Sales have declined by between 15% and 30%, according to vendors surveyed in Ecuador. The textile sector explains the situation.
A week ago the international casual clothing chain Forever 21 filed for bankruptcy in the United States, facing competition from foreign fast fashion groups, according to a statement, and co-head of restructuring Stephen Coulombe was more specific in mentioning Shein and Temu.
It is the result of the "substantial and negative" impact of the use of the de minimis exemption (a rule that allows shipments of up to US$800 to arrive in the United States free of duties and taxes) by these two strong competitors, according to a court filing cited by CNBC.
The closure in the United States would not affect stores abroad. However, the warehouse they had in Guayaquil is no longer open, and merchandise in Quito is on sale. AR Holdings, the brand's operator in Ecuador, indicated that they have "been analyzing the situation and various options to determine the best continuity scenario."
In any case, as these platforms gain traction, in-person sales are declining by between 15% and 30%. This is what salespeople at several stores in Ecuador estimate.
Daniel runs a men's clothing store in a shopping mall in Guayaquil and sells between 25% and 30% less: "Anyone can access the platforms, they arrive quickly, so it does have a negative impact."
At another location, the store manager comments that sales have dropped by 15% to 20% . Some customers even come in to compare the promotions and product variety with those offered on the platforms.
“They prefer to order because there is more variety and sometimes here they find two or three colors or models.”
The impact is less on footwear, according to a seller of these items, because people prefer to touch the shoe they are going to buy.
“The shoe is more delicate, and it absolutely needs to be tried on. Most people prefer to try it on, because even thousandths of a second can make the difference between comfortable and uncomfortable.”
According to Camilo Ontaneda, the executive president of the Ecuadorian Textile Manufacturers Association (AITE), there is and has been a significant impact on the sector.
"We estimate that approximately 55% of the imports coming through these platforms are clothing and footwear; more than half of what is imported directly affects the textile and footwear sector," he says.
In the last two years, he says, total sales have seen a drop of more than US$50 million, corresponding to a negative variation of between 4% and 5%.
Added to this is the fact that textile and clothing imports have also suffered a 9% drop, representing approximately US$81 million less in imports.
What comes through the platforms, he explains, is not included as an import statistic, but is part of category B, which is parcel delivery, express mail, and coincidentally, everything that comes through courier saw an increase of practically 90% last year.
The sector as a whole, including information from other countries facing the same problems, is working to stem "this frenzy of parcel delivery that is killing formal trade and local production," which involves importers who do so legally and producers, since the impact is felt at every level throughout the textile chain.
There's a lot of concern because products are arriving at prices below the cost of raw materials: It's not that they're expensive in Ecuador, they're just complying with the law.
"We follow all the steps required to ensure a fair product. We don't have labor exploitation, we don't have child labor, we don't pollute rivers or air. We've made the necessary investments in all our alternative energy needs, and all of that, logically, isn't appreciated by the market when it comes to price, and that's what we're fighting for," Ontaneda emphasizes.
He comments that they have spoken not only with the government, but also with other sectors, to continue encouraging formality, explaining to consumers that they are being deceived in a certain way, because the quality of garments at much lower prices is not optimal, and also the effect on health, since there are dyes or chemicals that are already banned in the textile industry because they contain lead.
Ontaneda clarifies that they are not against couriers , but that the use of this parcel delivery system is wrong.
And the problem isn't the use of platforms, because most brands have a mixed structure between physical and electronic.
"The world is going in that direction. It's not that we're fighting against it, but what we're saying is: 'If it comes electronically, let it come legally.'"
The president of the Guayaquil Chamber of Commerce, Miguel Ángel González, indicates that many companies in the textile sector have adapted to new technologies and have turned to offering their products online.
It indicates that by January 2025, the textile sector grew 17.3% and so have other related sectors, such as fashion (8.4%), clothing (5.3%) and footwear (8.6%) and this is largely due to the growing confidence of consumers in online shopping, especially in stores where they already used to buy physically.
According to González, digitalization and new consumer demands have forced the textile sector to adapt, improving its online offering, logistics, and optimizing the customer experience, which will continue to drive growth in the coming years.
"TEMU EFFECT"
The impact of these platforms on their markets has been dubbed the “Temu Effect” in several countries.
In Uruguay, the president of the Uruguayan Chamber of Commerce and Services, Julio César Lestido, indicated that last month alone, purchases through international parcels represented US$15 million, and if projected for the year, this means US$180 million was not spent on local commerce, directly impacting the supply chain.
During a presentation that Lestido called the "Temu Effect," he said that "it's a challenge" that cannot be ignored and requires concrete measures to balance competition and strengthen the local market.
In that country, Parliament is seeking to increase the tax exemption to US$500, currently US$200, according to the newspaper La R.
COLOMBIA
The outlook is similar in the neighboring country. They believe the greatest impact of the platforms will be felt this year and in 2026, and that the Temu phenomenon has generated both positive and negative effects.
On the one hand, because it has driven digitalization among consumers, however, the problem lies in the articles that enter through a current mechanism, but which is designed for other types of purchases, allowing the evasion of VAT payment and in turn generating unfair competition for national producers, said the executive president of the Colombian Chamber of Electronic Commerce, María Fernanda Quiñones, to the media Portafolio .
Given this situation, the National Federation of Merchants (Fenalco) is calling for greater oversight from the authorities.
For this industry, smuggling, primarily of clothing and footwear, is a scourge that continues to grow in that country, resulting in millions of dollars in losses throughout the entire supply chain, including for the Ecuadorian government.
