Shein and Temu, two international e-commerce platforms, are shifting their focus from tax arbitrage to local fulfilment and supply chains in South Africa due to the country’s tighter customs regime. The regulatory intervention by the South African Revenue Service (SARS) has had a significant impact on the e-commerce sector, slowing down cross-border e-commerce growth.
The Online Retail in South Africa 2026 report, conducted by World Wide Worx, reveals that cross-border e-commerce growth slowed significantly in 2025, with Shein’s growth slowing by 30% to 50% annually, to 11% in 2025, while Temu recorded an average monthly decline of 42%.
Regulatory Changes
In November 2024, SARS removed the de minimis concession that allowed parcels worth less than R500 to clear at a flat 20% duty without VAT. A tiered tariff structure was introduced in February 2025, while SARS tightened declaration requirements in April, requiring more complete invoice information on cross-border products bought by locals.
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These changes have reduced the advantage enjoyed by global platforms whose business models relied heavily on shipping individual low-value parcels directly to consumers. Arthur Goldstuck, MD of World Wide Worx, notes that Shein and Temu “no longer slip as easily beneath the regulatory radar”, and their pricing advantage is likely to narrow further.
Impact on Local Retailers
The Ecommerce Forum South Africa (EFSA) has received complaints from local online retailers, alleging anti-competitive practices by Shein and Temu, including misleading advertisements, anti-competitive prices, and exploiting import tax loopholes. Alastair Tempest, EFSA CEO, explains that the main issues raised by members are the extremely low prices that South African businesses can’t compete with and the use of large advertising budgets to prevent others from promoting their products.
Tempest also notes that the SARS customs system is still failing to create a level playing field between local retailers and global e-commerce giants, despite changes to import rules. Many parcels continue entering the country with declared values well below their actual worth, allowing importers to pay substantially less duty than local businesses.
Shifting Business Models
Shein and Temu have responded to the regulatory changes by moving towards locally-compliant supply chains and merchant programmes. Temu, for example, has introduced local-dispatch warehouse services, allowing some products to be stocked domestically through logistics partners and delivered more quickly to South African consumers.
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This shift in business models means that the competitive threat posed by international platforms is evolving, rather than disappearing. The report describes this as a transition from tax arbitrage to local execution, which will increase the importance of operational efficiency, rather than simply offering aggressive prices.
As the e-commerce environment in South Africa continues to evolve, it is likely that the next phase of competition will be determined less by parcel-by-parcel import economics and more by how effectively international platforms establish local operations. The ability of Shein and Temu to adapt to the new regulatory environment and establish efficient local supply chains will be key in determining their success in the South African market.
The situation continues to disadvantage South African manufacturers, particularly the textile industry, which has struggled to compete against ultra-low-priced imported clothing. The South African government will need to continue to monitor the situation and make adjustments to the regulatory environment to ensure a level playing field for local retailers and manufacturers.
