 5,282 in retail — that did not materialise between 2020 and 2024.
  • South Africa’s e-commerce penetration stood at 9.9% in 2024, projected to reach 15.9% by 2030, still below global averages.
Shein and Temu reached a combined 3.6% share of South Africa’s total retail market within five years. This expansion pace far exceeds that achieved by international physical retail entrants.
Shein Overdrive Shein and Temu reached a combined 3.6% share of South Africa’s total retail market within five years. This expansion pace far exceeds that achieved by international physical retail entrants. Sisipho Skweyiya / Reuters

In just five years, Shein and Temu have reshaped South Africa’s retail textiles, clothing, leather and footwear (TCLF) sector. Their digitally driven, low-cost supply chains have allowed rapid product turnover and competitive pricing unmatched by many domestic retailers, says a new report.

  • This growth has shifted market share away from local players, with about R960 million in unmaterialised local manufacturing sales, limiting job creation and intensifying calls for policy action to ensure fairer trading conditions across the e-commerce landscape.
  • Combined, Shein and Temu represented 37% of South Africa’s e-commerce clothing sales in 2024, reflecting rapid consumer adoption and strong competitive pressure on local retailers.
  • Between 2020 and 2024, their expansion resulted in about 8,100 potential jobs — 2,818 in manufacturing and 5,282 in retail — that did not materialise.
  • The Offshore E-commerce Disruption in South Africa study, commissioned by the Localisation Support Fund and prepared by BMA, provides detailed analysis of their impact and was published in early 2025.

THE STUDY: The Offshore E-commerce Disruption in South Africa study investigated Shein and Temu’s competitive impact on South Africa’s TCLF sector. Drawing on verified datasets, global policy comparisons and operational model assessments, it quantified lost domestic manufacturing sales, uncreated jobs and regulatory shortcomings.

  • Findings also provide targeted recommendations to reinforce local production capacity, strengthen enforcement mechanisms, and improve competitive conditions in South Africa’s rapidly expanding e-commerce market.
  • Field research was conducted between February and May 2025, incorporating data validation with listed South African retailers and relevant industry associations.
  • Comparative policy examples came from Brazil, France, Türkiye, Vietnam, the United Kingdom, and selected insights from India and Indonesia.
  • Impact modelling utilised R-CTFL (retail clothing, textile, footwear and leather industry) Masterplan ratios, domestic sourcing percentages and market share data from multiple reputable industry information sources.

WHAT’S AT STAKE: Shein and Temu’s rapid expansion risks undermining South Africa’s domestic manufacturing base and retail employment. Their market dominance erodes local capacity, investment appetite and supply chain stability.

  • Without stricter enforcement of VAT and customs rules, alongside effective localisation measures, domestic firms face growing vulnerability. Sustained inaction could weaken South Africa’s industry resilience and long-term competitiveness in an increasingly globalised, digital-first retail landscape.
  • Offshore production, low-value import thresholds and logistical cost advantages enable aggressive pricing strategies that local manufacturers cannot easily match.
  • Challenges in enforcing existing policies reduce the intended impact of reforms aimed at supporting and protecting South African retail and manufacturing interests.
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WHAT THE DATA SHOWS: Shein and Temu reached a combined 3.6% share of South Africa’s total retail market within five years. This expansion pace far exceeds that achieved by international physical retail entrants, underscoring the disruptive force of offshore digital-first business models in transforming competitive dynamics across the country’s e-commerce sector.

  • In 2024, South Africa’s e-commerce penetration was below Brazil, Vietnam, Türkiye, France and the United Kingdom, according to comparative market data.
  • Shein’s strong presence in key clothing categories contributed significantly to its share of South Africa’s e-commerce market, as indicated by category-level revenue estimates in the study.
  • By 2030, penetration is projected to reach 15.9%, remaining well below the current global average of 35.6% cited in the study’s comparative analysis.
  • E-commerce growth in South Africa’s clothing sector between 2019 and 2024 was nearly four times faster than the overall sector’s compound annual growth rate.
  • Offshore platforms achieved strong market penetration without establishing local operations, instead leveraging cross-border logistics networks and centralised global inventory systems to serve South African consumers efficiently.

