Shein, Temu and Alibaba: how the algorithmic retail machine works

Bohdan Lytvyn
October 08, 2026

Table of Contents

KEY TERMS:

Shein, Temu, Alibaba, two-sided platform economics, french fashion market, fast fashion.

About Bohdan Lytvyn

MBA · 17 years SEO & Growth · Former Alibaba Senior SEO Manager

Bohdan Lytvyn

"WASTELESS GROWTH" BOOK AUTHOR

International experience across B2B marketplaces, SaaS, eCommerce and digital-first businesses in European and international markets.

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The French Fashion Market Is Being Repriced

Online is no longer a niche channel

Online sales amounted to a total of 27.5% of all sales of clothes markets according to the data of the first 7 months of 2026. Comparison data with 2019 show that the current level of online sales of clothes is 11% above that of 2016, while offline shops are behind the 2019 level.

Online sales in France includes both pure e-Commerce and omni-canal trade by fashion brands. The input of e-Commerce (alone) into that progression is seemingly moderate. According to Gildas Minvielle of FEVAD, e-commerce still accounts for only a relatively small portion of several companies’ business, sometimes ranging from 5% to 10%.

The Trio of Shein, Temu and AliExpress is taking disproportionate share online

e-Commerce sales show great concentration of the market and a dominance of several platforms, which are head of sites of clothing brands or previously owned or “second hand” clothing vendors.

The trio of Shein, Temu and AliExpress accounted for 8% of total clothing purchases by volume in the first seven months of 2026 and 3% by value. In e-commerce alone, their share stood at 29% of volumes and 15% of value.

Price is the field of battle and new models are winning

As the data show, e-Commerce therefore is a market where competition is largely driven by price, which means price sensitivity is the key characteristic of online consumers.

Traditional retailers are pressured by several forces at once: ultra-fast fashion and the second hand, whose share in volume is 8% and 11% respectively, which means that almost 20% of the market in volume or a great proportion of purchases are now being made from new suppliers other than the traditional retailers.

In a market that is below the level of the 2000s in sales volume this means redistribution of the market share towards the new “business models”.

The Customs barrier has started to slow the Chinese platforms

The dynamics of the market share expansion of Shein, Temu and AliExpress is slowed by the introduction of the custom duties on the small parcels from abroad: in July 2026, Shein, Temu and AliExpress accounted for 25% of online clothing purchases by volume, compared with an average of 29% over the first seven months of the year.

As research by Médiamétrie//NetRatings brought by Fevad suggests daily visitor numbers of the three Chinese platforms are down. In July 2026, these figures fell year-on-year for all three platforms: -9.4% for Temu, -12.5% for AliExpress and -53.2% for Shein. This trend is especially pronounced for Shein, whose daily audience has more than halved, falling from 4.74 to 2.22 million internet users.

Platforms’ scale makes them difficult to displace

Shein's presence in internet users’ daily habits as seen from the data above is quite large. If the adult population in France is 54,7 million persons, then, at least before July 2026, Shein was daily used by 8.6% adult inhabitants or almost 7% of all population of France.

With the imminent introduction of the EU customs on small parcels, this poses the questions of the effect on the trio of Shein, Temu and AliExpress, considering their strong adaptability, whether in terms of their pricing policies, their logistics organisation or their online visibility presence in France and Europe

The new business model is turning demand into supply the quickliest

Platforms made for Europe to sell goods coming from the Chinese factories

These are specialized platforms built for European markets, which does not negate they may have their Chinese counterparts bearing different names.

The platforms are built on detailed and elaborate taxonomy of goods

Shein’s model, in particular,depends on massive SKU proliferation, algorithmic demand sensing, granular product/category data. A 2024 academic study describes Shein's real-time, data-driven supply-chain model and reports that its design/procurement operation oversees hundreds of thousands of SKUs, with algorithms analysing social-media and online-shopping data to identify trends and consumption patterns.

Shein uses the large-scale automated test and reorder (LATR) model

Platforms has thoroughly analyzed and accrued a detailed knowledge on the clothing market in France and Europe as regards a demand and supply in specific categories. Moreover, according to Harvard Business School, Shein monitors consumer trends, launches products in very small initial batches, observes demand, and then reorders successful products, which is called the large-scale automated test and reorder (LATR) model.

This results in massive, yet, economically justified proliferation in volume of goods: between July and December 2021, SHEIN added 2,000 to 10,000 items per day to its app — the estimated effect of Shein's LATR is that it generated 20 times as many new items as H&M or Zara in 2021. Therefore, the competitive advantage is the speed at which demand information is converted into supply.

Ultra low pricing

Their pricing is adapted to each European country and is currently appealing towards the most price sensitive customer cohorts. For example, the median price per article on Shein and Temu is 9€ and 10€ respectively as compared to 20€ on Amazon or €19 on H&M (source: IFM).

les 10 plus gros vendeurs de vetements en France en 2026

Image source: fashionunited.fr

Gamification methods

Shein and Tenu employ gamification, including daily rewards, unlocking exclusive offers in exchange to making target actions and random wins. Likewise, the European Commission opened formal proceedings against Shein in February 2026 specifically investigating “addictive design”, including the use of points and rewards for engagement, as well as the transparency of its recommender systems.

This gamified experience helps shift the emphasis from the rational side of the purchase, including the quality, expected duration of utile life, price to quality ratio to that belonging to the registry of games: thrill and expectation of rewards, which can influence attitudinal loyalty and behaviour. For example, see a research in Psychology & Marketing on gamification in mobile applications. The architecture therefore appears designed not merely to convert individual transactions but to generate repeated engagement and return visits.

