Sensor Tower: daily US users of PDD Holdings' Temu fell 58% in May; the US closed the “de minimis” loophole on May 2, and Temu then slashed its US ad spending
Context & Ripple Effects
Temu’s US expansion had relied on heavy customer acquisition despite earlier reporting that the platform was losing money per order. The policy change coincided with a sharp reduction in Temu’s US digital advertising, making the user decline a measure of how exposed that acquisition model was to cross-border shipping rules.
Subsequent Sensor Tower coverage showed the weakness extended beyond a brief daily-use reading: Temu’s monthly US audience fell sharply through June, while Shein’s decline was materially smaller. That contrast matters because both companies faced the same broad policy environment.
First-order effects
- Temu’s US reach and near-term funnel weaken as daily active users fell 58% in May after it cut advertising following the de minimis closure.
- PDD must operate Temu’s US customer acquisition with less promotional support and under a shipping regime that no longer offers the prior exemption.
Second-order effects
- Shein and other cross-border value retailers face the same cost and logistics disruption, but the reported smaller decline in Shein’s daily users suggests the immediate impact is uneven across platforms.
- Reduced Temu ad buying can lower competitive pressure in US digital advertising auctions, while merchants dependent on Temu’s US demand face a smaller customer pool.
Third-order effects
- If the pattern persists, cross-border marketplaces will need to compete less on ultra-low prices enabled by direct small-parcel imports and more on fulfillment, merchant economics, and repeat demand.
- The episode points to trade-policy changes becoming a durable determinant of marketplace scale in the US, potentially favoring platforms with more adaptable local supply and delivery operations.
The trend: The broader trend is that regulatory changes to cross-border commerce are reshaping the growth economics of discount marketplaces that built scale through direct-to-consumer imports.