READING BETWEEN THE LINES: Shein and Temu’s business strategies reveal ambitions beyond offering low prices. Shein uses AI-driven demand forecasting to coordinate suppliers, minimise unsold stock and optimise replenishment. Temu’s bidding platform intensifies competition among suppliers, forcing prices down while retaining platform control. Both models capitalise on structural advantages in production and logistics, allowing rapid market entry and expansion in South Africa’s cost-sensitive e-commerce environment.

  • Shein’s decentralised supplier network uses small production runs to test products, scaling only items that achieve strong sales performance in target markets.
  • Temu leverages consumer data analytics to tailor marketing, refine product offerings and strengthen competitive advantages in online retail.
  • Strategic global logistics choices, including bulk shipments and optimised routing, help maintain low costs while meeting delivery time expectations for South African customers.
  • Both companies bypass traditional inventory risk by avoiding upfront bulk commitments, enabling continuous product rotation aligned with emerging trends and consumer feedback.
  • Data-driven decision-making underpins rapid market adaptation, allowing efficient scaling of successful items while quickly discontinuing underperforming products to preserve profitability and market relevance.

THE BIGGER PICTURE: South Africa’s modest e-commerce penetration in the TCLF industry reflects long-standing structural and operational constraints. Delivery infrastructure gaps, rural access challenges and consumer preference for physical shopping slow growth. Even with projected increases, the country will remain behind global benchmarks without significant investment in logistics, payment systems and supportive localisation policies that encourage domestic industry development while balancing consumer demand for variety, affordability and convenience.

  • Crime-related delivery disruptions and rural distribution costs deter last-mile service expansion, limiting e-commerce accessibility beyond major metropolitan areas.
  • South Africa’s established mall culture presents a persistent obstacle to accelerating consumer migration from physical retail to online shopping.
  • Limited digital payment adoption in some consumer segments constrains online retail growth, especially in lower-income and rural communities with restricted access to banking services.
  • Infrastructure investments, including warehouse modernisation and regional distribution hubs, are essential to reducing delivery times and improving competitiveness against offshore e-commerce platforms.
Offshore E-commerce Disruption in South Africa
Offshore E-commerce Disruption in South Africa
  • Authored by:

    BMA

  • Publisher: Localisation Support Fund
  • 57

  • The Localisation Support Fund NPC (“LSF”) was established as a non-profit company in 2021, funded by private sector contributors committed to localising manufacturing in South Africa. Established in 1997, BMA is an industrial development consulting firm passionate about building production-led economies.

Strategic recommendations

The report makes the following recommendations that focus on potential steps competing retailers and manufacturers in the South African market can take to enhance their competitiveness.

Integrate Data Across the Supply Chain
  • Retailers and manufacturers should digitally connect systems to enable mutual access to supplier capacity data and retailer demand insights for improved planning.
  • Using AI tools can match demand with production capacity, identify supply gaps, and support proactive product co-creation between manufacturers and retailers.
  • Successful integration requires trust, robust data security, and clear protocols, particularly where suppliers work with multiple retail partners.
Develop Critical Skills for Competitiveness
  • Competing with offshore e-retailers demands investment in data analytics, AI, and machine learning for predictive product development and supply chain transparency.
  • Shein and Temu’s success relies on strong product development, research-and-copy capabilities, and cost engineering expertise.
  • Building capacity in digital, product, and cost-focused skills will enable domestic firms to match offshore online platforms’ speed and adaptability.
Enhance Supplier Performance with Support
  • Retailers should set clear supplier KPIs, linking performance in areas like speed or quality to tangible benefits and business incentives.
  • High-performing suppliers could access better payment terms, larger orders, or targeted support for equipment and process upgrades.
  • Aligning supplier performance with retailer success criteria creates motivation and ensures operations support competitive advantages in speed, cost, or quality.
Leverage Retail Scale for Suppliers
  • Retailers can centralise raw material sourcing to reduce costs, improve material quality consistency, and enhance sustainability through traceability and auditing.
  • Using scale, retailers can negotiate favourable financing terms or purchase materials for suppliers, improving liquidity and easing financial strain.
  • Manufacturers benefit from simplified sourcing, reduced lead times, and economies of scale by aligning processes with centralised material specifications.
 
 
  • Dated posted: 12 August 2025
  • Last modified: 12 August 2025
 
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