News / Temu faces stricter rules as EU also clamps down on ecomm

04/06/2024

It’s not just the US which is starting to scrutinise the ecommerce industry. Last week the EU designated Temu as a Very Large Online Platform (VLOP) – which means it will face more stringent rules.

While it does not directly impact Temu’s logistics, stricter compliance rules could impact demand: some cheaper items, perhaps because they are counterfeit or potentially illegal listings, must be scrutinised and banned from the platform.

Temu has some 75m monthly users in the EU, which under the Digital Services Act means it must comply with different rules within four months of its notification as a VLOP.

Under the rules, it must “diligently analyse the specific systemic risks with regard to the dissemination of illegal content and products”, as well as addressing risks such as the listing and sale of counterfeit goods and unsafe products.

Consumer groups have complained that Temu is not protecting consumers by failing to provide sufficient traceability of its traders. Consumer organisation BEUC also claimed it had “manipulative practices”. It alleged last month that: “Temu breaches the EU’s new online content law, the Digital Services Act, on all of the above points and must now be investigated by authorities.”

Compatriot Shein was designated a VLOP in April this year, but has eyes on the UK and European market. It is expected soon to file plans to list on the London stock market, in a float which could value it at some £50bn ($64bn).

The EU is also proposing to end its €150 ($1§63) de minimis threshold from 2028. It said last year: “Maintaining the customs duty exemption for goods [valued at] up to €150 has left the door open for the systematic abuse of that threshold through undervaluing and splitting of consignments…

“A study conducted by Copenhagen Economics in 2016 estimated that about 65% of the e-commerce consignments are undervalued in terms of customs duties.

“Competition is therefore distorted. The duty exemption favours third country e-commerce operators over traditional trade and EU retailers, which must pay customs duties when importing in bulk, and encourages the establishment of e-commerce distribution centres outside the EU.”

Airlines should follow the changes closely.