From a Wasteless Growth perspective, this changes the unit of competition. The platform is no longer competing only on price, quality or expected product life; it is also competing for the consumer's attention, anticipation and repeated engagement.

From search to AI: how do Shein, Temu and Alibaba acquire customers?

Poorly represented in search engines by category pages and long tail queries

Shein may often have several category pages that cannibalize each other. From my experience I can say that's not uncommon with Chinese platforms — a low sensitivity to SEO recommendations or best practices. Instead, the platforms that create tons of URLs would end up not indexed or performing in search poorly.

For example, Shein is ranked 39th, i.e. at the bottom of the 4th ranking page in Google, for a search query “Trenchs pour femmes” with the following URL that’s likely isolated from the site's structure (judging from the breadcrumb’s path).

“Trenchs pour femmes” Shein results page URL that’s likely isolated from the site's structure

Instead, they have several candidate URLs that are seemingly more representative and well-embedded to the site-structure (for example, as below).

On a general plan, I can observe that Shein, Tenu and Alibaba are struggling with indexation issues, so called “crawl budget” problems and are seriously underperforming as regards representation in search, being showcased instead against long tail queries mostly.

Extensive use of AI-generated images

SHEIN is increasingly integrating AI-generated or AI-modified images into products: its 2026 AI transparency policy explicitly acknowledges the use of AI to create product images, virtual models and lifestyle backgrounds.

Dubious customer reviews cited in AI answers

Reviews are another potential trust issue. For example, EU consumer authorities have raised concerns about the authenticity of reviews on Temu. Customer reviews cited to AI Overviews or results of the AI-assisted search therefore become a part of acquisition.

Cookies illegally used for advertising

The core acquisition strategy included advertising in social media built around spontaneous wins and surprisingly low prices. The goal of the advertising campaign is to make the user hit the website, after which he or she was followed by Shein ads on other internet sites (retargeting) that became possible due to — in my opinion — the engineered “cookies concern” mechanics. Notably, in 2025 Shein was fined €150 millions for using customer cookies without consent, which includes that users could not refuse from placing cookies.

The underlying legal decision explicitly says that Shein's French activities included efforts to increase visibility through journalists and influencers, bringing potential customers to shein.com, after which cookies were used in part to track navigation and display advertisements for products sold by Shein.

Recommender systems increasingly compete with search

The European Commission is explicitly examining the transparency of Shein's recommender systems. Arguably, this is the core of Shein business that rests on the LATR model, which works as a fast testing screen that constantly measures customer reactions and recommends what fits the particular customer’s preferences based on a comprehensive knowledge of his or her preferences. And their real competitive advantage may be the ability to combine search, merchandising, recommendation and transaction into one environment.

What does the proliferation of the Shein, Temu and Alibaba in France actually signify?

Clothing as an adjustable variable

Possibly, consumers start to attach relatively less value to it, both literally and figuratively, which explains interest to vendors that sell for less. This is called a household's budgetary trade-offs. For example, INSEE reports that the share of clothing in what is called “'appearance” budget fell by a third between 1960 and 2015, facing competition in particular from leisure, technology and other forms of consumption as discussed by Le Figaro. In 2025, clothing and footwear accounts for around 3% of household consumer spending in France according to Insee as reported by Fashion United.

Clothing has become an adjustable variable allowing them to make compromises between constrained or essential expenditures and certain discretionary spending. This adjustable variable becomes a category of spending where items can be easily substitutable and therefore consumers seek to pay significantly less for them. Budgetary trade-offs are not made solely in favour of low-cost new clothes, they are made on a massive scale in favour of second-hand goods, a segment operated almost exclusively through C2C (consumer-to-consumer) marketplaces like Vinted.

Sorting and filtering tools are seen as “budget savers”

Price comparison enabled by platforms fuels the adjustable variable concepts but adds the psychology variable.

e-Commerce growth has reportedly been predicated on the availability of choice and price comparison. Likewise, a large-scale opinion poll conducted by Ifop reveals that, when it comes to buying clothes online, the ability to easily compare prices across different brands is one of the main reasons why online shoppers choose to shop online.

A study by OpinionWay for Perifem suggests that 42% of consumers would like an online tool or algorithm to automatically alert them to a similar, cheaper product whilst they are browsing, and these platforms allow shoppers to adjust their purchasing decisions in real time. Overall, sorting and filtering tools are seen as ‘budget savers’ through instant comparison features and built-in filters (by price (ascending), size or discount).

Delivery costs and problems in France

In France, delivery costs make a considerable portion of the total cost of purchase. Some websites would only disclose the cost of delivery before the check-out, making it an unpleasant surprise for customers. With Shein, for example, delivery is set as free for orders more than 39€.

The European Commission says that 91% of EU e-commerce shipments valued below €150 came from China in 2024, and the number of such items more than doubled from 1.9 billion to 4.17 billion. Shein and Temu specifically has grown very rapidly in the EU, to more than 75 million EU users in 2024.

Ultra fast fashion business model is the algorithmic retail machine

These platforms have built an unusually granular representation of consumer demand. In Shein's case, the platform combines a vast product taxonomy with real-time demand sensing, small-batch testing and algorithmic recommendations, allowing it to continuously test which products and styles attract demand. Likewise, fast fashion business model is well discussed in an article from 2025 by McKinsey.

Shein, Temu and AliExpress have compressed the traditional distance between demand recognition, merchandising, customer acquisition, recommendation and transaction. Their competitive advantage is not simply low cost. It is the speed and scale with which consumer attention and behavioural data are converted into new supply, new recommendations and new purchases.