The news
Shein opened a 737,000-square-foot automated distribution center in Lebanon, Indiana, this month, about 1.5 miles from the Whitestown building it has run since 2022. The opening takes the company past 2.5 million square feet in the state, where it employs more than 1,300 people and expects to add hundreds more as the site ramps up.
The building runs a goods-to-person system, which brings products to a worker’s station instead of sending pickers down the aisles. A Shein spokesperson told Supply Chain Dive the aim is to cut manual tasks and improve worker safety.
Shein built its US business on single parcels flown from Chinese suppliers to shoppers, which entered duty-free under the $800 de minimis exemption. That exemption ended for Chinese goods in May of last year and for every other country three months later.
Duty-free parcels into the US had grown from 411 million in fiscal 2018 to 1.36 billion in fiscal 2024, then fell to 943 million in fiscal 2025, the year the exemption ended, per Customs and Border Protection.
Since then, Shein has been moving stock into the US, and its Hong Kong listing document shows what that has cost so far: fulfillment expense rose to 47.7% of net revenue in the first quarter, from 42.8% a year earlier.
What changed
The listing document describes the new flow. Rather than shipping each order as a parcel from China, Shein sends goods by the container, clears customs in bulk and pays the duty before a customer orders. The company says it is increasing locally held inventory and expanding partnerships with local fulfillment providers to cut its exposure to cross-border duties.
That flow needs buildings, which Shein started adding before the rule changed. It opened Whitestown in 2022 at 659,000 square feet, then took a 1.8 million-square-foot, two-building hub in Cherry Valley, California, the following year.
Shein rents this space rather than owning it. Brookfield paid about $330 million for the Cherry Valley buildings with Shein as the tenant, per The Real Deal. The listing document says the company’s warehouse leases sit mainly in China, the US and Poland.
Shoppers have paid for part of the change as well. Shein has raised US prices since May of last year to pass on most of the added tariff cost, per the document, while its US revenue fell 14.3% to about $2 billion in the first quarter.
The competition
Other cross-border sellers faced the same rule change but have answered it in different ways.
Temu: It stopped shipping US orders from China the day the exemption ended for Chinese goods and moved fulfillment to locally based sellers and their logistics partners. Merchants ship inventory in bulk to US warehouses while Temu keeps control of pricing, traffic and after-sales, so the sellers hold the stock instead of Temu.
Aritzia: The Canadian retailer moved all US online orders into its Columbus, Ohio, distribution center after more than doubling the building in 2024. CEO Jennifer Wong said the site runs at “triple the capacity compared to prior to the de minimis removal,” per Supply Chain Dive. CFO Todd Ingledew said the switch brought transitory expenses in the quarter it happened.
Cainiao: Alibaba’s logistics arm said in March it will build robotic warehouses across seven countries, the US among them, per Modern Materials Handling.
Of the four, Shein and Aritzia run their own US buildings, while Temu leaves the stock with its sellers.
The counter
Holding stock in the US has not lowered Shein’s cost to fill an order so far. The fulfillment ratio rose almost five points over the same year Shein made the shift, and those numbers end before Lebanon opened.
Goods that cross by container are also bought and duty-paid before a customer orders, so a style that does not sell is already sitting in Indiana. Sheng Lu, a professor of fashion and apparel studies at the University of Delaware, has said of Shein’s sourcing that its advantage “depends on speed, flexibility, and extremely small production runs.”
Meanwhile, startups such as Portless, which holds brands’ inventory at its warehouse in Shenzhen and flies each order to the shopper, have been growing quickly through the same rule change. Founder Izzy Rosenzweig had recently told us the brands that fit the model best share three traits:
Origin: they manufacture in China or Vietnam.
Weight: the average order weighs under five pounds.
Revenue: they sell more than $1 million a year.
What’s next
Shein has already run the same sequence in Europe. It opened a logistics hub in Wroclaw, Poland, last December, about six months before the EU began charging duty on low-value parcels. It it has said the Wroclaw region will reach 740,000 square meters of warehouse space with robotic picking and automated sorting.
Lebanon begins operating this month, so its ramp-up runs straight into holiday peak. After that, Shein’s first results as a listed company will show whether fulfillment expense has come down from 47.7% of revenue now that more orders ship from US stock.
