Several million Australians shop on low-cost Asian e-commerce sites Temu and Shein each year, but those platforms are now increasingly coming under regulatory scrutiny.

One of the latest measures is in the EU where authorities are cracking down on online retailers evading EU custom checks.

Some of the countermeasures being proposed there include a new tax on e-commerce platforms’ revenue and an administrative handling fee per item that would make most shipments less competitive, reported the Financial Times.

European trade commissioner Maroš Šefčovič has said about 4bn lower-value parcels will be flown to the EU this year, almost triple the number in 2022.

 

Since most of them are under the €150 threshold for custom duties, they are not checked upon entry into the EU, leading to a potential increase in imports of dangerous or counterfeit goods with little official oversight as these are mostly sent directly to consumers.

The EU executive has already proposed scrapping the €150 value threshold underneath which packages are exempt from custom duties, a step that is also being pursued in the US.

Both Temu and Shein are known for the rock-bottom pricing of their goods, which EU officials are concerned would negatively impact European competitors who have higher production costs as they need to adhere to EU standards.

 

A major obstacle to screening parcels arriving from retailers such as Temu and Shein would be that screening each one of them might simply overwhelm the system. Amsterdam’s Schiphol airport and Rotterdam port, for example, already handle a combined 3.5mn packages a day — or 40 per second.

Another possible remedy being suggested is a handling levy which would be a fee applied to any online retailer shipping to EU customers directly from outside the bloc.

Last month, the European Commission and national regulators, including Belgium, Germany and Ireland, jointly demanded that Temu halt “problematic practices” that have the potential to mislead consumers and are in violation of the EU’s product safety rulebook.

These activities include posting fake discounts and reviews, forcing customers to play a “fortune wheel” game while hiding essential information about its conditions, displaying misleading information and hiding contact details for customers to file questions or complaints.

In August, research firm Roy Morgan stated that 3.8 million Australians aged 14+ are buying at least once from Temu over 12 months, while 2 million are buying at least once from Shein.

It estimates that Temu and Shein together had close to $3 billion in annual sales in Australia in the 12 months to June 2024, which includes $1.7 billion for Temu and $1.1 billion for Shein.

Recently, Amazon launched the beta version of its own low-cost storefront called Haul in the US. Haul which is available in the Amazon shopping app has a selection of products that are US$20 or less, with the majority being under US$10.