The news: Last-mile delivery providers for Shein and Temu are under fire for allegedly underpaying workers, among other labor disputes, according to The Information.

The allegations: One such company, Alibaba-backed UniUni, is facing several lawsuits over its pay practices.

• UniUni is accused of paying drivers less than minimum wage without offering overtime, despite assigning routes that could take 16 hours or more to complete.
• Other lawsuits allege that the company offered drivers a daily lump sum that amounted to $2 or less per package delivered.
• The company is also accused of failing to compensate eligible workers for meal breaks and overtime and misclassifying workers as independent contractors.

The problem: The explosion of packages from Shein, Temu, and other Chinese ecommerce platforms has created a “race to the bottom” among delivery companies as they try to win lucrative contracts while keeping costs low.

Both Temu and Shein ship over 1 million packages per day, giving them more power to negotiate lower rates.

At the same time, companies like UniUni, PiggyShip, and SpeedX are able to charge 50% or less per package than national carriers.

• That’s because they rely on workers who have their own vehicles and because they pay fixed rates per package rather than an hourly wage.
• Those practices make them hugely favorable to companies like Shein looking to keep costs as low as possible.

Our take: Cheap delivery is one of the many ways Shein, Temu, AliExpress, and other Chinese ecommerce players are able to offer shoppers ultra-low prices. But the growing tide of lawsuits against these companies’ delivery providers could soon eliminate that advantage.

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